Wheres the Applause Explaining the Lack of Industry Enthusiasm for NNMI

Where's the Applause? Explaining the Lack of Industry Enthusiasm for NNMI

The business community  needs to  wakes up to the nature and scope of the international competition it faces and sees smart government policies, such as NNMI, as key ingredients in their company’s success. 

Last week the Obama Administration announced a commitment of $200 million to create three new manufacturing innovation institutes focused on digital manufacturing and design innovation, lightweight and modern metals manufacturing, and next-generation power electronics.

These institutes will be modeled after the initial center created last year focused on additive manufacturing, and are part of a $1 billion proposal to create at least 15 manufacturing innovation centers across the nation as part of a National Network for Manufacturing Innovation (NNMI).

With the federal government poised to take a major step to help U.S. manufacturers, you’d expect widespread “applause.” But you’d be wrong. To be sure, a few groups like the Council of Competitiveness praised the announcement, but the National Association of Manufacturers (NAM) has been silent. 

Not standing in the way is an insufficient position for such organizations to take; rather they should be ardent proponents of programs like NNMI, which is designed to revitalize America’s manufacturing prowess.

Compare NAM’s lack of support with their counterpart to the North, Canadian Manufacturers and Exporters. CME, like NAM, focuses on bread and butter issues like lower taxes and reduced regulatory burdens on manufacturing. But unlike NAM, they go further and lobby aggressively for government programs to help Canadian manufacturers be more competitive through technology.

It’s not like NNMI is a crazy idea. Other nations have either had similar initiatives for years or are developing new ones. Both Taiwan’s Industrial Technology Research Institute (ITRI) and Germany’s 60-plus Fraunhofer Institutes have long provided a compelling model for performing applied research of direct utility to industry.

Furthermore, the Cameron government in the United Kingdom just announced a £1 billion (US$1.53 billion) investment to create UK Catapult, a nationwide network of technology and innovation centers. One of the first will be the High-Value Manufacturing Catapult, “a catalyst that transforms brilliant manufacturing into valuable products and services.”

Likewise, Japan’s new economic stimulus package includes, as its largest single line-item, $2 billion to promote university-industry collaboration, including funding to conduct industrially relevant research.

And just last week Canada’s Minister of State for Science and Technology Gary Goodyear announced the government’s decision to refocus the National Research Council (NRC), Canada’s main government funder of science, toward research that is more directly relevant to industry in Canada.

Lack of Serious Lobbying

NAM is not alone in ignoring or at least giving little attention to government manufacturing technology policies.

Few manufacturing companies spend serious time lobbying for these efforts.

One reason is because for the most part manufacturers’ government relations staff and their CEOs are usually not aware of how their companies benefit from federal technology programs.

Case in point, in a recent breakfast roundtable with the CEO of a leading U.S. manufacturer, I asked him if he or his DC government relations team were aware that his company was a major participant in a federally funded manufacturing research institute. Neither he nor the head of the company’s DC office knew of it.

But this is par for the course. Over the years I have talked to many U.S. manufacturing engineering managers who benefit from federal technology programs and with very few exceptions (IBM being a notable one), their Washington government relations staff do not even know these programs exist and benefit their company.

The reason behind this has to do with business culture. Large and mid-sized corporations’ lobbying shops give short shrift to federal technology policies in part because many U.S. business leaders have a deeply held view that they succeed in spite of government, not because of it.

As U.C. Berkeley political scientist David Vogel argued in his article Why Businessmen Distrust Their State: The Political Consciousness of American Corporate Executives, because of historical differences in development patterns and the role of the state, nations differ in the extent to which business leaders favor state support of innovation policies.

Vogel writes: “There is, in fact, relatively little principled opposition toward strong government by French, German, or Japanese businessmen.” However, the prevailing view of U.S. business executives is that government has little role to play, other than to get out of the way and “do no harm.”

Contrast that view with Germany, where 30% of industrial managers have attributed their company’s innovation success in part to German government policies.

In speeches to U.S. industry groups I like to quip that if they did a similar survey here, the number would be negative 9%. This “go it alone” attitude probably made sense when U.S. manufacturers faced limited global competition and the competition they faced did not have significant government support.

Matter of Competition

But today as I point out in Innovation Economics: The Race for Global Advantage, the competition is intense and our competitors are not just firms, but firms helped by their state.

As Wayne Johnson, formerly of Hewlett Packard and now at CalTech, observed, “We in the United States find ourselves in competition not only with individuals, companies, and private institutions, but also with governments and mixed government-private collaborations.”

To be sure, while distrust of a proactive role for government in innovation is deep in the psyche of American business, this is beginning to change, in part because more business leaders, like Johnson, see their own companies challenged by foreign firms that are backed by their states.

In 2010, General Electric CEO Jeff Immelt acknowledged that the United States is “a pathetic exporter . . . we have to become an industrial powerhouse again but you don’t do this when government and entrepreneurs are not in synch.”

Former Intel CEO Andy Grove has made a similar point saying: “Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.”

In addition, former Microsoft CEO Bill Gates, in promoting the development of a robust domestic clean energy economy argues, “To achieve the kinds of innovations that will be required, I think a distributed system of R&D with economic rewards for innovators and strong government encouragement is the key.”

And finally, Dow Chemical CEO Andrew Liveris writes in Make It in America about renewing American manufacturing, in part by supporting these kinds of government policies.

Only time will tell whether Immelt, Grove, Gates, and Liveris are anomalies or representative of a maturing U.S. business community as it wakes up to the nature and scope of the international competition it faces and sees smart government policies, such as NNMI, as key ingredients in their company’s success. 

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