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Innovation centers bring rebirth of American manufacturing

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Good old American ingenuity and know-how are what made this country a world leader in the manufacturing sector.

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Inventions by American citizens have transformed the world and, in many cases, contributed to the growth and financial health of other countries.

In recent decades, manufacturing has been eroding in the United States, both through moving production capabilities overseas and through foreign competition.

In 2014, the trade deficit – the difference between imports and exports – for manufactured goods was $524.2 billion. Jobs have shown a corresponding trend, with annual manufacturing employment decreases since 1980.

The good news is, recent trends show increased hiring and the movement of company operations back, the so-called on-shoring trend. Both are early indications that the country is poised for a manufacturing resurgence.

Recognizing that fostering innovation is critical to fueling this revitalization, the Manufacturing Institute addressed shortfalls in the present environment through its concept of a National Manufacturing Innovation Network.
According to the institute, while companies and the government invest in basic research, and plants have the physical capability of producing goods, there is a gap between invention and commercialization. Specifically, assets in development, engineering and prototyping are lacking.

In addition, many new inventions are left on the shelf in government and university labs. Small companies often don’t have the resources or infrastructure to perform intensive research and development or bring products to market unassisted.

The federal government, as initial funder, responded by creating eight National Network for Manufacturing Innovation (NNMI) centers. The technologies they address include semi-conductors, light metal manufacturing, photonics, electronics and digital manufacturing and design.

The three key goals of NNMIs are to develop advanced manufacturing technologies, to bring private and public sector resources together to assist smaller companies, and to develop a pipeline of workforce talent.

Advanced manufacturing is defined as the “use and coordination of information, automation, computation, software, sensing and networking, and/or to make use of cutting-edge materials and emerging capabilities enabled by the physical and biological sciences.”

Taking existing manufacturing processes and development to the next level through technology and science is seen as critical to enhanced competitiveness. Information about the centers is available at www.manufacturing.gov.

In the private sector, the interest in innovation centers is also accelerating. The Innovation Game: Why and How Businesses Are Investing in Innovation Centers, a 2014 report by Capgemini Consulting and Altimeter, provides an overview of digital innovation centers.

According to the authors, companies seeking to build their competitive advantages realize that collaboration is the key. Many innovation centers bring together inventors, venture capital, academia and vendors to support the development of the most promising new ideas.

These centers are considered to accelerate the speed of innovation while attracting talent and building a culture of innovation. Private sector-funded innovation centers mainly fall into four configurations:

  • Corporations create in-house innovation labs to generate ideas and take them through proto-typing and development to market.
  • University centers are funded by corporations to tap talent and develop promising technologies.
  • Community centers work with students and startups to test their innovations in partnership with companies, which often take an equity stake.
  • Innovation outposts are small company teams placed in geographical innovation centers, such as Silicon Valley.

While multiple sectors use innovation centers, 58 percent are sponsored by manufacturing companies. Within the United States, Silicon Valley leads the way, with 53 centers. Chicago has four, and others are located in the Northeast, on the East Coast and in the Midwest.

The mission of these centers is split between gaining access to the latest technologies and better understanding customer needs, the two-sided coin of successful new product creation. Two-thirds of companies have networks of centers rather than a single stand-alone.

Since innovation centers can be risky, the study recommends carefully defining the purpose and the focus of the center. Support success by addressing upfront shortfalls in resources or talent through partnerships while leveraging company capabilities.

Cross-functional teams can ensure that ideas aren’t developed in isolation without regard to how they can be commercialized through the manufacturing, sales and finance functions of the company.

Sharing learning from a center throughout the company can contribute to a companywide culture of innovation. This is a wise strategy, since new ideas can come from many sources.The employees who work on the front lines often see both opportunity and challenge.

The good news for companies is that both private and public sector innovation centers are providing fertile soil for a renaissance of American manufacturing.