From a U.S. policy perspective, manufacturing has been left out in the cold. The argument has always been, according to Dr. Jan Youtie, Manager of Policy Services and Principal Research Associate at Enterprise Innovation Institute, “The U.S. is a capitalist society, so we have decided not to have an industrial policy. People argue that ‘some will get served and some won’t, and that is not what we’re about.’ ” And that has been the case for about 100 years.

Speaking to a crowded room at her Sept. 16 Brown Bag Seminar at the Georgia Tech Manufacturing Institute, Dr. Youtie also explained that others argue that manufacturing is a declining industry and we don’t need to pursue policy that encourages it. The industry sector has lost 1.6 million jobs since 2007 and has shown a steep decline in the number of establishments.

However, Dr. Youtie argues: “Productivity has gone up. People are still buying things, and manufacturing has gotten better about making things.”

Although durable goods took a hit during the downturn, productivity has rapidly increased over the last three years. And where there was a drop in manufacturing’s percentage of gross domestic product, we are beginning to see an uptick. “So it is much more complicated than just saying manufacturing is a declining industry,” said Dr. Youtie.

From a historical perspective, manufacturing has had a significant technological and societal impact. We have seen the rise of automation and microprocessors in the 1960s and ‘70s, to robotics, internet, biotech, and lightweight materials in the following decades. But these technologies did not come about without challenges such as job loss, deskilling and outsourcing.

Starting in the 1980s, manufacturing faced many challenges and the U.S. trade surplus became a trade deficit with the rise in Toyota products. The gap between large manufacturers’ productivity and their small and mid-sized counterparts began to widen. At the time, “our large manufacturers were as good as any in the world,” said Dr. Youtie, “but not our small and mid-sized manufacturers (SME). There was a huge gap.”

SMEs once made up 70 percent of manufacturing productivity, but today they only make up 60 percent. The difference in productivity can be linked to the fact that large manufactures use new technologies, whereas SMEs use new technologies much less frequently. “The uptake in technology is one reason for this gap between large manufacturing productivity and SME productivity,” said Dr. Youtie.

SME has constraints in terms of adopting technology, including:

• Lack of finances
• Lack of know-how or internal knowledge to manage new technology
• Shortage of skills and limited access to qualified personnel
• Limited ability to meet customer needs and foreign markets
• Weak business relationships and isolation in their work

As the gap continues to expand, Dr. Youtie suggests that it is time to intervene. SMEs lack knowledge and resources, but large customers, vendors and consultants don’t and can’t support the SMEs in their plight. From a government perspective, there are gaps in public providers, a lack of service coordination and a lack of supporting policies for SMEs.

There have been policy attempts to help since the late 1980s, according to Dr. Youtie. The Omnibus Trade and Competitiveness Act established regional technology transfer centers to move technology from federal labs to SMEs. These didn’t work as planned, so in 1993, the Technology Reinvestment Act was announced, which expanded the federal Manufacturing Extension Partnership (MEP) program to all 50 states.

During the 2000s the economy took a nosedive and low-cost, technologically capable global competitors began to pull manufacturing away from the United States. In order to compete with the lower-wage nations, the general consensus was that for the United States to compete, we had to be more innovative. In 2007, the America COMPETES Act was rolled out. MEP services were to focus on next generation manufacturing and offering toolkits to promote growth. MEP responded with its Next Generation Manufacturing Strategy 2008. “Systemized growth services was the big effort to promote innovation and new products,” explained Dr. Youtie. “Today, there is a renewed effort for advanced manufacturing.”

These new efforts target the Technology Readiness Levels of 4, 5 and 6, or the “valley of death” in the U.S. technology maturation process. Three big initiatives have been introduced, including the Advanced Manufacturing Technology Consortia, the National Network for Manufacturing Innovation, and Manufacturing Technology Acceleration Centers.

“These new policy changes may mean changes in technology: additive manufacturing, digital design and lightweight materials,” concluded Dr. Youtie. “Whole segments of manufacturing will be wiped out.”

The GTMI Brown Bag Semina Series takes place each Monday between noon and 1 p.m. in the Manufacturing Research Building, Room 114. Students and faculty are invited and are welcome to bring their lunch to the meeting. If you have questions or you want to be added to the reminder list for these events, please contact Tina Guldberg at tina.guldberg@gatech.edu.