December 2, 2016 To Spur Growth Policymakers Need to Bolster “Smart” Manufacturing

But to speed this transformation, the federal government needs smarter policies for smart manufacturing.

President-elect Donald Trump has made bolstering U.S. manufacturing an important policy priority, and according to the Information Technology and Innovation Foundation (ITIF), one of the most important ways for the country to regain global manufacturing market share and jobs is to focus on “smart” manufacturing. ITIF, the leading U.S. science and tech policy think tank, released a new report today explaining how smart manufacturing—the application of information and communications technologies to every facet of modern manufacturing processes—could reduce the advantages low-wage nations have in the manufacturing industry in favor of higher-cost nations such as the United States, but only if policymakers act.

“The digitalization of manufacturing is transforming everything from how products are designed, fabricated, and serviced, to the operations and energy footprint of factories and the management of supply chains,” said Stephen J. Ezell, the report’s author and ITIF vice president for global innovation policy. “The countries, companies, and industries that lead in embracing smart-manufacturing techniques will gain first-mover advantage over global competitors. If policymakers want to ensure that American industries remain on the cutting edge of manufacturing innovation to stay globally competitive, they need to implement policies that can help ensure the United States remains a smart-manufacturing leader.”

Ezell’s report explains that the current transformation in manufacturing stems from the advent and maturity of several foundational digital technologies, including sensors, wireless connectivity, data analytics, generative and computer-aided design, and advanced robotics. These digital technologies will transform nearly every aspect of modern manufacturing, from the design of manufactured goods, to the management and execution of production processes and factory operations, to the integration of industrial supply chains, to how products are used by customers once they leave the factory floor.

Recognizing the importance of smart manufacturing to their industrial future, several countries have already launched policies and programs to support the research, development, and deployment of these technologies, including China, Germany, the European Union, Korea, Sweden, and the United Kingdom.

To ensure America’s continuing leadership in smart manufacturing, ITIF urges Congress to:

• Allocate funding to build out the Manufacturing USA network;
• Provide a stronger tax incentive for investment in machinery and equipment;
• Pass the Small Business R&D Act;
• Make the NIST Manufacturing Extension Partnership cost-share ratio more generous;
• Expand the development and use of standards-based, nationally portable, industry-recognized certifications designed for specific manufacturing sectors;
• Boost support for vocational-education programs at community colleges;
• Reform the Workforce Investment Act system;
• Pass the Energy Modernization Act;
• Pass the Manufacturing Universities Act;
• Pass the National Fab Lab Network Act;
• Fund a pilot program to integrate the maker movement and makerspaces into high schools;
• Fund research and development into underlying technological challenges relevant to the Internet of Things;
• Fund the National Strategic Computing Initiative and federal high-performance computing initiatives; and
• Support trade agreements that preclude partner nations from imposing barriers to cross-border data flows.

ITIF also urges the Trump administration to articulate a national smart manufacturing strategy; ensure collaboration between the Manufacturing Extension Partnership centers and Institutes of Manufacturing Innovation; direct the National Institute of Standards and Technology to continue developing interoperable standards; and negotiate—and enforce—trade agreements that preclude partner nations from imposing barriers to cross-border data flows.

“The marriage of digital and industrial is the defining aspect of the fifth wave of the industrial revolution,” concluded Ezell. “Yet the private sector will not be able to navigate this transformation alone. Around the world, nations are implementing smart-manufacturing strategies and making attendant investments to ensure that their manufacturing enterprises, large and small alike, are positioned to take optimal advantage of the smart-manufacturing revolution. If the United States wishes to remain a leading smart-manufacturing economy, policymakers must implement robust, proactive, and coordinated public policies that support America’s manufacturing sector and its ability to leverage smart-manufacturing techniques.”

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The Information Technology and Innovation Foundation (ITIF) is an independent, nonpartisan research and educational institute focusing on the intersection of technological innovation and public policy. Recognized as one of the world’s leading science and technology think tanks, ITIF’s mission is to formulate and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress. Learn more at itif.org.

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