Manufacturings Innovation Agenda

November 2, 2004
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GRAND RAPIDS — The manufacturing sector is changing fast and it's changing forever.

The change can't be blamed on just China or Mexico; technological advances have given manufacturers the ability to do things quicker, faster and with fewer employees, according to Birgit Klohs, president of The Right Place Inc.

A Council on Competitiveness report released in September indicated that to remain competitive in the global market, Michigan must strengthen its human capital base as well as its entrepreneurial platform.

Key findings of the report, as well as long-term solutions for the state's manufacturing industry, were the focus of a recent panel discussion at the Economic Club of Grand Rapids.

In addition to Klohs, panelists included Congressman Vern Ehlers, R-Grand Rapids, Mark Murray, president of Grand Valley State University, and Fred Keller, chairman and CEO of Cascade Engineering.

Globalization is here to stay and fierce global competition is a long-term reality, said Ehlers, who authored the Manufacturing Technology Competitiveness Act. The bill (HR 3598), passed by the House in July and now awaiting Senate action, is intended to foster innovation in American manufacturing sciences.

The nation is shifting from an industrial economy to a knowledge economy, just as it once shifted from an agricultural economy to an industrial economy driven by manufacturing, he said.

Agricultural at one time supported 80 percent of the work force. Today it employs about 1.5 percent.

"These people did not go on welfare; most of them ended up in manufacturing or in other professions," Ehlers pointed out. "Today we face a different revolution."

Advances in science and technology have shaped the new revolution and demand "the use of our brains to a greater extent than before," he said. What can the nation learn from the past, and can it change as fast as it has in order to deal with this new revolution? How can the country best compete in a global, technological economy where the transfer of knowledge is so rapid?

"America has substantial competitive advantages. Our biggest advantage, I believe, is a high level of creativity and innovation," Ehlers said. "We know how to imagine and create 'the next big thing.' We have a history of thinking outside the box, and we have an outstanding history of good, basic scientific research, which is the basis for technological development. Better innovation and productivity have always kept us ahead."

But there's a big problem standing in the country's way, as he sees it. The jobs of the future are going to require an understanding of the basic principles of math and science. People have to be educated for those types of jobs, he said, and today they are not being educated well enough.

According to Ehlers, what this country needs is a national strategy of innovation, which can only be created with increased investment in and greater concentration on science, math, engineering and technology education both in schools and the workplace. That effort, he said, also should include public-private partnerships that encourage technological development and "strong investment" in federal research institutions.

"India and China saw the light in the early '80s and began developing programs to train individuals in math and science. Today they are producing outstanding scientists and engineers and they are also doing the technology transfer."

The United States hasn't been as good at transferring scientific results and technology directly from the laboratory to the workplace, he said.

"We have today in America what I call the 'Valley of Death,' where good ideas are developed in the labs but take forever to get into products in the workplace."

GVSU's Murray said one of the things the educational system has done over the last 15 years has been to move the study of algebra — once strictly a high school subject — into the middle schools.

"We've learned that we can, in fact, improve performance in a particular area if we concentrate and get the leadership discussion and training going on," Murray observed. "Reading should always be the first on any list in terms of skills, but if the framework for No Child Left Behind carries on, I think there will be a very appropriate time in the next few years to make science one of the national standards."

Murray said the biggest challenge higher education faces in trying to ensure that manufacturing has the scientists and engineers it needs for the future is the changing nature of the manufacturing environment itself.

Klohs said reforming the state's tax structure and providing incentives to retain and attract jobs is very important in the scheme of things because Michigan's competition isn't just coming from China and Mexico, but from competitors in the southern United States.

"The basics of it are how expensive or inexpensive it is to do business in Michigan, and that's not just the tax structure but also regulations and how much time it takes to apply for a permit. The competitors will never go away unless we have a national strategy to level the playing field."

A third issue affecting Midwestern states are neutrality agreements that bind companies to unionize without input from the employer. Those are not helpful either, she said.

Keller noted that for the first time in the history of U.S. manufacturing, the industry is receiving both recognition and representation at the federal level, with the Bush Administration's recent creation of the U.S. Department of Commerce Manufacturing Council and the appointment of long-time manufacturer Al Frink as assistant secretary of manufacturing.

Keller and John Padilla, COO of Ford Motor Co., are appointees to the newly formed council, which is putting together an agenda for manufacturing. The national council met for the first time in June at Cascade Engineering's headquarters here. At that time the council formed work force, competitiveness and international trade subcommittees that are tackling issues such as health care and tort reform, he said.

"We feel like there's been some progress made and that we've reached a point where we have a good voice in Washington," Keller remarked.          

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