Description
Within this detailed information pertaining to a national governors association policy academy report.
A National Governors Association Policy Academy Report
“Making” Our Future
What States Are Doing to Encourage Growth
in Manufacturing through Innovation,
Entrepreneurship, and Investment
THE NATIONAL GOVERNORS ASSOCIATION (NGA), founded in 1908, is the collective voice of
the nation’s governors and one of Washington, D.C.’s, most respected public policy organizations.
Its members are the governors of the 55 states, territories and commonwealths. NGA provides
governors and their senior staff members with services that range from representing states on
Capitol Hill and before the Administration on key federal issues to developing and implementing
innovative solutions to public policy challenges through the NGA Center for Best Practices. NGA
also provides management and technical assistance to both new and incumbent governors.
The NGA Center for Best Practices is the only research and development firm that directly serves
the nation’s governors and their key policy staff. Through the NGA Center, governors and their
policy advisors can:
n Learn about what works, what doesn’t and share lessons learned
n Participate in meetings of leading policymakers, program officials and scholars
n Obtain specialized assistance
For more information about NGA and the Center for Best Practices, please visit www.nga.org.
Acknowledgments
This report was prepared by Erin Sparks and Mary Jo Waits at the National Governors Association
Center for Best Practices in collaboration with:
n Doug Henton, John Melville, and Kim Held at Collaborative Economics, Inc.;
n Lindsey Woolsey at The Woolsey Group, LLC;
n Ken Poole and Mark White at the Center for Regional Economic Competitiveness;
n Dan Berglund at the State Science and Technology Institute;
n Angela Martinez at the U.S. Economic Development Administration; and
n Mark Troppe, Heidi Sheppard, and Gary Yakimov at the U.S. National Institute of Standards
and Technology’s Hollings Manufacturing Extension Partnership Program.
The NGA Center wishes to thank the U.S. National Institute of Standards and Technology’s
Hollings Manufacturing Extension Partnership Program and the U.S. Economic Development
Administration for their support of this project.
The report was edited by Nancy Geltman and designed by Middour & Nolan Design.
January 2013
c o ntents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
TAKING A NEW LOOK AT MANUFACTURING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Manufacturing Is Too Important to Lose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Manufacturing Has Changed and Is Changing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Too Many Manufacturers Are Not Growing through
Innovation and Global Exports—but Could . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The “Deindustrialization” of America Is Not Inevitable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Leadership in This “New” Manufacturing Is Largely Up for Grabs—
but It Requires Understanding and Developing Innovation Ecosystems. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
States Control a Variety of Policies Associated with
Well-Developed Ecosystems of Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
TECHNOLOGY AND TIME BRING A NEW PERSPECTIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS . . . . . . . . . . . . . . . . . . . . . . . . . 21
Pursue an Integrated Approach to Developing a Manufacturing
Strategy, Connecting Large and Small Manufacturers, as well
as State, Federal, and Regional Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Develop and Implement Industry-Driven Priorities and Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Boost Innovation and Commercialization Capacity of Manufacturers,
Particularly for Small and Midsized Firms, by Connecting Them to
Partners, Consortia, and a Whole System of Supports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Provide Talent Both to Fill the Specialized Needs of Employers Quickly
and to Deliver Lifelong Training for Workers at All Levels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
BEST PRACTICE LESSONS OFFERED FOR OTHER STATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Executive Summary
The policy agenda for U.S. manufacturing is changing. Five years ago the debate
was mostly about how to rescue and retain existing footholds in manufacturing, but
lately the debate is increasingly about how to set the stage to lead the world in new
technologies and innovations that are changing the face of manufacturing. That shift
in direction was underscored this year when eight states prepared new strategies
not through the lens of “let’s save manufacturing” but through the lens of “let’s lead
in what lies ahead,” including robotics, nanotechnology, and advanced materials.
Given all that is happening in manufacturing today, including advances in
technology, a greater focus on tailor-made goods aimed at specific individuals
and industry users, and the growing importance of sustainable forms of
production, opportunities for the United States to lead are becoming increasingly
clear. That leadership, however, will be built on a different breed of policy
than the usual formula of enticing global public companies to build plants in
this country. It will be built on a combination of worker education, business
innovation, and public and private sector entrepreneurship that allows the
United States to take the lead in shaping the way that manufacturing addresses
“global wicked problems,” such as needs for energy, water, food, health,
security, and public infrastructure. That new formula is taking shape.
This report is about what states are doing to support this new shift in direction.
It focuses especially on recent actions by the states of California, Colorado,
Connecticut, Illinois, Kansas, Massachusetts, New York, and Pennsylvania.
Their new focus on advanced manufacturing has grown out of a recently
concluded National Governors Association Center for Best Practices Policy
Academy designed to generate a new scale of effort, a sharp focus on the future,
and opportunities for states to work together and learn from one another.
These eight states are not the only ones taking a new look at manufacturing,
but the work they are doing is especially relevant because:
? Together the states represent 30 percent of total U.S. manufacturing
Gross Domestic Product (GDP), one-third of U.S manufacturing jobs,
and more than 25 percent of U.S. exports of manufactured goods;
? They signal a common agenda for states. Although each of the eight states
arrived at its agenda independently, their agendas are remarkably similar
in the priorities they set and the policies they are implementing; and
? As an eight-state cohort working on similar priorities, they can
scale up efforts and generate effects that are greater than
what can be done by a single state working alone.
n
Executive Summary
1
As a result of the NGA Policy Academy, the states:
? Established new programs, such as
Connecticut’s innovation voucher program,
which is providing $800,000 to help connect
small and medium-sized businesses to partners
and to universities to encourage them to take
up regular R&D and innovation activities;
? Redesigned organizations or created new ones,
such as the Colorado Advanced Manufacturing
Alliance and the Pennsylvania Governor’s
Manufacturing Advisory Council, to ensure
a consistent industry voice about the issues
and policy priorities and to seed a strong
connection among manufacturers, suppliers,
financiers, academic research centers and to
universities, and key government agencies;
? Passed legislation, such as California’s
measure to renew and extend the
community college initiative that funds
manufacturing and other regional industry
workforce partnerships, or Connecticut’s
establishment of a bipartisan legislative
advanced manufacturing caucus to identify
top issues for legislative action in 2013; and,
? Secured funding allocations for their
manufacturing priorities, such as the $1
million for the Massachusetts Advanced
Manufacturing Futures Fund, for initiatives
across five high-priority areas.
? Did not see their work as “saving
manufacturing.” Rather, they saw their
work as creating the best location for the
development of new technologies that radically
improve production processes or that can be
transformed into innovative new products;
? Recognized a big “missed opportunity” with
small and medium-sized companies (SMEs)
and thus emphasized doing a better job of
supporting startups and SMEs;
? Determined that because of important
developments already occurring, the
most immediate benefits can be obtained
by assembling, improving, coordinating,
connecting or replicating, and scaling up
those resources to manufacturers;
? Found crucial voids remaining to be filled,
sometimes because the right services for
manufacturers did not exist and sometimes
because the services needed lacked the scale
and steady commitment for success;
? Recognized that an intermediary valued by all
parties (particularly industry) is crucial not only
for developing an effective policy framework but
also for sustaining broad support for advanced
manufacturing as a high state priority;
? Focused on the interplay between state policy
and regional action;
? Recognized the value of finding investments in
“Best Practice” Lessons Offered for Other States
In preparing this report on the results from the NGA
Policy Academy on advanced manufacturing, NGA
recognized that other states would benefit from
knowing of the optimistic vision and associated
policy steps taken by the eight states to encourage
growth in manufacturing through innovation,
entrepreneurship, and investment. In particular, other
states would benefit from knowing that these states:
2
the immediate term and mobilizing support for
the future;
? Understood that they must “just get started” and
secure some early achievements and momentum
that make a difference to manufacturers; and
? Recognized that traditional metrics may need to
be updated for advanced manufacturing (e.g.,
adding metrics to capture manufacturing as a
critical driver of innovation, productivity, and
competitiveness, in addition to being a source
of job growth).
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
Introduction
The policy agenda for U.S. manufacturing is changing. Five years ago the debate
was mostly about how to rescue and retain existing footholds in manufacturing,
but lately the debate is increasingly about how to set the stage to lead the world
in new technologies and innovations that are changing the face of manufacturing.
That shift in direction was underscored when eight states prepared new strategies
based not on the desire to “save manufacturing” but with the idea, “Let’s lead in
what lies ahead,” including robotics, nanotechnology, and advanced materials.
While playing defense against the changes that are happening still holds
enormous appeal, there is a growing sense that U.S. companies and workers
can also play offense by adroitly following the changes happening in global
manufacturing and using them to invigorate the domestic manufacturing base.
Given all that is happening in manufacturing today—including advances in
technology, a greater focus on tailor-made goods aimed at specific individuals
and industry users, and the growing importance of sustainable forms of
production—opportunities for the United States to lead are becoming increasingly
clear.1 That leadership, however, will be built on a different kind of policy than
the usual formula of enticing global public companies to build plants in the
United States. It will be built on a combination of worker education, business
innovation, and public and private sector entrepreneurship that allows this
country to lead in shaping a manufacturing sector that addresses “global
wicked problems,” such as the needs for energy, water, food, health, security,
and public infrastructure.2 That new formula is already taking shape.
It is not easy to pinpoint just what signals the beginning and the end of a policy
agenda, but one indicator may be movement in a similar direction by both
public and private sectors. By that standard, a shift is under way today in U.S.
manufacturing. In the past two years alone, multiple public sector efforts to
enable and create an environment for competitive and innovative companies to
flourish and lead in what lies ahead have developed. For example, the Advanced
Manufacturing Partnership (AMP) is a national effort bringing together industry,
universities, the federal government, and other stakeholders to create universityindustry partnerships that identify emerging technologies with the potential
to create high-quality domestic manufacturing jobs and enhance U.S. global
competitiveness. A group of states is working together to encourage growth
opportunities in manufacturing through innovation, entrepreneurship, and
investment. And in the private sector, the March 2012 Harvard Business Review—
titled Reinventing America—and other journals have reported that manufacturers
Peter Marsh, The New Industrial Revolution: Consumers, Globalization and the End of Mass Production (New Haven and London: Yale University Press, 2012).
Global wicked problems refer to public policy challenges to which there is no immediate or simple solution. The term was introduced by Horst Rittel and Melvin Webber in
“Dilemmas in a General Theory of Planning,” pp. 155–169, Policy Sciences, Vol. 4, Elsevier Scientific Publishing Company, Inc., Amsterdam, 1973.
1
2
n
Introduction
3
Box 1. The NGA Policy Academy Process
The NGA Policy Academy provided the states a venue in which to develop their strategies to encourage growth in manufacturing
through innovation, entrepreneurship, and investment.
The NGA Center’s Policy Academy gathers governor-designated state teams for an intensive, year-long strategic planning process
that creates a unique forum for advancing state policy. A policy academy is a process, not an event. What distinguishes it from
“one-shot” meetings is that an academy requires a long-term investment of time, energy, and resources in a facilitated process
that is designed to produce tangible outcomes such as executive orders, changes in administrative practices, and new legislation.
During the policy academy, NGA Center staff and other experts provide workshops, dedicated technical assistance, and
information and reports to help a state achieve its own policy objectives. Furthermore, because the NGA Center works with a
group of states simultaneously, it creates an opportunity to have a national impact in a way that individual state efforts do not.
The state teams are selected for participation by a group of independent expert reviewers through a competitive application
process. Each state team has four to seven members, designated by the governor. The teams include members from the
governor’s office and from workforce and economic development agencies, university presidents, state legislators, state
business leaders, and others.
such as General Electric and investors such as
The Carlyle Group are beginning to recalculate
their rush to globalize and reverse course to
renew American manufacturing operations.
This report describes what states are doing to support
this new shift in direction. States are looking to bring
new focus to advanced manufacturing, set the stage to
ensure that their companies and workers are ready for
the challenges ahead, and thus generate new business
and good jobs. It focuses especially on recent actions by
eight states: California, Colorado, Connecticut, Illinois,
Kansas, Massachusetts, New York, and Pennsylvania.
Their new focus on advanced manufacturing has
grown out of a recently concluded National Governors
Association Center for Best Practices Policy Academy
designed to generate a new scale of effort, a sharp
focus on the future, and opportunities for states to
work together and learn from one another. The NGA
Policy Academy process is described in Box 1. NGA
collaborated with, and received funding support from,
the U.S. Department of Commerce’s National Standards
of Institutes and Technology (NIST) Manufacturing
Extension Partnership (MEP) Program and the U.S.
Department of Commerce’s Economic Development
Administration to expose states to leading edge thinking
and best practices and to help shape strategies to
support a new policy direction.
4
As a result of the NGA Policy Academy, the eight states:
? Established new programs, such as
Connecticut’s innovation voucher program,
which is providing $800,000 to help connect
small and medium-size businesses to partners
and to universities to encourage them to take
up regular R&D and innovation activities;
? Redesigned organizations or created new ones,
such as the Colorado Advanced Manufacturing
Alliance and the Pennsylvania Governor’s
Manufacturing Advisory Council, to ensure
a consistent industry voice about the issues
and policy priorities and to seed a strong
connection among manufacturers, suppliers,
financiers, academic research centers and
universities, and key government agencies;
? Passed legislation, such as California’s
measure to renew and extend the
community college initiative that funds
manufacturing and other regional industry
workforce partnerships, or Connecticut’s
establishment of a bipartisan legislative
advanced manufacturing caucus to identify
top issues for legislative action in 2013; and
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
? Secured funding allocations for their
manufacturing priorities, such as the $1
million for the Massachusetts Advanced
Manufacturing Futures Fund, for initiatives
across five high-priority areas.
The eight states that participated in the NGA Policy
Academy are not the only ones taking a new look at
manufacturing. Maryland, for example, recently launched
a manufacturing commission to find new ways to
support manufacturing in the state. In August 2012, the
governors of Illinois, Michigan, Missouri, and Tennessee
formed a bipartisan National Governors Auto Caucus to
help foster growth of the U.S. industry and its suppliers.
And the Southern Governors Association is focusing on
manufacturing in 2012–2013. The work that the eight
states that participated in the NGA Policy Academy are
doing is of particular relevance because of the following:
n
Introduction
? Together the states represent 30 percent
of total U.S. manufacturing GDP, one-third
of U.S manufacturing jobs, and more than
25 percent of U.S. exports of manufactured
goods (see data spread on page 6 and 7);
? They signal a common agenda for states.
Although each of the eight states arrived at
its agenda independently, their agendas are
remarkably similar in the priorities they set
and the policies they are implementing; and
? As an eight-state cohort working on similar
priorities, they can scale up efforts and
generate effects that are greater than what
can be done by a single state working alone.
5
State Impact on U.S. Manufacturing
Eight states account for 30% of total U.S. manufacturing GDP.
Manufacturing as a % of Total US Manufacturing GDP (2011)
Source: US Bureau of Economic Analysis
Further, manufacturing makes a significant contribution to state GDP, and in
several states that contribution has grown over the past two years.
Manufacturing as a % of Total State Gross Domestic Product
Source: US Bureau of Economic Analysis
6
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
The 8 Policy Academy states also account for…
More than 25 percent of manufactured goods exported.
3 out of 10 U.S. manufacturing jobs.
State Contribution to the Exporting of US Manufactured Goods (2011)
Manufacturing as a % of Total US Manufacturing Employment (2012)
Source: US Census Bureau, Foreign Trade Division
Source: Economic Modeling Specialists, Inc. 2012 Q2 Covered Employment Data
Manufacturing Jobs Pay Average of Nearly 25 Percent More than the Average Job Across Policy Academy States
State
MFG Jobs
MFG as a % of Total Emp
Avg Annual Wages in MFG (2012)
MFG Wages Relative to Overall State Avg Wages
Massachusetts
256,744
7.9%
$78,703
132.4%
Connecticut
165,703
10.1%
$76,868
126.2%
1,244,995
8.2%
$76,649
138.9%
Colorado
131,891
5.7%
$62,000
126.9%
Illinois
587,131
10.3%
$61,600
121.3%
New York
457,149
5.3%
$61,231
99.3%
Pennsylvania
571,435
10.1%
$55,723
118.4%
Kansas
164,217
12.0%
$52,328
129.6%
11,886,075
8.9%
$59,787
124.2%
California
USA
Source: Economic Modeling Specialists, Inc. 2012 Q2 Covered Employment Data
n
Introduction
7
Taking a New Look At Manufacturing
Why shift policy gears? Although the specific economic environment
and historical context vary across the eight states participating in the
NGA Policy Academy, the states are similar in the ways that they
frame the reasons for a renewed drive to be competitive and the
strategies for getting there. Their reasons include the following:
First, evidence is growing that:
? Manufacturing is too important to lose;
? Manufacturing has changed and is changing;
? Too many small and medium-size manufacturers are not
growing through innovation and global exports—but could; and
? The “deindustrialization” of the United States is not inevitable.
In fact, new technologies and advanced manufacturing
processes create a new opportunity in the United States.
Second, belief is widespread that:
? Leadership in this “new” manufacturing is still
up for grabs—but it requires understanding and
developing innovation ecosystems; and
? States control a variety of policies associated with
well-developed ecosystems of innovation.
Each of those points is briefly reviewed here because they
form the foundation of the eight states’ choices of initiatives
and strategies that are discussed in the report and also
because other states may benefit from the logic.
n
TAKING A NEW LOOK AT MANUFACTURING
9
Manufacturing Is Too Important to Lose.
Although in 2010 China overtook the United States as
the world’s largest manufacturing nation, measured
by value of output, manufacturing is the third-largest
sector in the U.S. economy. It pays premium wages and
includes activities that extend far beyond production, for
example, into research, design, technological services,
and logistics. On average, every manufacturing job
supports 2.5 jobs in other sectors. At the upper end,
every high-tech manufacturing job supports 16 others.3
Box 2. Manufacturing Matters to the
U.S. Economy
• Manufacturing as an industry accounted for 18.6
million jobs in 2009—11.8 million direct jobs,
and 6.8 million indirect jobs in industries such as
transportation and warehousing and professional,
business, and financial services.
• Manufacturing in the United States offers premium
jobs. Manufacturers pay 9 percent more in wages and
benefits than the entire economy. On average, U.S.
manufacturing jobs are more likely to provide health,
pension, and other benefits than ones in other sectors.
• Manufacturing has a greater secondary economic
impact (multiplier effect) than any other sector of
the economy, with an estimated additional $1.40 in
output from other sectors being generated for every
$1.00 in final sales of manufactured products.
• The United States attracts the most foreign direct
investment of any nation in the world, as investors
continue to be drawn by its large and open market,
the quality of its infrastructure, high income levels,
and access to cutting-edge technology and research.
Source: L. Woolsey and G. Yakimov, “Innovation and Product Development in the 21st Century,” Hollings
Manufacturing Extension Partnership Board, February 2010.
3
4
5
6
Manufacturing also is integral to American
innovation, accounting for two-thirds of private
sector research and development—which is a key
driver of innovation—and employing 63 percent of
domestic scientists and engineers.4 The high level
of innovation that characterizes so much of U.S.
manufacturing depends in large part on production
and R&D being located in close proximity.5
Manufacturing accounts for about 65 percent of all
U.S. trade, including both exports and imports.6 It
makes an outsize contribution to GDP growth: in the
16 years from 1997 to 2012, real manufacturing
output grew by an average of 3 percent per year,
compared to the average of 2.3 percent for the
overall economy (see Box 2 for more evidence that
manufacturing matters to the U.S. economy).7
Adding to that, manufacturing is part of the supply
chains for health care, business services, national
defense, energy, construction, and environmental
sustainability; that is, manufacturing products and
technologies are required to create better health
care systems, more energy-efficient buildings, and
alternative energy sources (photovoltaics, advanced
energy storage devices); to ensure U.S. security; and
to create better transportation systems. Box 3 shows
the cross-cutting importance of manufacturing.
Manufacturing Has Changed and Is Changing.
A lot is happening, everywhere. Today’s factories
are high-tech and highly efficient. The dirty, boring
factory jobs of 50 years ago are now done by
robots. The jobs of today require skill, know-how,
and ability in everything from R&D to data analytics
to product design. (See Box 4 for an example of
how manufacturing employment has changed.)
Ross DeVol et al., “Manufacturing 2.0: A More Prosperous California” (Santa Monica: Milken Institute, June 2009), www.milkeninstitute.org/pdf/CAManufacturing_ES.pdf.
Charles W. Wessner and Alan Wm. Wolff, eds., Rising to the Challenge: U.S. Innovation Policy for Global Economy (Washington DC: Committee on Comparative National Innovation Policies: Best Practice for the 21st Century; Board on Science,
Technology, and Economic Policy; Policy and Global affairs; National Research Council; National Academies Press, 2012), 79-102; and Stephen J. Ezell and Robert D. Atkinson, Fifty Ways to Leave Your Competitiveness Woes Behind: A National
Traded Sector Competitiveness Strategy (Washington DC: Information Technology and Innovation Foundation, September 2012).
Susan Helper, Timothy Kruger, and Howard Wial, “Why Does Manufacturing Matter? Which Manufacturing Matters? A Policy Framework” (Washington DC: Brookings Institution, Metropolitan Policy Program, February 2012).
Ibid.
7
Mark J. Perry, “U.S. Manufacturing Leads Current Economic Growth as It Has for 15 Years,” SeekingAlpha, May 20, 2012.
8
National Academy of Engineering, Making Value: Integrating Manufacturing, Design, and Innovation toThrive in the Changing Global Economy (Washington DC: National Academies Press, 2012).
10
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
This is partly because of the increase in resources
being directed toward the design, development,
and marketing parts of the product development
cycle. As the National Academy of Engineers has
noted, “Rapidly advancing technologies in areas
such as biomanufacturing, robotics, smart sensors,
cloud-based computing, and nanotechnology have
transformed not only the factory floor but also the
way products are invented and designed.”8
The new areas of nanotechnology and synthetic biology
illustrate the trend. Scientists, engineers, and manufacturers are finding a wide variety of ways to deliberately
make materials at the nanoscale level to take advantage
of enhanced properties such as higher strength, lighter
weight, increased control of light spectrum, and greater
chemical reactivity than their larger scale counterparts.
Synthetic biology offers the hope of creating biological
factories for a virtually unlimited number of products.
Box 3. Manufacturing Covers a Wide Array of Disciplines, Systems, Applications, and Environments
MODELING &
SIMULATION
DEFENSE/
AEROSPACE
MEDICAL
DEVICES
ROBOTICS
(nano materials,
plastics, textiles,
plasma tools)
ENERGY &
ENVIRONMENTAL
TECHNOLOGY
BIOTECHNOLOGY
ENGINEERING
SYSTEMS
TECHNOLOGY
• Test and evaluation
support
• Concept definition
and analysis-ofalternatives
• Rapid prototyping
• Precision
• Manufacturing
manufacturing
process modeling
for process
• Testing
improvement &
control
• Human effects
monitoring
• Mission planning &
exercise modeling
• Highperformance
composites
• Propulsion
systems
• Directed
energy (lasers,
microwaves)
• Drug development
• In-vivo health
monitoring
• Clinical trials
design & analysis
• Advanced
therapeutics
• R&D
instrumentation
• Nano materials
• Nano
manufacturing
• Highperformance
composites
• Environmental
science
• Translational
genomics/medicine
• Biomanufacturing
• Process design
• Product
engineering
• Nanosensors
• Nano materials
• Nano
manufacturing
• Climate monitoring
systems
• Environmental
• Health monitoring
sensors
systems
• Smart grid
• Environmental
components
monitoring systems
• Smart
transportation /
infrastructure
• Systems
integration
• Process design
• Product
engineering
• Process
engineering
• Renewable energy
components
• Manufacturing
technology
• Process design
• Product
engineering
• Precision
manufacturing
• Testing
• Health monitoring
• Test and evaluation
support
ANALYTICAL
INSTRUMENTS • Concept definition • Precision
and analysis-of(signal processing,
manufacturing
alternatives
navigational, optic,
• Testing
•
R
apid
prototyping
measurement
tools)
• Manufacturing
process modeling
ELECTRONICS
& SEMICONDUCTORS
MATERIALS
SCIENCES
• Rapid prototyping
• Manufacturing
process modeling
• Test & evaluation
support
• Precision
manufacturing
• Testing
• Nano materials
• Nano
manufacturing
• Highperformance
composites
• Systems
integration
• Computation
• Process design
• Product
engineering
Source: Collaborative Economics, Inc.
n
TAKING A NEW LOOK AT MANUFACTURING
11
Box 4. Manufacturing Jobs Are Changing
In the United States, production jobs make up less than half of the total
manufacturing-related employment
Too Many Manufacturers
Are Not Growing through
Innovation and Global
Exports—but Could.
US Manufacturing Employment, 20101 (Million)
Leading firms do more
than survive. They thrive by
17.2
continuing to innovate their
way through economic and
technological shocks and
disruptions, and even use
them to their advantage (see
Box 5). But only 20 percent
Total
Service and other
Manufacturing
Service-type jobs
Assembly jobs
of manufacturers can be
manufacturingjobs linked to
employment3
in manufacturing4
related employment manufacturing2
considered truly advanced
and engaged in continuous
innovation, according to
1 Employment is total FTEs plus self-employed.
one 2009 survey.9;10 The
2 4.7 million jobs in services and 1 million jobs in primary resource industries that are directly and indirectly linked to manufacturing. Employment multipliers
were applied to import-adjusted final demand for manufacturing. Employment mulitpliers were calculated applying employment to output ratios to the
remaining 80 percent say
output multiplier table. Output multipliers were advanced using an inmport-adjusted input-output table.
3 Manufacturing employment as reported by the US Bureau of Economic Analysis.
that they are struggling to
4 Non-production jobs in manufacturing sectors, such as product R&D, marketing and sales, customer care and service, back-office functions, and facilities
management.
adapt to change, to connect
Source: McKinsey Global Institute, Manufacturing the Future: The Next Era of Global Growth and Innovation, November 2012.
to the global marketplace,
or do more than stay afloat.
Recent survey data show that
only
25
percent
rank
their
business’s progress toward
Meanwhile, a shift toward smaller runs and custombecoming a world-class, global business as good or
designed products is favoring agile and adaptable
better. Although an array of agencies, programs, and
workplaces, business models, and employees—and
policies exists to support and facilitate innovation,
creating entirely new opportunities for entrepreneurs to
commercialization, and the launch and growth of new
start, grow, and renew businesses. With developments
ventures, a substantial number of manufacturers,
such as three-dimensional printers, computational
particularly small and medium-size enterprises (SMEs),
modeling and simulation, and Internet connectivity,
are not connected to such services and resources.
more ideas than ever before are making their way
Only 5 percent to 8 percent of manufacturing SMEs
from the research stage, to development, to market.
nationally are receiving services from the federal
At the same time, technological improvements in
communication, logistics, and IT make it possible
to integrate players in multiple countries into
Box 5. New Products, Processes Key to
global supply chains—and the management of
Company Growth
the mix is becoming a highly prized skill.
Michael Porter, of the Harvard Business School, told the
These features are important not only because they
nation’s governors in 2011, “If a company in your state
illustrate how manufacturing has changed and is
is doing the same thing that it did 10 years ago—using
changing, but also because they emphasize that
the same production processes, producing the same
entrepreneurs, economic developers, educators,
products—it’s going to be very hard to succeed” (National
students, and parents will need new approaches
Governors Association Winter Meeting, Washington, D.C.,
and capabilities to boost competitiveness and
February 2011).
gain the maximum benefits from the changes.
12
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
government’s Manufacturing Extension Partnership
(MEP) program,11 for example, and most SMEs do
not benefit from frequent and extensive contacts
with universities, as many large manufacturers do.12
In fact, large corporations increasingly emphasize
access to key resources such as universities for
talent and R&D partnerships as they look for new
places to set up shop in the United States.13
Box 6. Nothing Is Inevitable about the Industrial Decline of the United States
Anecdotal Evidence in California… A reporter for the San Jose Mercury News put it vividly when he reported on September
2, 2012, that the Silicon Valley and Bay Area are in the midst of a modern manufacturing revival, thanks in part to China.
“Rising wages and other increasing costs there help make the case for manufacturing here. Add to that the other advantages
of manufacturing domestically—more control, quicker turnaround, higher quality, more secure intellectual property—and it
makes abundant sense for some companies to sell products designed in California and made in California.” He goes on to say,
“If someone told me the same thing six months ago, I would have said they were nuts. But I’ve spent that time visiting factories
and talking to dozens of academics, executives, economists, production workers, policymakers and educators. I’ve talked to a
CEO bringing jobs back to San Jose from China, a team that is building desktop computers in Santa Clara and an East Bay CEO
who is starting production in Asia to serve customers there, but who is also hiring at his Livermore factory.”
Source: Mike Cassidy, “Silicon Valley, Bay Area Poised for Manufacturing Revival,” September 2, 2012, Mercury News,http://www.mercurynews.com/business...valley-bay-area-poised-manufacturing-revival.
Empirical Evidence in Massachusetts… Report cards on Massachusetts manufacturing in 2008 and 2012 indicate “staying
power” for advanced manufacturing. Although many manufacturers have either left the state or ceased production altogether
because they could not compete in national and international markets, what is left in the state—among its more than 7,500
manufacturing firms—are enterprises that for the most part have remained competitive by investing in advanced technologies
that boosted productivity at prodigious rates and by training their labor force to take advantage of the new technologies.
That is true not only of “new” manufacturing companies in state-of-the-art, high-technology industries, but also of “old”
manufacturing firms in traditional industries such as food processing, fabricated metal operations, and plastic extrusions.
Using a “technological intensity” indicator, based on a methodology provided by the Organization for Economic Cooperation and
Development (OECD), Northeastern University researchers tracked the technological intensity of the entire manufacturing sector
in the state from 1970 to 2010. The level of technology (low-technology, medium-low-technology, medium-high-technology,
and high-technology) specific to an industrial sector is measured by the ratio of research and development (R&D) expenditure
to value-added in an industry and the technology embodied in purchases of intermediate and capital goods. In 1970, nearly
40 percent of the Massachusetts manufacturing workforce was in low-tech industries, with less than 20 percent in the hightech sector. But in 2010, the low-tech sector had shrunk to less than 25 percent and the high-tech sector had expanded to 31
percent of the total workforce. Employment in the two medium-tech sectors grew by one to two percentage points during the
same 40 year span. That important finding suggests that the strength of Massachusetts manufacturing is not only in the most
R&D-intensive sectors, but also in a broad range of companies that remain competitive by redesigning product lines and the
ways in which they manufacture them. In short, the evidence is clear that low-tech manufacturing is a thing of the past in U.S.
manufacturing. High-tech manufacturing is the current driver and appears to be growing.
Source: Barry Bluestone, et al., Staying Power II A Report Card on Manufacturing in Massachusetts 2012 (Northeastern University Kitty and Michael Dukakis Center for Urban and Regional Policy, 2012.)
Lindsey Woolsey and Gary Yakimov, “Innovation and Product Development in the 21st Century,” (Hollings Manufacturing Extension Partnership Board, February 2010.)
A study of U.S./U.K. manufacturing sectors found that approximately 33 percent and 37 percent of the manufacturing sectors, respectively, can be characterized as having low technological intensity. Another 23 percent of the manufacturing sector
can be characterized as having medium-high technological intensity. Reported in the Information Technology and Innovation Foundation (ITIF) report, Stephen J. Ezell and Robert D. Atkinson, International Benchmarking of Countries’ Policies and
Programs Supporting SME Manufacturers, September 2011, 41.
11
The MEP Program of the U.S. Department of Commerce, which helps small businesses apply new techniques and technologies, has a modest $125 million annual budget that is spread among 66 centers across the country; it is supported on a
matching basis by the states, as well as through fees.
12
Interviews with both small manufacturers and universities indicate that SMEs do not engage as often as big companies. In The Report to the President on Capturing Domestic Competitive Advantage in Advanced Manufacturing (July 2013), the
President’s Council of Advisors on Science and Technology suggests that more than 300,000 small and midsized firms are largely outside the U.S. innovation system.
13
Members of the 2005 Rising Above the Gathering Storm Committee, National Academy of Sciences, National Academy of Engineering, and Institute of Medicine, Rising Above the Gathering Storm, Revised, Rapidly Approaching Category
(Washington DC: National Academies Press, 2010).
9
10
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TAKING A NEW LOOK AT MANUFACTURING
13
The “Deindustrialization” of America Is
Not Inevitable. In Fact, New Technologies
and Advanced Manufacturing Processes
Create a New Opportunity for America.
During the last few years positive indications have
appeared that technologically sophisticated, highvalue manufacturing—advanced manufacturing, as it
is sometimes called—can thrive in the United States.
First, the Bureau of Labor Statistics projects a continuing
decline in the number of manufacturing jobs in the
United States through 2020 but an increase in value
added by the sector—that means gains concentrated
in particularly high-wage, more productive segments
Box 7. The Keys to Capturing Competitive
Advantage in Advanced Manufacturing
In its Report to the President on Capturing Domestic
Competitive Advantage in Advanced Manufacturing,
the American Manufacturing Partnership recommended
two things. The partnership identified 11 cross-cutting
technology areas for attention because “they are pivotal
in enabling U.S. manufacturing competitiveness, both in
terms of differentiation and tradability of goods.” It also
suggested that “universities, national labs, intermediate
technology institutes, independent research institutions,
and community colleges will need to work together
with industry to support research, development, and
deployment of these manufacturing technologies, and to
develop the talent pipeline for industry”:
• Advanced sensing, measurement, and process control
• Advanced materials design, synthesis, and processing
• Visualization, informatics, and digital
manufacturing technologies
• Sustainable manufacturing
• Nanomanufacturing
• Biomanufacturing and bioinformatics
• Additive manufacturing
• Advanced manufacturing and testing equipment
• Industrial robotics
• Advanced forming and joining technologies
Source: AMP Steering Committee, President’s Council of Advisors on Science and Technology, Report to the
President on Capturing Domestic Competitive Advantage in Advanced Manufacturing (Washington DC: AMP
Steering Committee, President’s Council of Advisors on Science and Technology, July 2012).
14
of manufacturing (e.g., search/detection/navigational
instruments, guided missiles and space vehicles,
and electromedical apparatus).14 Second, changes in
manufacturing are occurring that may favor American
ingenuity, entrepreneurship, and “tight connections
among innovation, design, and manufacturing, and also
our ability to integrate products and services.”15 Third,
manufacturing companies are returning to, or reinvesting
in, North America, particularly manufacturers that rate
high in product innovation, intensive customer service,
supply chain connectedness and cost.16 Recent case
studies show that companies that previously sent work
offshore are bringing it back to the United States because
of “rising oil prices, longer shipping times, rising wages in
coastal Chinese cities, intellectual property leakage, the
desire to create innovation hubs, and a fuller appreciation,
based on years of experience, of the downsides of
offshoring 17 (See Box 6 for state examples.) American
firms are now more likely to appreciate ‘hidden costs’ of
production abroad, such as administrative costs, legal
costs, risks and complexities.”
Leadership in This “New” Manufacturing
Is Largely Up for Grabs—but It Requires
Understanding and Developing Innovation
Ecosystems Like Those that Created Companies
such as Apple, Amazon, and Google.
Although not everyone agrees that a new industrial
revolution has begun, it is widely agreed that nearly all
the features of manufacturing—technology platforms,
consumer choice, value chains, markets, and new
manufacturing nations and clusters—are changing
and becoming increasingly intertwined.18 (Some
of the new opportunities are described in Box 7.)
Grabbing leadership in this dynamic and complex
context requires businesses and policymakers to
decide to compete in innovating new technologies, new
production processes, and new business models and
in initiating new ventures. They must also lay the basis
for well-developed ecosystems of innovation, such as
Bureau of Labor Statistics, “Employment Outlook: 2010-2020, Overview of Projections to 2020,” Monthly Labor
Review, January 2012.
National Academy of Engineering, Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the
Changing Global Economy. (Washington DC: National Academies Press, 2012).
16
Paul Bjacek and Larry Oglesby, “North America Flexes Its Industrial Muscle,” in Accenture Outlook, June 2012. http://
www.accenture.com/us-en/outlook/Pages/outlook-journal-2012-north-america-flexes.
17
Helper, Kruger, and Wial, “Why Does Manufacturing Matter?”
18
Marsh, The New Industrial Revolution.
14
15
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
establishing collaborations between universities and
business and between public and private pools of risk
capital. They must generate a strong, reliable, and welltrained workforce that will support the entire life cycle
of technology development—from R&D, invention,
innovation, and commercialization, to scale-up for
efficient production and export development—and the
emergence of new, and newly enhanced, advanced
manufacturing clusters and global value chains.
Belief Is Widespread that States Control a Variety
of Policies Associated with Well-Developed
Ecosystems of Innovation.
Increasingly states are helping to create innovation
ecosystems, or innovation hubs, of the type that have
made Austin, Texas, and San Diego, California, leaders
in specific industry clusters (in Austin, semiconductors
and software; in San Diego, biotechnology). Although
not every state has a Silicon Valley or a Stanford
University, they know that public and private leaders
can work together to develop an array of statewide
proficiencies—smart people, unique research
institutions, strong collaborations, and other links and
resources—both to help entrepreneurs establish highgrowth businesses and to create strategic advantages
for existing small and medium-sized companies that
must compete in the global economy. States such
as Arizona, Oregon, Ohio, New York, and Utah are
already benefiting from their stepped-up efforts during
the last decade to support and facilitate innovation
ecosystems for biosciences, nanotechnology, and
alternative energy (see Box 8 on results in Oregon).
More and more governors and other state leaders
are gaining confidence that their states can apply the
lessons learned from earlier efforts in biosciences
and nanotechnology industry clusters to catalyze and
support next-generation advanced manufacturing.
Box 8. Best Practice Model—Oregon’s Innovation Ecosystem for Nanotechnology
Through NGA’s policy academy process, states had an opportunity to learn from organizations that connect small businesses
to an ecosystem of supports, including access to research, commercialization assistance, and shared facilities. Oregon’s
Nanoscience and Microtechnologies Institute (ONAMI) is fostering research and development capacity in the new field of microand nanotechnologies among Oregon’s four research universities, the Pacific Northwest National Laboratory, and the state’s
“Silicon Forest” high-technology industry cluster.
To facilitate commercialization, ONAMI offers proof-of-concept grants to university researchers and companies to advance
technology into the marketplace. Funding comes with business development services, as ONAMI operates with the understanding
that new companies have two major gaps to overcome: the gap between a research result and a manufacturable product, and the
gap between a technology-based solution and demand for that solution from an established market.
ONAMI has 250 researcher members from its four partnering research institutions. Members are eligible for competitive participation in
ONAMI-sourced large projects, and they can apply for matching funds for research, workforce development, and equipment purchases.
ONAMI provides a 5 percent match if only one ONAMI-affiliated institution participates. Matching increases to 7 percent if two or
more institutions participate. Shared equipment proposals are matched up to 16.5 percent of the value of the equipment. In addition
to funding, ONAMI staff have built collaborative teams of university and industry researchers for research and commercialization.
ONAMI operates facilities that provide access to specialized equipment and promotes them to businesses statewide via the
State Business Development Office. The ONAMI high-tech extension service connects a group of shared/open user facilities to
industry—now over 150 companies of all sizes—on a fee-for-service basis.
Its effort to “bootstrap an ecosystem” is already paying off for Oregon, generating new firms, new jobs, and new economic
strengths. As of May 2011, ONAMI had invested $4.6 million in its commercialization gap fund to assist 23 start-up companies
that have raised a total of $93.3 million in external funding. New research awards and contracts to ONAMI researchers grew from
less than $10 million in 2002 to more than $50 million in 2010. ONAMI can also link increases in company revenue to increased
industrial use of the shared-user facilities, including access to focused ion beam and microanalytical and XPS capabilities.
Source: Oregon Nansocience and Microtechnologies Institute, “Metrics and results,”http://www.onami.us/index.php/economic-impact/metrics_and_results (accessed May 29, 2012).
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TAKING A NEW LOOK AT MANUFACTURING
15
TECHNOLOGY AND TIME BRING A NEW PERSPECTIVE
All eight NGA policy academy states emerged from independent
analyses of strengths, weaknesses, opportunities, and threats
with the view that (a) manufacturing matters to economic
growth, and (b) their public policy choices will strengthen that
economic role. Two perspectives appeared to carry the day:
? Technology. New technologies (e.g., robotics, 3D
printing, additive manufacturing) and business models
will continue to shake up manufacturing, and that opens
new opportunities to lead in global manufacturing.
? Time. Times have changed since the United States first
experienced massive offshoring, and important trends are
beginning to favor U.S. locations. Those include rapidly rising
wages in emerging economies, increasing transportation
and logistical costs, and shortening product life cycles.19
Moreover, after a decade or so of practicing cluster-based,
science and technology–oriented economic development
strategies, states are now more assured that they know how
to strengthen the nation’s competitive advantage in advanced
manufacturing by embracing innovation hubs and ecosystems.
19
Michael E. Porter and Jan W. Rivkin, “The Looming Challenge to U.S. Competitiveness,” Harvard Business Review, March 2012, 55–62.
n
TECHNOLOGY AND TIME BRING A NEW PERSPECTIVE
17
Figure 1. Key Elements of Innovation Ecosystems
Research
Universities
Entrepreneurs
Quality of Life
Intermediary
and Integrative
Organizations
Investment
Capital
Business
Environment
Social and
Professional
Networks
Workforce
Source: Mary Walshok et al, Closing America’s Job Gap: How to Grow Companies and Land Good Jobs in the Age of Innovation (University of California Regents, Business Books, 2011).
Both Republican and Democratic governors have
supported the development of clusters in their
states. Key features of this strategy, as characterized
by the NGA Center for Best Practices (the NGA
Center), are state actions in four areas:
? Investing to build strong research
capabilities, provide shared facilities,
and produce and attract globally
competitive talent in strategic areas;
? Encouraging interaction by requiring
collaboration among universities, firms, and
others and cultivating strong networks, industrydriven intermediaries, well-designed research
facilities, and compact geographical location
(because proximity enables greater interaction);
? Putting people from diverse industries,
knowledge fields, and cultures together
by cultivating strong networks and welldesigned research facilities to increase
collective capabilities and creativity; and
18
? Encouraging the application and commer-
cialization of research by experimenting with
university-industry partnerships, pioneering
open intellectual property policies and faculty
tenure changes, and keeping industry
continuously engaged.
The essence of the strategy is tight alignment of
industry, university, and government resources
so that all components of the system are moving
toward the same goal: to be the best location for
high-value, specialized, and innovative activities.
A number of diagrams of “innovation ecosystems”
have been created to help guide coordinated public
policy and investment choices. One of them, shown
in Figure 1, depicts eight elements that San Diego
identifies as the sources of the innovation performance
and global competitiveness of its high-technology and
life science clusters.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
Box 9. Several Caveats About U.S. Manufacturing
Good signs come with caveats, and the eight NGA Policy Academy states are not Pollyannas. They recognize that all is not well
with American manufacturing:
• The number of jobs in manufacturing dropped 41 percent between 1979, when manufacturing employment peaked, and the
end of 2009, when it reached its recent low point.20
• Facilities involving large numbers of jobs and high-end work moved out of the United States over the past decade at a
faster rate than that at which some companies are currently bringing facilities back. Harvard Business School conducted
a survey of 1,700 alumni who were personally involved in firm location decisions and found that more than half of the
decisions concerned the possibility of moving existing activities out of the United States, whereas only about 10 percent
considered moving activities from another country into the United States.21
• A manufacturing revival will not solve the country’s problem of unemployment, partly because modern plants use robots and
fewer workers and run day and night, 365 days a year, and partly because the jobs that new factories do create will be highskill jobs, requiring workers trained in “STEM” subjects—science, technology, engineering, and math.
• The United States is lagging in innovation in the manufacturing sector relative to high-wage nations such as Germany
and Japan, and it has been losing significant elements of the research and development activity linked to manufacturing
to other nations. It has also been losing its ability to compete in the manufacturing of many products that were invented
here—from laptop computers, to flat panel displays, to lithium ion batteries.22
• “Whether it is Apple iPhones or Rolls-Royce Trent aero engines, the real profit is not made in the basic assembly of goods.
The margins are in servicing, brands, design and after-sales.”23
• Nations around the world, most notably China, Germany, Korea, and India, are improving the climate for new industrial
plants and encouraging business investment locally. For example, China has more than 300 research centers, second
only to the United States, and the number is increasing. A multiyear initiative is under way to make India a global
nanotechnology hub, including the establishment of 14 new world-class universities.24
Michael E. Porter and Jan W. Rivkin, “The Looming Challenge to U.S. Competitiveness,” Harvard Business Review, March 2012, 55–62.
Susan Helper and Howard Wial, “Accelerating Advanced Manufacturing with New Research Centers” (Washington DC: Metropolitan Policy Program at Brookings, Brookings Institution, February 2011).
Michael E. Porter and Jan W. Rivkin, “Prosperity at Risk: Findings of Harvard Business School’s Survey on U.S. Competitiveness” (Boston: Harvard Business School, January 2012).
22
AMP Steering Committee Report, President’s Council of Advisors on Science and Technology, Report to the President on Capturing Domestic Competitive Advantage in Advanced Manufacturing (Washington DC: President’s Council of Advisors on
Science and Technology, July 2012).
23
Luke Johnson, “Making It in the New Industrial Revolution,” Financial Times, August 28, 2012; and Dan Breznitz and Peter Cowhey, “America’s Two Systems of Innovation: Recommendations for Policy Changes to Support Innovation, Production and
Job Creation” (San Diego: CONNECT Innovation Institute, February 2012).
24
Members of the 2005 Rising Above the Gathering Storm Committee et al.
19
20
21
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TECHNOLOGY AND TIME BRING A NEW PERSPECTIVE
19
WHAT STATES ARE DOING TO FORGE
NEW MANUFACTURING STRENGTHS
Although the eight states arrived at their agendas independently
of one another, their agendas are remarkably similar in key
issues and priorities. This part of the report discusses policies,
programs, and approaches that the states have been pursuing that
appear to be both innovative and promising for helping American
manufacturers begin operations, grow, and compete globally.
Four objectives rose to the top across all states as the focus for
their strategies:
? Pursue an integrated approach to developing an advanced
manufacturing strategy, connecting large and small
manufacturers, as well as state, federal, and
regional partners;
? Develop and implement industry-driven priorities
and partnerships;
? Boost the innovation and commercialization
capacities of manufacturers, particularly small and
midsized firms, by connecting them to partners,
consortia, and a whole system of supports; and
? Provide talent both to fill the immediate specialized
needs of employers and to deliver lifelong, industryrelevant training for workers at all levels.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
21
Pursue an Integrated Approach to Developing a
Manufacturing Strategy, Connecting Large and
Small Manufacturers, as well as State, Federal,
and Regional Partners.
The states participating in the NGA Policy Academy
independently developed similar lists of the most
critical areas of focus for manufacturers. The areas
included access to capital, industry-relevant workforce
and education, streamlined business services and
environment, innovation, and improved marketing
and branding. States also similarly realized that
duplication in effort, parallel but disconnected policies
and programs, and misaligned approaches across
federal, state, and local programs are a problem
for manufacturers trying to navigate public support
programs. Comprehensive manufacturing strategies
were essential to connect the many needed pieces.
Broadly, there were three approaches
to strategy development:
? Using statewide councils comprising
large, midsized, and small manufacturers
(Pennsylvania and Massachusetts);
? Emphasizing a regional, bottom-up
process, involving a series of meetings
of local public and private stakeholders
(Colorado, New York, and California);
? Assembling, improving, and coordinating
activities that are already in progress
(Kansas and Connecticut).
The Statewide Council Approach
Pennsylvania In fall 2011, Governor
Tom Corbett formed the Governor’s
Manufacturing Advisory Council (GMAC)
as a public-private partnership. He
appointed the secretary of the Department of Commerce
and Economic Development and the president and
CEO of Kennametal, Inc., as co-chairs, along with
24 manufacturing leaders and experts from across
the commonwealth as its members. The members
included a cross-section of manufacturing interests
from the areas of heavy manufacturing, minerals,
22
pharmaceuticals, plastics, steel, and textiles. The GMAC
was given six months to develop recommendations for
sustaining and growing Pennsylvania manufacturing.
The governor assigned the Team Pennsylvania
Foundation (a unique, nonpartisan, charitable
nonprofit, created in 1997 to allow government and the
private sector to collaborate for the betterment of the
Commonwealth of Pennsylvania) to manage the GMAC
without using tax dollars. With support from the NGA
Policy Academy and the Pennsylvania staff leadership
team, the council organized its work around six monthly,
full-day meetings, each focusing on a specific topic,
including an overview of the manufacturing environment
in Pennsylvania; talent and workforce development;
opening new domestic and international markets;
making government work for manufacturers; innovation;
and access to capital. The final meeting summarized
findings, challenges, opportunities, and next steps. The
governor released the council’s recommendations at
a press event on August 21, 2012. The Pennsylvania
policy academy leadership team received the task of
developing a plan to implement the recommendations.
In September 2012, the Pennsylvania policy academy
leadership team met with other stakeholders to
begin developing the implementation plan. They
organized into four teams based on the categories of
recommendations in the GMAC paper:
? Talent and workforce;
? Opening new markets (international,
domestic, and emerging energy);
? Innovation; and
? Access to capital.
Massachusetts Beginning in 2010,
Massachusetts began consultations
with manufacturers about their needs,
including a wide array of state agencies, federal
programs, and local institutions and organizations
to identify potential solutions and complementary
roles. Massachusetts’ approach emphasizes
regional collaboration among manufacturers,
educators, and other civic leaders but recognizes
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
that those collaborations will be most effective when
connected to statewide collaboratives composed
of policymakers, academic and civic leaders,
and manufacturers from throughout the state.
In November 2011, Governor Deval Patrick established
the Advanced Manufacturing Collaborative to align
and focus public and private resources statewide in
support of manufacturing initiatives, to enhance the
effectiveness of regional networks, and to promote the
visibility of manufacturing in and outside the state. The
collaborative developed five working groups focused
on particular areas identified through the consultative
process: promoting manufacturing; workforce and
education; technical assistance and innovation; access
to capital; and the cost of doing business. Each working
group continues to be led by industry co-chairs and
includes representatives of education and state and
federal government, as well as other stakeholders.
In July 2012 the state legislature formally established
the Advanced Manufacturing Collaborative in
statute, to sustain the integrated approach, and also
established an Advanced Manufacturing Futures
Fund, with authority to finance initiatives in the five
areas. In addition, the legislature increased the
funding of key partners in the strategy, including
Massachusetts’ Manufacturing Extension Partnership
(MEP) and existing workforce training activities.
The Regional Bottom-Up Approach
Colorado Colorado’s approach to
building a comprehensive manufacturing
strategy started with regional meetings of
local public and private stakeholders as
part of Governor John Hickenlooper’s intensive program
of listening sessions, conducted around the state early
in his administration. Those sessions led to the Colorado
Blueprint, a framework for strengthening Colorado’s
industries, including advanced manufacturing, around
six core objectives:
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
1. Build a business-friendly environment;
2. Retain, grow, and recruit companies;
3 Increase access to capital;
4. Create and market a stronger Colorado brand;
5. Educate and train the workforce of the future; and
6. Cultivate innovation and technology.
Since the regional listening sessions, the governor’s
office and the Colorado Office of Economic Development
and International Trade (OEDIT) have convened
CEOs and other top executives from 14 key industries
into individual industry steering committees. Those
steering committees create business plans for their
industry networks, centered on the six core objectives.
Tactical teams on workforce development, education,
economic development, and other support programs
then are responsible for implementing the actions in
the business plans. Advanced manufacturing was the
first industry to create a business plan, in early 2012.
The original Advanced Manufacturing Steering
Committee represented 26 industry leaders from across
the state’s regions, its diverse manufacturing, and its
small and large companies (including Vestas Towers and
Intrex Aerospace, for example). The steering committee
concluded that Colorado lacked a unified structure or
association aligning issues and goals across the industry
to meet the needs of small and medium-sized enterprises
(SMEs) and original equipment manufacturers (OEMs).
In response, OEDIT joined with industry members to
create the Colorado Advanced Manufacturing Alliance
(CAMA), a 501(c)(6) organization guided by a board
made up of the original steering committee and a fulltime president and funded by private investments. The
alliance is organized across three areas:
? Member strategic services, which focuses on
implementing the advanced manufacturing
business plan, includes increasing and
streamlining access to state programs
related to business development, access
to capital, branding and marketing,
and workforce development;
23
? Direct services to manufacturers, which will
incorporate a partnership with manufacturing
service providers, such as a restructured
Manufacturing Extension Partnership
Center focused on continuous improvement
services, innovation engineering assistance,
and a workforce training network; and
? Technology and innovation acceleration, which
includes a new Center for Entrepreneurship
(inclusive of various existing Colorado
incubator and entrepreneurship programs)
and a new Colorado Advanced Manufacturing
Innovation Institute, whose form is currently
being analyzed but which may be modeled
on Virginia’s Commonwealth Center for
Advanced Manufacturing (see Box 10).
New York When Governor Andrew
Cuomo took office in 2011, he
created a new plan for economic
development, one that changed New
York’s economic development strategy
from one in which leadership and decision making
were concentrated at the state level to a model that
empowers regions to develop and invest in their own
strategies for job creation and business growth.
Regional economic development councils were
created in each of the state’s 10 regions. Local
business, university, labor, and community leaders
were charged to develop their own strategic plans
based on their region’s assets, strengths, and
aspirations. It is important that each regional council
is co-chaired by a business leader and a university
leader. That choice expressed the governor’s
fundamental belief that economic growth in today’s
global environment requires a strategic link between
the state’s business and university strengths.
Through an intensive, deliberative process, each region
discussed, debated, and designed its own strategic
plan. The state received 10 different plans tailored to
the strengths, needs, and opportunities of each region.
25
Although the plans were unique, common elements
were found in almost all. Most relevant to the NGA
Policy Academy work was the emphasis that each
region placed on entrepreneurship and innovation for
growth. The regional councils expressed the need to
create cultures of innovation and entrepreneurship on
their campuses, in their communities, and within their
corporations. Another common characteristic was an
emphasis on manufacturing, particularly advanced
manufacturing, as a catalyst for the growth of the
regions. The plans of Western New York, the Finger
Lakes Region, Central New York, the North Country,
the mid-Hudson Valley, and Long Island all placed
a high priority on the growth of manufacturing.
The governor’s office charged state agencies to align
their programs and resources to respond to the needs
and opportunities identified by the regional councils.
The state provided an initial round of $785 million in
funding, through a consolidated application process
that combined resources available from individual
state agencies. The state made more than $700
million available in a second round of funding to
maintain the regional councils as the driving force
for economic development. Eleven state agencies
participated in the 2012 consolidated funding
application, including Empire State Development,
the New York Department of Labor, the Council on
the Arts, the New York Power Authority, Homes and
Community Renewal, and the New York State Energy
Research and Development Authority, among others.25
The state received more than 2,800 finalized
applications in the latest round of consolidated
funding. The regional councils completed their
ranking of projects, giving special attention to those
that aligned with the regional strategic plans and
awarding the highest scores to projects that are
“regional priorities.” Many of those projects are based
on new partnerships in which business and industry
are attempting to unleash the innovation potential
of new technologies or addressing specific industry
needs, such as shortages of workers in skilled trades.
New York Works for Business, Regional Economic Development Councils,http://regionalcouncils.ny.gov/.
24
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
During fall 2012, Governor Cuomo and a strategic
implementation assessment team met with each
council in their region to assess how well each
region is progressing toward its objectives.
Both competitive and collaborative processes are
at work. Regions compete for funding, and that
competition has required that partners identify and
leverage their greatest strengths. It also is forging
collaborations, as individuals and institutions learn
more about their regional assets and how they
can be collectively deployed to address common
objectives. Round two has witnessed the development
of some collaborative projects between regions,
many of which address technological and innovation
needs of companies throughout the state.
California California’s manufacturing
policy academy team linked to and
leveraged a new, strategic statewide
economic policy process. The California
Economic Summit process was initiated by
two civic organizations—California Forward
and the California Stewardship Network—to identify and
mobilize around economic priorities for the state. The
summit process involved more than 1,400 Californians,
who attended one of the 14 regional forums or a
statewide meeting and launched seven major “signature
initiatives” in areas such as workforce development,
innovation, infrastructure, access to capital, and
regulatory reform. During the process, participants
voiced support for stronger efforts to promote
manufacturing, resulting in a specific recommendation
to seed “regional manufacturing pilot projects” across
California. In turn, based on discussions between
policy academy and state community college leaders,
manufacturing was made eligible as a focus for regional
industry partnership seed funding. Funding was
awarded to more than 10 manufacturing partnerships
statewide. In addition, legislation was passed to
renew and extend the California community college
initiative responsible for funding manufacturing and
other regional industry workforce partnerships.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
The Assembling and Coordinating Approach
Sensing that manufacturers had little or no appetite
for another manufacturing strategy and prioritysetting exercise and wanted “action” instead,
Kansas and Connecticut took the “assemble
and coordinate” approach for their initiative.
Kansas A series of regional meetings
with manufacturers, local officials, and
higher education and other service
providers revealed a number of common challenges:
? Numerous initiatives, programs, and
organizations focused independently on
different dimensions of manufacturing;
? A lack of consistent and comprehensive
communication to manufacturers about
the array of assistance available;
? No systematic mechanism for feedback
to policymakers on manufacturing needs
and limited manufacturing presence in
commercialization and technology transfer
discussions at state universities; and
? No actionable evaluative process to measure
the impact of various programs and
investments designed to help manufacturers.
Rather than focus on a statewide effort, the state
embarked on several regional initiatives to integrate
a multitude of plans and bring a coherent focus to
advanced manufacturing using the strengths and assets
of each region. For example, Wichita is exploring ways
to extend technologies, facilities, equipment, workforce
programs, and partnerships within aviation to other
advanced manufacturing industry segments. Those
transferable assets can support new opportunities for
existing companies, stimulate new, high-growth startups, and attract new businesses to the area. Leaders
are also looking outside the metro area to identify
new collaborations that will build on Wichita’s existing
and emerging industrial and research strengths.
25
Kansas City is partnering with a number of groups
to use its newly designated National Cancer Institute
Center and technology upgrades related to the
Google Gigabit Fiber pilot as focal points for attracting
new wealth to the region. In addition, the city has
created a new program, funded by the board of
public utilities and industry with technical expertise
in sustainable manufacturing (provided by the MidAmerica Manufacturing Technology Center, the local
MEP center and a Department of Commerce affiliate)
to improve the competitiveness of its manufacturers
by reducing energy costs in aging facilities.
that the high cost of energy in Connecticut was a
challenge for manufacturers, so the Department of
Economic and Community Development joined with
the Clean Energy Finance and Investment Authority to
develop and launch a Clean Energy Business Solutions
program. The program is designed to address energy
cost challenges for existing Connecticut businesses
or potential new arrivals. That program will provide
financing to targeted companies of strategic importance
for economic development in Connecticut, with the goal
of improving their competitiveness by delivering cleaner,
cheaper, and more reliable energy to their operations.
At the state level, to reinforce the integrated approach,
the Mid-America Manufacturing Technology Center, a
Department of Commerce affiliate, is implementing a
partnership plan and an information/collaboration portal
as a centralized reference point for manufacturers.
At the same time, State Senator Gary LeBeau, who
was a member of the policy academy team, launched
a bipartisan “advanced manufacturing caucus”
in the legislature to identify the most important
issues for legislative action in 2013. The caucus
now includes 30 legislators, spanning the state
and representing various legislative committees.
Connecticut Connecticut started
the NGA Policy Academy process
already having a good understanding
of the top issues for Connecticut manufacturers,
partly because it had already conducted studies.
Rather than reconvene manufacturers to discuss
challenges that had already been identified, the
policy academy team took the issues that they knew
were priorities and created an action plan, with input
from representatives of manufacturing companies,
the state legislature, and universities, and workforce
and economic development leaders in the state.
The priority areas identified by the policy academy
team include (1) creating a sustainable, businessfriendly environment for manufacturers; (2) improving
connectivity among manufacturers, institutions, and
companies in relevant fields, leading to new ideas and
partnerships for commercial opportunities; (3) helping
manufacturers enhance their technology and processes;
and, (4) attracting, educating, and maintaining strong
talent to support current and future manufacturing.
For each area, the team worked to identify actions
that could be implemented quickly and could lead
to long-term change. For example, the team knew
26
Develop and Implement Industry-Driven
Priorities and Partnerships.
It is widely agreed that employer engagement is
critical in making any state manufacturing strategy a
success. However, many programs engage employers
through a one-time (or sometimes annual) solicitation
of information about their needs, then design and
provide services for them as customers. Often that
approach has yielded disappointing results. And
efforts to foster engagement in additional ways, such
as industry association meetings and workshops,
tend to yield recommendations for general business
environment priorities (taxes and regulations) but not
much in terms of concrete industry research priorities
or types of real-time services useful for manufacturers
seeking to produce globally competitive products.
Some states are moving to a more systematic and
lasting employer engagement strategy of working with
manufacturers as partners in both setting priorities
and implementing them. In that way, employers share
ownership of the strategy and continue to contribute
their guidance and unique resources to drive results.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
During their NGA Policy Academy work, both
Massachusetts and Colorado formed new publicprivate partnerships to ensure that industry leaders are
staying engaged and working with other public and
private entities to help implement specific initiatives.
Both states saw a need to engage stakeholders
in additional ways besides industry associations.
Both states spent considerable time looking at
the purpose and structure of the Commonwealth
Center for Advanced Manufacturing (CCAM), which
NGA suggested as one model for more structured
coordination among industry, university, and
government (see Box 10 for a description of CCAM).
Massachusetts Massachusetts
consulted with hundreds of employers
of all sizes across every region of the
state to determine priorities and then established the
Massachusetts Advanced Manufacturing Collaborative,
led by industry, to focus on five major priority areas.
Most members of the collaborative are manufacturers,
plus leaders from academia, the legislature, and
Box 10. Best Practice Model—Commonwealth Center for Advanced Manufacturing
Through the policy academy process, states had an opportunity to learn about a new kind of organization that uses industry
funding and input to advance industry priorities, particularly in workforce development and industry-relevant research. Virginia’s
Commonwealth Center for Advanced Manufacturing (CCAM) is a collaboration among the state, the University of Virginia, Virginia
Tech, Virginia State University, and manufacturing companies worldwide. The state was primarily responsible for developing a
large and diverse partnership to bring a Rolls Royce production facility to Virginia. The partnership now provides tailored research
and development (R&D) and workforce training to eight large manufacturing companies, and expanded participation by supplier
companies is being planned.
By pooling resources and keeping research focused on company needs, CCAM increases the value of the R&D dollar. Members
share facilities, personnel, and pre-competitive research. The partnership bridges the gap between fundamental research
typically performed at universities and product development routinely performed by companies. Research is conducted in areas
(for example, surface engineering) that add value to manufacturers in diverse sectors. Manufacturers are able to direct the
research toward production and focus it on commercial uses.
CCAM’s eight industry members, including Newport News Shipbuilding, Rolls Royce, and Siemens, make sizable contributions to
the partnership. Tier 1 industry members contribute $400,000 annually for at least five years, have one full-time staff person onsite at the CCAM facility, and engage two other companies (often smaller suppliers) as Tier 2 members. Tier 1 membership fees
cover two kinds of research—generic and directed. All members have a nonexclusive, royalty-free license to intellectual property
developed from generic research. Directed research is owned by the member company that funded it. The cost of entry for Tier 2
members is lower. They have access to generic but not directed research. Industry partners have committed to contribute more
than $25 million to CCAM over five years.
CCAM’s collaborative pre-competitive model is also focused on preparing a skilled workforce for manufacturing jobs. Students
participate in CCAM’s research and development through internships and graduate student internships, which foster the
transfer of skills between seasoned industry veterans and students. CCAM is also partnering with Virginia’s community college
system to develop training that meets the specific workforce needs of its industry members.
The state has made a number of commitments to CCAM’s continued development, including matching research funds and
funding laboratory renovations, faculty hires, graduate research assistantships, undergraduate student interns, and workforce
development programs. The state’s contributions to CCAM will total at least $40 million over five years.
The three founding universities also contribute resources to CCAM. Each university member commits one staff person to be onsite at CCAM facilities full-time. The universities are committing $10 million to CCAM over five years through faculty hires and
start-up packages, matching research funds, new manufacturing courses, and research equipment funding.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
27
government agencies. The five priorities were assigned
to working groups with co-chairs from industry. Specific
actions in each area were identified and refined and
became the scope for the the new $1 million Advanced
Manufacturing Futures Fund (Futures Fund) created
by the legislature. The futures fund will help seed
industry-led regional manufacturing partnerships that
pursue a customized workforce, technical assistance
and innovation, and other strategies. The statelevel Advanced Manufacturing Collaborative, now
formalized in statute, will promote and oversee action
in all five priority areas. It will be led by two industry
co-chairs and include strong employer participation.
Colorado The Colorado Advanced
Manufacturing Alliance (CAMA)
identified two big obstacles impeding
the ability of programs and policies to
meet the needs of industry: the lack of a consistent
industry voice about issues and needs and the absence
of a strong network to facilitate business-to-business
activity and partnering. Regional manufacturing sector
partnerships exist in the southern and western parts
of the state, but they are disconnected from one
another and are not present in other regions. Like
other states, Colorado has had industry networks or
clusters rolled out before, but this time the governor
and OEDIT staff deliberately sought out permanent
homes for each of the governor’s 14 key industry
networks, so that industry executives can convene
regularly and so that one organization, in partnership
with other stakeholders, is responsible for keeping
the industry voice front and center while aligning,
improving, or creating policies and programs. In the
case of advanced manufacturing, a credible convener
did not exist, and so CAMA was created. In addition to
its 26-member board, CAMA is propelled by industryled committees. It established a membership goal of
more than 100 manufacturers in its first six months.
28
Boost Innovation and Commercialization Capacity
of Manufacturers, Particularly for Small and
Midsized Firms, by Connecting Them to Partners,
Consortia, and a Whole System of Supports.
The common challenges of manufacturers across
the United States are well documented, and despite
increases in overall productivity by U.S. manufacturers,
largely because they have adopted lean processes,
individual manufacturers still report barriers to
growth that prevent them from creating new jobs.
Barriers that affect small and midsized companies
(SMEs) directly can include a lack of access to:
? Modernized equipment, high-powered
computing or modeling, and simulation
and analysis software to create new
products and implement new technologies,
processes, and techniques;
? Rapid cycle product development techniques
and the specialized capabilities to produce
a rapid prototype for proof of concept;
? Local laboratories for testing, inspection,
process development, interoperability,
environmental, and other similar resources
critical for translating research into innovations
and innovations into successful new products;
? State universities and federally funded
R&D activities and new product
or process innovations; and
? Networks, relationships, and spaces
(physical and virtual) that connect
government, universities, and industry—and
permit real-time information exchanges,
knowledge flows, and collaborations—
to achieve a higher level of innovation,
entrepreneurship, and commercialization.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
As part of their NGA Policy Academy work, the states
undertook a number of actions to address challenges
facing small and midsized manufacturers, including
the following:
? Creating an innovation voucher program,
modeled after successful programs in
Europe, to help connect SMEs to partners
and universities that can help their R&D
and new product development efforts;
? Building formal and informal institutions and
networks (including portals to build virtual
networks) that promote detailed information
and technology transfer and joint problem
solving among manufacturers, federal labs,
academic research center, and universities;
? Providing shared scientific infrastructure,
such as high-powered computing or
modeling, simulation and analysis
software, and the like, which can be
expensive for smaller firms to own;
? Addressing gaps in access to capital
for innovation, commercialization,
and business expansion; and
? Providing export assistance to
expand into new markets.
Box 11. Best Practice Model—Encouraging SMEs to Take Up Regular R&D and Innovation Activities
As part of the policy academy process, states learned from a number of countries or international regions that have created
innovation voucher programs to strengthen ties between small and medium-sized companies and sources of innovation, such
as universities or research organizations. Those programs provide companies with relatively small vouchers (typically $5,000 in
value), which a company can use to purchase innovation expertise and services; the vouchers are designed to have a fast and light
application and administration process. The NGA Center for Best Practices assisted with a virtual, conference-call-based “study
tour” of programs in the Netherlands, Germany, Austria, Switzerland, and Canada. Those calls informed the design of Connecticut’s
innovation vouchers program. Many of the key lessons learned are summarized below.
Goals of the program. Common goals of innovation voucher programs include bridging the gap between companies and universities,
expanding innovative capacity within a company by helping to solve a particular problem, or spurring innovation in companies that
have not traditionally tried to develop new products or processes. Many of the programs aim to engage small and medium-sized companies
that have limited interaction with universities or government programs to encourage them to cooperate with research organizations.
Voucher size. Programs tend to offer vouchers in the range of $5,000 to $15,000. Smaller vouchers are often easier to administer, tend
to not require a company match, and are often used to promote either new innovative activity in a company or a new relationship with
a partner such as a university or other service provider. Larger vouchers tend to require some form of match from the company, often
include a longer and more rigorous vetting process, and are targeted to solve a problem for which a company needs very specific expertise.
Eligible services to companies. Countries that have implemented an innovation vouchers program have defined eligible services
differently. For the smaller voucher programs, some countries decided that all services were eligible and approved all applications.
In contrast, Austria focused its services mostly on idea studies and proof of concept, R&D studies, prototyping, and innovation
management. Germany followed suit, with the main focus on R&D and innovation. Innovation voucher programs that limit eligible
services tend not to allow vouchers to be used for projects such as training, financing, IT consulting, and investment because they
are difficult to define or are only loosely connected to innovation.
Approved service providers. In some cases, innovation voucher programs limit eligible service providers to public universities
and research institutions, but others allow private service providers to participate. When providers are limited to public sector
institutions, the reason is often that the country is focused on improving connections between companies and research institutions.
Application process. The length and rigor of the innovation vouchers application process often depend on how companies structure
the voucher size, eligible services, and approved providers. For example, if eligible services are focused on technical projects that
address a specific company problem, then a technical review by an expert may be required before the voucher can be approved. This
level of review adds time to the application process and requires access to technical experts in a range of technology areas.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
29
Creating an Innovation Voucher Program
Connecticut Connecticut is launching
an innovation voucher program, based on a
best practices review of programs in other
countries, to better connect small and medium-size
companies to sources of innovation and the technical
assistance they need to develop and commercialize
new products (see Boxes 11 and 12 for international
examples and lessons learned). The state has allocated
$800,000 to launch its innovation vouchers pilot
program, which will be administered as part of Governor
Dannel Malloy's Innovation Ecosystem Initiative, which
has designated four innovation hubs in the state.
The goal of the program is to help some of the state’s
most promising early stage companies develop their
ideas and get products to market faster. To spur
collaboration between early stage companies and
service providers in the innovation ecosystem, the
Box 12. Best Practice Model—Innovation Voucher Program Results
As part of the policy academy process, states learned from a number of countries or international regions that have created
innovation voucher programs to strengthen ties between small and medium-sized companies and sources of innovation, such as
universities or research organizations. Evaluations of the programs have uncovered a number of important lessons learned:
Very small, innovative companies are most likely to use innovation vouchers. Innovation vouchers are attractive to very small
firms because they are easily accessible and are not difficult to administer. They thus can be effective in reaching companies
that have not sought out state resources in the past, but which could benefit from innovation assistance. The vouchers tend
to be used by the more innovative companies. In the Netherlands, an evaluation found that less-innovative SMEs often apply
for the vouchers but fail to redeem them. In Alberta, the companies that applied for vouchers were regionally diverse, but the
program was particularly successful with rural areas.
Vouchers most often fund projects that would not otherwise be undertaken. Evaluations of the European programs have
found strong “additionality.” “Additionality” is a measure of whether a firm would have undertaken a project without a voucher.
An evaluation of the Dutch program found that 81.5 percent of the firms receiving small vouchers would not have undertaken
their project without it. In Austria, 80 percent would not have carried out the project without the voucher. Of those that would
have carried out the project, 35 percent would have carried it out differently. The evaluation concluded that “the innovation
voucher makes SMEs conduct a larger, better project more quickly.” Some SMEs noted that the voucher reduced time-to-market
by as much as 50 percent. In the Swiss case, 90 percent of the firms that received innovation vouchers said that they would not
have undertaken their project without the innovation voucher.
Vouchers promote continued interaction between companies and universities. In the evaluation of the Swiss and Austrian
programs, a significant number of companies reported new and intensified contacts with research organizations, follow-up
activities, and less reluctance to cooperate with a research organization. In the Netherlands, an evaluation found that companies
did not go back for a repeat project but expressed interest in staying in contact with the research organization. It also found that the
program prompted research organizations to adopt a more active approach to SMEs.
Services exist that universities and other research organizations will offer for $5,000. Those services most often include
technical development, proof-of-concept, design services, product development, technology exploration, intellectual property
management, and market studies. Projects funded by innovation vouchers in the Netherlands included developing a prototype
of a women’s shoe with an adjustable heel, testing systems to catch mussel larvae, finding a market niche in Internet music
databases that led to the creation of a new music platform, and increasing patent protection for a product whose export base
is growing. In many cases, though the individual voucher was small, universities saw an opportunity in the potential volume of
vouchers. Universities also began to inventory the services they could offer to SMEs.
Sources: Barbara Good and Brigitte Tiefenthaler, “Innovation Voucher - Small Is Beautiful,” Platform FTeval, December 2011. European Commission, Availability and Focus of Innovation Voucher Schemes in European Regions, November
2009. Interview with Alex Umnikov, Advanced Technology Industries Division, Alberta Enterprise and Advanced Education, July 2012.
30
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
program gives companies a voucher to purchase
innovation or commercialization services from a specific
provider. Service providers are public and private
entities (for example a university or an engineering firm)
that have a specific expertise that can help a company
develop or commercialize a new product or service.
Companies that are selected to participate in the pilot
program will be provided with a $5,000 voucher that they
can use to purchase specific services from an approved
provider. The company is not required to provide a
financial match. Services could include anything from
small-scale prototyping or preparatory work for research
and development, to an innovation audit, an engineering
design, or the preparation of legal documents to protect
new intellectual property. To be eligible for a voucher,
companies must propose a clear deliverable in one of
four categories: research and development, business
model development or market feasibility, operations, or
legal assistance. A recipient company must also be a
start up (that is, not yet profitable and often employing
fewer than 10 people) or a stage 2 company (that is,
profitable and often employing between 11 and 100)
and be identified as high-performing by the Connecticut
Innovation Ecosystem staff.
Implementing a program with a quick turnaround time
was of particular importance to the state. A 2010 study
of high-growth companies found that many did not have
a positive view of state programs and were not likely to
interact with the state. Designing a program with small
grants and quick turnaround was therefore a priority.
A joint application process is expected to speed the
time between application and project approval, which
is expected to be no more than four weeks. Companies
can apply for two innovation vouchers within one year,
but they must apply jointly with a service provider
partner. Paired with the innovation hubs initiative,
the vouchers provide a way for the hubs to connect
with a large number of high-potential companies and
service providers. The vouchers program thus becomes
a front door to the other resources and services
to which the innovation hubs can link companies,
such as training and education, peer networks,
mentoring, and strategic and technical support.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
Building Formal and Informal Institutions
and Networks that Promote Technology
Transfer and Joint Problem Solving
New York New York has focused
a good deal of attention on better
connecting SMEs to the technology
resources that already exist at the
state level, including university
technology centers and MEP centers. Encouragement
and direction provided by the NGA Policy Academy
led to an unprecedented meeting of all the state’s
Centers for Advanced Technology (15), Centers of
Excellence (6), and Regional Technology Development
Centers (10). It was followed by the launch of
an interactive portal with a systemwide customer
relations and referral protocol to encourage better
collaboration among resource providers. The academy
assisted Empire State Development in its work with
the state’s Centers of Excellence in developing
center-specific commercialization plans designed to
expand strategic industry outreach efforts to serve
more companies in more regions of the state.
In its most recent effort to align its technology
resources with the needs of SMEs, the MEP network
of Regional Technology Development Centers
(RTDCs) is conducting 10 region-based “Solution
Fairs.” The Solution Fairs are designed to take the
state’s technology resources to industry customers.
A half-day forum in each region of the state allows
companies to discuss their individual technology need
or challenge with university technology centers.
That effort is consistent with the NGA Policy Academy's
efforts to identify new models for more effective delivery
of services to SMEs. It is also consistent with Governor
Cuomo’s directive to align existing resources with
regional needs and regional priorities.
Illinois The Illinois Open Innovation
Network is currently being developed to
forge better connections between SMEs and
sources of innovation. The Open Innovation
Network is a partnership between the
Governor’s Innovation Council, the Illinois Department
31
of Commerce and Economic Opportunity, the Illinois
Science and Technology Coalition, and Illinois’ major
research institutions. It will connect industry to research
institutions, and research institutions to one another.
The network will aggregate researcher expertise,
publications, available technologies, unique facilities,
and collaborative history. Its goals are (1) to enhance
university-industry collaboration; (2) to facilitate the
capture of federal funding; and (3) to maintain Illinois’
prominence in research, development, and innovation.
California California has found
that its small and medium-sized
manufacturers (SMEs) need to be world
class to compete, but most lack access
to technical assistance, resources, and
innovation services that are required
to be competitive in global markets. Although highquality research and development is taking place
at the state’s universities and technology industries,
that R&D is often disconnected from the realworld challenges facing SMEs. Although California
will remain a high-cost location relative to Asia,
manufacturers can compete on innovation, flexibility,
and quality, meeting rapidly changing consumer
demands by remaining closer to design. In fact,
some flexible, high-value manufacturing has been
returning to the state. However, better links between
California technologies in such areas as modeling and
simulation, robotics, and information technologies
and the manufacturing community are needed.
California is focusing on the establishment of a
California Network for Manufacturing Innovation to
build a bridge between technology developers and
manufacturers. The collaborative presently includes the
state’s two MEP centers, Lawrence Livermore National
Laboratory, the University of Southern California,
iHubs, Research Triangle Institute (RTI) and El Camino
Community College (also representing the 11 Centers
for Applied Competitive Technologies in California).
California’s iHub network was established in 2010 to
leverage the state’s innovation assets (e.g., research
parks, technology incubators, universities, and federal
laboratories) and codify relationships among them.
32
This network has provided a platform for start-up
companies, economic development organizations,
business groups, and venture capitalists to improve
the state’s national and global competiveness.
Colorado Colorado is working with
the National Aeronautics and Space
Administration (NASA) to create a
first-of-its-kind, statewide partnership
between CAMA and NASA. The partnership will explore
opportunities for collaboration around topics such as
incubation and technology transfer, STEM education,
commercialization and acceleration, open innovation,
and economic development. There will be several
subagreements, the first of which will be the existing
NASA agreement with the Colorado Association for
Manufacturing and Technology (CAMT) that defines the
partnership around technology transfer, getting NASA’s
technologies commercialized, especially among SMEs.
Kansas Kansas has developed
an “Innovation Community” pilot in
the city of Pittsburg with economic
development officials, university leaders and company
executives implementing a set of prioritized initiatives,
tools and processes designed to help the manufacturing
industry thrive in a newly connected innovation
ecosystem. The city has taken the leadership role for
the entire project while the Mid-America Manufacturing
Technology Center, with help from partner Network
Kansas, is guiding the implementation of the strategies
at the university and company level. Pittsburg is adding
additional support by addressing policy, incentives,
infrastructure and marketing. Initial focus areas include
the roll out of a newly-developed innovation engineering
minor at the university and individualized innovationbased growth plans at the participating companies.
Addressing Gaps in Access to Capital for Innovation,
Commercialization, and Business Expansion
Massachusetts Massachusetts is
implementing a series of workshops on
access to capital. Sponsored by several
banks in the state, the workshops will help companies
to better understand the financial system and their
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
Box 13. Federal Resources and Centers Are an Important Part of State Networks
States have found that federal resources and centers have played
an important role in building formal and informal networks to
promote technology and joint problem solving. Two examples are
the resources provided by the Manufacturing Extension Partnership
(MEP) Program at the National Institute of Standards and
Technology and the U.S Economic Development Administration:
Manufacturing Extension Partnership
NIST MEP is a public-private partnership with a nationwide
network of over 1,400 technical experts located in every state in
the form of state, university-based, or non-profit organizations.
MEP centers work with U.S. manufacturers to help them create and
retain jobs, increase profits, and save time and money. Services
include: innovation strategies, product design and protyping,
supply chain opportunities, reshoring, process improvements,
green manufacturing and exporting. MEP partners at the state
and federal level on programs that position manufacturers to
develop new customers, expand into new markets and create new
products. More than 460,000 of these types of projects have been
completed since the program's inception 25 years ago. Customers
are usually manufacturers with fewer than 500 employees in
virtually every type of industry – from food processors to solid state
circuitry assemblers to medical device manufacturers.
MEP Client Impacts
Results reported by MEP clients receiving services in FY 2011.
Of the 9,952 cleints selected to be surveyed, 7,658 completed
the survey. Recurring or cumulative benefits may be larger.
Retained Sales
| $8.2 Billion
otal Increased/
T
Retained Jobs
| 60,497
Total Increased/
Cost Savings
ew Client
N
Investments
| $1.3 Billion
| $1.9 Billion
MEP delivers a high return on investment. For every one dollar of federal investment, the MEP generates around $30 in new sales
growth. This translates into $3.6 billion in new sales annually among MEP clients. And for every $2,067 of federal investment, MEP
creates or retains one manufacturing job.
U.S. Economic Development Administration
As the only federal agency with economic development as its exclusive mission, the U.S. Commerce Department’s Economic
Development Administration (EDA) promotes the economic ecosystems in which jobs are created. EDA strives to advance global
competitiveness, foster the creation of high-paying jobs, and leverage public and private resources strategically.
EDA builds a foundation for sustainable job growth upon two key economic drivers: innovation and regional collaboration.
Innovation is the key to global competitiveness, new and better jobs, a resilient economy, and the attainment of national economic
goals, including the advancement of the manufacturing sector. The new global economy is built on centers of excellence and
competition. Those regions that work together to leverage resources and use strengths to overcome weaknesses will fare better
against global competition than those that do not.
EDA works directly with local economic development officials to support their bottom up, regionally-owned economic development
initiatives. Linking EDA’s investments to a community’s strategic economic development plan enables the federal government to
better leverage public and private sector investments in order to achieve economic development goals.
EDA offers a complementary, balanced portfolio of tools designed to help rural and urban communities evolve through the economic
development process to become robust regional engines for business creation and job growth.
n
WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
33
options within it, as well as help them to recognize
investment opportunities offered by SMEs that are
moving into advanced manufacturing products and
processes. The Advanced Manufacturing Collaborative’s
capital access work group is joining with the Boston
Federal Reserve Bank to identify and work through
any specific regulatory hurdles that may keep banks
in the state from lending to manufacturers. The work
group is creating a matchmaking guide to resources,
which will include a matrix that matches manufacturers’
needs with relevant public and private capital sources.
Colorado Based on needs expressed
by manufacturing executives, Colorado
is creating a capital resource portal to
connect industry with capital resources.
The state is also looking into creating a fund of private
investment capital to be channeled toward high-growth
companies in industry sectors including advanced
manufacturing.
Providing Export Assistance to Expand into New Markets
California California discovered
growing interest in exporting among SMEs
but found that most such businesses
did not know how to take the initial
steps. The state also found that current
approaches to educating small and
midsized manufacturers and matching them to
export opportunities are ineffective, largely because
of poor alignment among the public and private
sector organizations focused on export development.
Although many individual services are available,
including workshops, seminars, and trade missions for
manufacturers, no overall methodology, curriculum,
or coordinated effort exists to establish a systematic
approach for SMEs to follow. Recognizing that
problem, the state is implementing a series of “Trade
Connect” workshops to build a consistent message
among participating export assistance partners about
benefits and available services and how they work
together. The state is also piloting the use of ExporTech
training for Trade Connect partners, a shared method
for working with SMEs in manufacturing. Additional
funding from the State Trade and Export Promotion
34
Box 14. Best Practice Model—Washington’s
Workforce Intermediaries
Through the policy academy process, states learned from
workforce intermediaries that involve industry in developing
curriculum and in both funding and providing training.
Two of those intermediaries are based in Washington
state: the Center of Excellence for Aerospace and
Advanced Materials Manufacturing and the Aerospace
Joint Apprenticeship Committee.
Washington established 10 industry-specific centers of
excellence, each located at a community or technical
college, to serve as central points of contact and resource
hubs for industry trends, curriculum development, and
fast, flexible, customized training. The centers were
originally established to serve regional industry needs but
have evolved to oversee the services and training provided
in their sector across all 34 two-year colleges in the state.
The Center of Excellence for Aerospace and Advanced
Materials Manufacturing, through Workforce Investment
Act (WIA) funding, was able to cross-map community
college course codes in aerospace and manufacturing with
Boeing’s entry level job codes. The cross-mapping catalog is
a first step in creating a cohesive training program within
Washington’s community college system that aligns with the
knowledge, skills, and abilities that industry is looking for.
In addition, the center convenes the Aerospace Curriculum
Alignment Team (ACAT), a growing consortium of colleges,
training centers, and industry representatives that
clarifies industry needs and matches them with college
and training center capabilities and programs.
Washington’s Aerospace Joint Apprenticeship Committee
(AJAC) was established to help meet the demand for
skilled workers in the aerospace industry by creating new
apprenticeship programs. The committee is composed
of industry employers, employees, and the International
Association of Machinists and Aerospace Workers. AJAC
develops and implements apprenticeship programs for
multiple aerospace and manufacturing occupations. Ninetythree percent of the education takes place as paid on-thejob training that is managed by an AJAC apprenticeship
coordinator. The apprentice is supervised by a journey-level
employee from their workplace. Apprentices must also
attend related college classroom instruction to learn the
theory behind what they are learning on the job.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
(STEP) grant has helped export promotion activities
through partnerships among the Governor’s Office
of Business and Economic Development (GO-Biz),
California Community Colleges’ Centers for International
Trade Development (CITD), California Chamber of
Commerce, and other agencies throughout the state.
Provide Talent Both to Fill the Specialized Needs
of Employers Quickly and to Deliver Lifelong
Training for Workers at All Levels.
The importance of a skilled workforce to the success
and growth of all manufacturing companies cannot be
overstated. Yet across the country, the education and
training programs that could prepare job seekers for
successful careers in manufacturing are underused
or, where they exist, are often misaligned with the
actual needs of industry. Successful models that
engage industrial firms, assess their needs, and create
programs and credentials that provide real currency for
job seekers are gaining more attention. For example,
Box 14 presents some examples from Washington,
and Box 15 contains a snapshot of the growing
support for sector partnerships across the country.
For SMEs, finding and keeping a skilled workforce can
be particularly challenging because of the following:
? Rapidly changing and increasing skill
requirements to operate manufacturing
equipment make it difficult for education
and training providers—as well as
employers themselves—to stay current;
? It is often difficult to attract and retain
middle-skill workers with significant
engineering and technical skills, as
well as problem-solving acumen;
? Customized on-the-job training of incumbent
workers often entails risk and high cost; it
can take equipment out of production or
cause damage to valuable equipment; and
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
? The public has a generally negative
perception of manufacturing careers,
and awareness is lacking about career
opportunities in manufacturing, resulting
in young people being discouraged from
considering manufacturing as a career.
Although the states participating in the policy
academy took a number of approaches to producing
and attracting globally competitive talent for
manufacturers, all the approaches emphasized
public-private partnerships and industry-driven
solutions. A number of states also found that many
such activities already exist and that immediate
benefit was to be gained by improving, replicating,
and scaling up those existing resources.
Colorado Gaps in the skills and
experience of workers are top priorities
for both the OEMs and the SMEs
in Colorado. More than 25 percent
of human resource executives in the state rate the
skills and experience of workers as their company’s
number-one concern for the next three to five years.
The persistent problems of Colorado manufacturers
include the lack of a strong trade school network
and limited access to opportunities for workplace
experience through internships, job shadowing,
pre-apprenticeships, and apprenticeships. State
labor statistics indicate that the average Colorado
manufacturing employee is within 10 years of
retirement. Members of CAMA have made it clear that
there is no time to waste in engaging current workers
in developing and mentoring the next generation
of the state’s manufacturing employees. Colorado
manufacturers also believe that they do not consistently
engage the K–12 and higher education communities
in constructive conversation about the opportunities in
manufacturing or about crafting curricula to align with
the needs of Colorado’s manufacturing companies and
with national manufacturing credentialing standards.
Colorado is not at square one, however. Its recent
work in implementing regional sector partnerships is
proving effective in engaging industry and coordinating
35
education and training providers to meet the real
needs of industry. Two regional manufacturing sector
partnerships currently exist. The Colorado Office
of Economic Development and International Trade
(OEDIT) is now working with the Colorado Workforce
Development Council (the state workforce investment
board) to find ways to align, expand, and replicate them.
Massachusetts Massachusetts’
manufacturing education and workforce
strategy is focused on three priorities:
first, expanding use of the existing workforce training
fund for on-the-job-training for new hires and incumbent
worker training in manufacturing; second, providing
technical assistance to new regional manufacturing
sector partnerships that are getting started; and third,
providing support to accelerate the work of existing
sector partnerships through resources such as the
state’s workforce competitiveness trust fund.
Massachusetts has strong regional networks that are
organized to meet the needs of manufacturers and
provide pathways to jobs for new workers. For example,
in Worcester County, the workforce and training
system, led by Quinsigamond Community College,
WPI, MassMEP, and Fitchburg State, has organized a
seamless approach to training and educating workers.
MassMEP has led in training returning veterans for
manufacturing jobs. For this and other reasons,
MassMEP received a nearly 50 percent increase in
Box 15. Best Practice Model—Industry Sector Partnerships
Through the policy academy process, states could build on national experiences, as well as their own (in the cases of Massachusetts,
Colorado, and California), with sector strategies. An estimated 1,000 regional sector partnerships are operating across the country,
and more than 25 states are exploring or implementing sector strategies to address industry needs through education and training.
The strategies are known by different names in different states: Industry Partnerships in Pennsylvania, Skill Alliances in Illinois,
and Clusters of Opportunity in California. Massachusetts has been using a sector strategy approach for almost three decades,
funding hundreds of local partnerships through its workforce competitiveness trust fund. Pennsylvania’s investment has seeded
over 90 industry partnerships since 2005, more than 40 of which are still active. Washington State launched its first skill panels
in 2000 and since then has funded more than 100 public-private partnerships among business, labor, and education.
Regardless of what they are called, at the regional labor market level, these are partnerships of employers within one industry
that bring together government, education, training, economic development, labor, and community organizations to focus on
the workforce needs of their industry. At the state level, they are policies and investments that support the development of local
sector partnerships. At both levels, a growing body of evidence demonstrates their effectiveness for employers and workers.
In a survey of employers participating in sector partnerships in Massachusetts, 41 percent reported a reduction in turnover;
19 percent reported a reduction in rework on the job; 23 percent reported a reduction in customer complaints; and 100 percent
reported that participation in a sector partnership was valuable. In 2009 in Pennsylvania, 84 percent of surveyed employers
participating in industry partnerships reported significant increases in productivity.
Workers also benefit from training and education programs that develop out of sector partnerships. A 2009 random assignment
evaluation of three sector partnerships found that participants earned significantly more (18 percent more, or $4,500 over a
24-month period) than the control group. The reasons were that they were more likely to work, worked more consistently, and
worked in jobs with higher wages. They also had higher-quality jobs, as measured by benefits such as health insurance, paid
vacation, and paid sick leave. In short, sector partnerships are being adopted by more workforce development organizations,
education institutions, and other stakeholders because they work: they provide a process and mechanism to engage industry
and assess its workforce needs and to create customized solutions across multiple training and education programs in a way
that provides job seekers real currency in today’s labor market. For more context and details, see the NGA publication Sector
Strategies Coming of Age—Implications for State Workforce Policy Makers.
36
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
funding, and it remains a key partner in the work of the
Advanced Manufacturing Collaborative across the state.
In Hampden County, the region’s precision
manufacturers, working with the Hampden
County Regional Employment Board, established
a sector partnership involving all of the region’s
educational and training partners, including the
seven vocational schools, Springfield Technical and
Holyoke Community Colleges, and UMass Amherst.
The industry-led Precision Manufacturing Regional
Alliance Project (PMRAP), as the partnership
is known, identified a need for over 1,600 new
manufacturing workers in the following 40 months,
and the Hampden County Regional Employment
Board received $750,000 to train the region’s workers
for those jobs, including the region’s returning
veterans, the unemployed, minorities, and youth.
The Massachusetts Workforce Competitiveness Trust
Fund has been an important source of resources
and expertise to build regional sector partnerships in
many industries, including advanced manufacturing.
The state legislature authorized the recapitalization
of the fund with $5 million. The Commonwealth
Corporation, which administers the fund, is a part
of the Advanced Manufacturing Collaborative and is
designing additional technical assistance to support
new regional sector partnerships along the lines of the
successful central and western Massachusetts models.
As the focus of the state’s efforts turns to supporting
and scaling regional sector partnerships, the
Advanced Manufacturing Collaborative is launching
a statewide forum for sharing best practices and
for continuous improvement that includes the
state’s community colleges, workforce investment
boards, and vocational schools. The collaborative
is also aligned with the major, U.S. Department of
Labor–funded $20 million initiative by the state’s
community college system to establish seamless
career pathways for workers in growing industries.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
At the same time, Massachusetts has launched a
multifaceted outreach campaign to fill the workforce
pipeline, aiming to increase interest in career
opportunities in manufacturing among students,
parents, counselors, and others. MassDevelopment
and the Advanced Manufacturing Collaborative are
launching a new campaign to promote manufacturing
careers throughout the commonwealth. The
campaign, “AMP it up,” is designed to reach young
people and provide career information to parents,
career counselors, and teachers—the people
who most influence young people’s choices.
California California has realized
that as its small and medium-sized
manufacturers have emerged from the
recession and are executing growth
strategies, they have workforce skills
requirements that are not being met
through existing training programs. Clear pathways
from K–12 through community colleges or through
the workforce training system do not exist for students
and workers to gain needed skills. Because of the
economic diversity of California, every region needs its
own approach, based on its unique set of industries and
skill needs. With the formation of the California policy
academy team, conversations took place at the state
level with the vice chancellor of workforce and economic
development of California’s community colleges. The
team discussed with her the significance of advanced
manufacturing for the state’s economy. That resulted
in the inclusion of advanced manufacturing as an
industry sector in the Chancellor’s Office’s Doing
What Matters for Jobs & the Economy report and
made the manufacturing sector eligible for state
grant funding. Eight grants supporting manufacturing
throughout the state were awarded earlier this year.
California has begun moving on several fronts to
meet the immediate needs of manufacturers and
establish a foundation for longer-term support for
developing the state’s manufacturing workforce. In
May 2012, the California Economic Summit process
(caeconomy.org) issued a call to action to “prioritize
37
existing workforce-training and career-education
resources to focus on major regional industry sectors.”
Manufacturing was specifically identified as a major
sector for several regions. Subsequently, the California
community college chancellor’s office directed funding
to 10 manufacturing-focused partnerships through
its industry-driven regional collaboratives, responsive
training fund, and job development incentive fund.
Two legislative bills were enacted to sustain community
college efforts in this area and to align career technical
education with regional industry needs. In addition,
funding for the state’s “Regional Industry Clusters
of Opportunity” program has been increased, with
a specific focus on creating sector partnerships in
clean transportation manufacturing and fuels.
38
Illinois Illinois recently launched the
Manufacturing STEM Learning Exchange,
a statewide public-private network that will
coordinate resources and investments that
support the manufacturing talent pipeline.
The Manufacturing STEM Learning Exchange will be
led by the Illinois Manufacturers Association Education
Foundation and has initially targeted work-based
learning as a priority area. The learning exchange will
aggregate industry partners to provide mentorships,
internships, apprenticeships, and other practical training
and learning opportunities. That partnership network
will also monitor P-20 (pre-school through grade 20)
and workforce talent pipeline performance and advise
the state on coinvestment strategies and supports.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
BEST PRACTICE LESSONS OFFERED FOR OTHER STATES
In preparing this report on the results from the NGA Policy Academy
on advanced manufacturing, NGA recognized that other states would
benefit from knowing of the optimistic vision and associated policy
steps taken by the eight states to encourage growth in manufacturing
through innovation, entrepreneurship, and investment. In particular,
other states would benefit from knowing that these states:
Did not see their work as “saving manufacturing.” Rather, they saw their
work as creating the best location for the development of new technologies
that radically improve production processes or that can be transformed
into innovative new products.
Their ongoing work is to strengthen the innovation system within their states
by providing manufacturers streamlined access to specialized workforces,
research and development partnerships, commercialization services, innovation
networks, and unique business infrastructure to support quick, sustained,
and spectacular competitive advantage in developing commercial devices,
manufacturing them in the state, and getting them into global markets.
Recognized a big missed opportunity with small and medium-sized
companies (SMEs) and thus emphasized doing a better job of
supporting startups and SMEs.
Recognizing that 62 percent of net new jobs from 1992 to 2010 were created by
SMEs and that recently the success rate of small businesses has dropped, states
did not believe that they could be a part of the new manufacturing leadership
without helping SMEs build their capacity to innovate and commercialize new
products. Accordingly, they plan to encourage SMEs to take up regular R&D
and innovation activities, enlarging their R&D base and their opportunities for
growth through innovation and global exports. From this overarching objective
came a wide range of efforts, including programs to increase universities’ ability
and willingness to cooperate with SMEs and overcome companies’ reluctance
to approach and work with research organizations; programs to get people
into apprenticeships, internships, and education programs designed to lead to
full-time jobs with small and medium-sized manufacturers; and programs to
mentor SMEs in working more successfully as suppliers to large companies.
n
BEST PRACTICE LESSONS OFFERED FOR OTHER STATES
39
Determined that because of important developments
already occurring, the most immediate benefits
can be obtained by assembling, improving,
coordinating, connecting or replicating, and
scaling up those resources to manufacturers.
That means proactively ensuring that manufacturers
know what is available, that manufacturers are directly
involved in program design and consulted on program
effectiveness, and that manufacturers are encouraged
(even provided incentives) to approach and work with
government or university organizations. But it also
means that universities, community colleges, financial
institutions, and other key parts of the innovation
system have to embrace the new opportunities related
to advanced manufacturing, as well as the concept that
manufacturers, just as bioscience or clean energy firms,
will benefit from specialized (sector-focused) programs
and services promoting innovation, entrepreneurship,
investment, and education as crucial for business
growth and competitiveness. In short, states realize
they must build on what works. Examples include the
ways in which Colorado, California, and Massachusetts
have found ways to replicate their business sector
partnerships and expand them to advanced
manufacturing. New York has adopted a similar
approach by funding regional partnerships focused
on new technologies and related workforce training.
Found crucial voids remaining to be filled,
sometimes because the right services for
manufacturers did not exist and sometimes
because the services needed lacked the scale
and commitment for success.
Reinforcement of this message came as the policy
academy states studied what some other states and
other nations such as Germany are doing to support
their industries. Some states are engaged in big
collaborations, such as the Automotive Manufacturing
Technical Collaborative (AMTEC), which involves 30
community colleges and 34 auto-related plants in
12 states in a new kind of public-private partnership
for training and retraining workers. In Germany,
organizations such as the Fraunhofer Institutes partner
with companies to turn advanced technologies into
40
production processes and commercial products. These
initiatives are coupled with active export promotion
support from the highest level of government. Both
of these efforts—AMTEC and Fraunhofer Institutes—
underscore what is missing in terms of focus,
scale, and steady commitment in many states.
Recognized that an intermediary valued by all
parties (particularly industry) is crucial not only
for developing an effective policy framework, but
also for sustaining broad support for advanced
manufacturing as a high state priority.
It must be some entity’s responsibility both to sort
out the complex interplay between different actors
and mechanisms crucial to research and product
development activities and to connect the activities of
dozens or perhaps hundreds of firms and organizations.
Both the Colorado Advanced Manufacturing Alliance
and the Massachusetts Advanced Manufacturing
Collaborative and Advanced Manufacturing Futures
Fund illustrate the deliberate and strategic play
that states are making to create new public-private
partnerships that the community values and that can
push all players to align their investments and improve
their support for advanced manufacturing firms
within their borders, so as to capture the economic
activity and high-quality jobs that they can bring.
Focused on the interplay between
state policy and regional action.
States recognized that a combination of state
enabling actions and regional collaboration, with
strong industry engagement, would be necessary
to implement an effective advanced manufacturing
strategy. STEM exchanges in Illinois, regional
manufacturing partnerships in Massachusetts
and California, customized regional initiatives in
Kansas and New York all are examples of how
state policy encourages, seeds, and rewards
effective action at the regional or local level.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
Recognized the value of finding investments
in the immediate term and mobilizing support
for the future.
Most of the policy academy states acknowledged that
funding exists, but it is often a matter of finding it for
the right purposes, both in the immediate term and
for future needs. New York provides a great example
of bringing multiple state agencies together to fund an
initiative that speaks to their different missions. Joint
agency funding carries a lot of weight, especially for
operating programs that otherwise would not work
together. Connecticut’s foresight in engaging members
of the state legislature during its planning process
led to a bipartisan legislative manufacturing caucus,
now positioned to act for the benefit of advanced
manufacturing during upcoming legislative sessions.
Understood that they must “just get started” and
secure some early achievements and momentum
that make a difference to manufacturers.
No strategic plan is successfully launched without early
wins. Achieving them requires figuring out what actions
can be implemented in a short time, with few or no
new resources, that will garner increased support going
forward. For Colorado, that meant launching CAMA—
n
BEST PRACTICE LESSONS OFFERED FOR OTHER STATES
quickly and with private sector funding. For Connecticut,
it meant the innovation voucher program; for New York,
the Solutions Fairs; and for Illinois, the Open Innovation
Network. Rolling out programs like these does not imply
abandoning the fuller strategic plan; these are the
programs that demonstrate real action to existing and
new stakeholders while the fuller plan is implemented.
Recognized that traditional metrics may need to
be updated for advanced manufacturing.
Colorado is revising performance metrics based on
best practices and discussions through the NGA
Policy Academy. Because innovation and productivity
growth has become a critical component of the
state’s advanced manufacturing platform, OEDIT has
expanded its current metrics to include not only net
new jobs but also capital investment and gross state
product, on the theory that innovation investment may
lead to increased productivity and profitability but not
necessarily new jobs. The performance metrics used
by MEP centers, which employ third-party survey
organizations to document jobs created and retained,
sales increased or retained, cost savings achieved,
and investments leveraged, provide a model that has
been widely recognized in the federal government.
41
42
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
NGA CENTER DIVISIONS
The NGA Center is organized into five divisions with some collaborative projects across all divisions.
n Economic, Human Services & Workforce provides information, research, policy analysis,
technical assistance, and resource development on key issues relevant to governors and their
staff across a range of current and emerging issues, including economic development and
innovation, workforce development, employment services, research and development policies,
and human services for children, youth, low-income families, and people with disabilities.
n
Education provides information, research, policy analysis, technical assistance and
resource development for governors and their staff in the areas of early childhood, K-12
and postsecondary education. Issue areas include birth to 3rd grade access, readiness
and quality; the Common Core State Standards, STEM and related assessments; teacher
and leader effectiveness; turning around low-performing schools; high school redesign;
competency-based learning; charter schools; and postsecondary (higher education &
workforce training) access, success and affordability.
n Environment, Energy & Transportation provides governors and their staff with analysis and
information about best practices, tailored technical assistance, and insights into emerging
policy trends across the energy, environment, and transportation sectors. The division helps
states promote the efficient use of energy across all sectors; improve the use of traditional
and alternative fuels for electricity and transportation; better protect and cleanup the
environment; effectively manage their natural resources; and develop a transportation system
that safely and efficiently moves people and goods.
n
Health provides information, customized technical assistance, policy analysis, best practices
and periodic national meetings facilitating peer exchange for governors and their staff.
The Health Division covers issues in the areas of health care service delivery and reform,
including payment reform, health workforce planning, quality improvement and public health
and behavioral health integration with the medical delivery system.
n Homeland Security & Public Safety provides governors and their staff with analysis and
information about best practices, tailored technical assistance, and insights into emerging
policy trends across homeland security and public safety. The division provides detailed
analysis and technical assistance to governors on all matters related to homeland security,
emergency management, public safety, and criminal justice.
National Governors Association Center for Best Practices
444 N. Capitol Street, Suite 267
Washington, DC 20001
202.624.5300
www.nga.org/center
doc_756311348.pdf
Within this detailed information pertaining to a national governors association policy academy report.
A National Governors Association Policy Academy Report
“Making” Our Future
What States Are Doing to Encourage Growth
in Manufacturing through Innovation,
Entrepreneurship, and Investment
THE NATIONAL GOVERNORS ASSOCIATION (NGA), founded in 1908, is the collective voice of
the nation’s governors and one of Washington, D.C.’s, most respected public policy organizations.
Its members are the governors of the 55 states, territories and commonwealths. NGA provides
governors and their senior staff members with services that range from representing states on
Capitol Hill and before the Administration on key federal issues to developing and implementing
innovative solutions to public policy challenges through the NGA Center for Best Practices. NGA
also provides management and technical assistance to both new and incumbent governors.
The NGA Center for Best Practices is the only research and development firm that directly serves
the nation’s governors and their key policy staff. Through the NGA Center, governors and their
policy advisors can:
n Learn about what works, what doesn’t and share lessons learned
n Participate in meetings of leading policymakers, program officials and scholars
n Obtain specialized assistance
For more information about NGA and the Center for Best Practices, please visit www.nga.org.
Acknowledgments
This report was prepared by Erin Sparks and Mary Jo Waits at the National Governors Association
Center for Best Practices in collaboration with:
n Doug Henton, John Melville, and Kim Held at Collaborative Economics, Inc.;
n Lindsey Woolsey at The Woolsey Group, LLC;
n Ken Poole and Mark White at the Center for Regional Economic Competitiveness;
n Dan Berglund at the State Science and Technology Institute;
n Angela Martinez at the U.S. Economic Development Administration; and
n Mark Troppe, Heidi Sheppard, and Gary Yakimov at the U.S. National Institute of Standards
and Technology’s Hollings Manufacturing Extension Partnership Program.
The NGA Center wishes to thank the U.S. National Institute of Standards and Technology’s
Hollings Manufacturing Extension Partnership Program and the U.S. Economic Development
Administration for their support of this project.
The report was edited by Nancy Geltman and designed by Middour & Nolan Design.
January 2013
c o ntents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
TAKING A NEW LOOK AT MANUFACTURING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Manufacturing Is Too Important to Lose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Manufacturing Has Changed and Is Changing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Too Many Manufacturers Are Not Growing through
Innovation and Global Exports—but Could . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The “Deindustrialization” of America Is Not Inevitable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Leadership in This “New” Manufacturing Is Largely Up for Grabs—
but It Requires Understanding and Developing Innovation Ecosystems. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
States Control a Variety of Policies Associated with
Well-Developed Ecosystems of Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
TECHNOLOGY AND TIME BRING A NEW PERSPECTIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS . . . . . . . . . . . . . . . . . . . . . . . . . 21
Pursue an Integrated Approach to Developing a Manufacturing
Strategy, Connecting Large and Small Manufacturers, as well
as State, Federal, and Regional Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Develop and Implement Industry-Driven Priorities and Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Boost Innovation and Commercialization Capacity of Manufacturers,
Particularly for Small and Midsized Firms, by Connecting Them to
Partners, Consortia, and a Whole System of Supports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Provide Talent Both to Fill the Specialized Needs of Employers Quickly
and to Deliver Lifelong Training for Workers at All Levels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
BEST PRACTICE LESSONS OFFERED FOR OTHER STATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Executive Summary
The policy agenda for U.S. manufacturing is changing. Five years ago the debate
was mostly about how to rescue and retain existing footholds in manufacturing, but
lately the debate is increasingly about how to set the stage to lead the world in new
technologies and innovations that are changing the face of manufacturing. That shift
in direction was underscored this year when eight states prepared new strategies
not through the lens of “let’s save manufacturing” but through the lens of “let’s lead
in what lies ahead,” including robotics, nanotechnology, and advanced materials.
Given all that is happening in manufacturing today, including advances in
technology, a greater focus on tailor-made goods aimed at specific individuals
and industry users, and the growing importance of sustainable forms of
production, opportunities for the United States to lead are becoming increasingly
clear. That leadership, however, will be built on a different breed of policy
than the usual formula of enticing global public companies to build plants in
this country. It will be built on a combination of worker education, business
innovation, and public and private sector entrepreneurship that allows the
United States to take the lead in shaping the way that manufacturing addresses
“global wicked problems,” such as needs for energy, water, food, health,
security, and public infrastructure. That new formula is taking shape.
This report is about what states are doing to support this new shift in direction.
It focuses especially on recent actions by the states of California, Colorado,
Connecticut, Illinois, Kansas, Massachusetts, New York, and Pennsylvania.
Their new focus on advanced manufacturing has grown out of a recently
concluded National Governors Association Center for Best Practices Policy
Academy designed to generate a new scale of effort, a sharp focus on the future,
and opportunities for states to work together and learn from one another.
These eight states are not the only ones taking a new look at manufacturing,
but the work they are doing is especially relevant because:
? Together the states represent 30 percent of total U.S. manufacturing
Gross Domestic Product (GDP), one-third of U.S manufacturing jobs,
and more than 25 percent of U.S. exports of manufactured goods;
? They signal a common agenda for states. Although each of the eight states
arrived at its agenda independently, their agendas are remarkably similar
in the priorities they set and the policies they are implementing; and
? As an eight-state cohort working on similar priorities, they can
scale up efforts and generate effects that are greater than
what can be done by a single state working alone.
n
Executive Summary
1
As a result of the NGA Policy Academy, the states:
? Established new programs, such as
Connecticut’s innovation voucher program,
which is providing $800,000 to help connect
small and medium-sized businesses to partners
and to universities to encourage them to take
up regular R&D and innovation activities;
? Redesigned organizations or created new ones,
such as the Colorado Advanced Manufacturing
Alliance and the Pennsylvania Governor’s
Manufacturing Advisory Council, to ensure
a consistent industry voice about the issues
and policy priorities and to seed a strong
connection among manufacturers, suppliers,
financiers, academic research centers and to
universities, and key government agencies;
? Passed legislation, such as California’s
measure to renew and extend the
community college initiative that funds
manufacturing and other regional industry
workforce partnerships, or Connecticut’s
establishment of a bipartisan legislative
advanced manufacturing caucus to identify
top issues for legislative action in 2013; and,
? Secured funding allocations for their
manufacturing priorities, such as the $1
million for the Massachusetts Advanced
Manufacturing Futures Fund, for initiatives
across five high-priority areas.
? Did not see their work as “saving
manufacturing.” Rather, they saw their
work as creating the best location for the
development of new technologies that radically
improve production processes or that can be
transformed into innovative new products;
? Recognized a big “missed opportunity” with
small and medium-sized companies (SMEs)
and thus emphasized doing a better job of
supporting startups and SMEs;
? Determined that because of important
developments already occurring, the
most immediate benefits can be obtained
by assembling, improving, coordinating,
connecting or replicating, and scaling up
those resources to manufacturers;
? Found crucial voids remaining to be filled,
sometimes because the right services for
manufacturers did not exist and sometimes
because the services needed lacked the scale
and steady commitment for success;
? Recognized that an intermediary valued by all
parties (particularly industry) is crucial not only
for developing an effective policy framework but
also for sustaining broad support for advanced
manufacturing as a high state priority;
? Focused on the interplay between state policy
and regional action;
? Recognized the value of finding investments in
“Best Practice” Lessons Offered for Other States
In preparing this report on the results from the NGA
Policy Academy on advanced manufacturing, NGA
recognized that other states would benefit from
knowing of the optimistic vision and associated
policy steps taken by the eight states to encourage
growth in manufacturing through innovation,
entrepreneurship, and investment. In particular, other
states would benefit from knowing that these states:
2
the immediate term and mobilizing support for
the future;
? Understood that they must “just get started” and
secure some early achievements and momentum
that make a difference to manufacturers; and
? Recognized that traditional metrics may need to
be updated for advanced manufacturing (e.g.,
adding metrics to capture manufacturing as a
critical driver of innovation, productivity, and
competitiveness, in addition to being a source
of job growth).
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
Introduction
The policy agenda for U.S. manufacturing is changing. Five years ago the debate
was mostly about how to rescue and retain existing footholds in manufacturing,
but lately the debate is increasingly about how to set the stage to lead the world
in new technologies and innovations that are changing the face of manufacturing.
That shift in direction was underscored when eight states prepared new strategies
based not on the desire to “save manufacturing” but with the idea, “Let’s lead in
what lies ahead,” including robotics, nanotechnology, and advanced materials.
While playing defense against the changes that are happening still holds
enormous appeal, there is a growing sense that U.S. companies and workers
can also play offense by adroitly following the changes happening in global
manufacturing and using them to invigorate the domestic manufacturing base.
Given all that is happening in manufacturing today—including advances in
technology, a greater focus on tailor-made goods aimed at specific individuals
and industry users, and the growing importance of sustainable forms of
production—opportunities for the United States to lead are becoming increasingly
clear.1 That leadership, however, will be built on a different kind of policy than
the usual formula of enticing global public companies to build plants in the
United States. It will be built on a combination of worker education, business
innovation, and public and private sector entrepreneurship that allows this
country to lead in shaping a manufacturing sector that addresses “global
wicked problems,” such as the needs for energy, water, food, health, security,
and public infrastructure.2 That new formula is already taking shape.
It is not easy to pinpoint just what signals the beginning and the end of a policy
agenda, but one indicator may be movement in a similar direction by both
public and private sectors. By that standard, a shift is under way today in U.S.
manufacturing. In the past two years alone, multiple public sector efforts to
enable and create an environment for competitive and innovative companies to
flourish and lead in what lies ahead have developed. For example, the Advanced
Manufacturing Partnership (AMP) is a national effort bringing together industry,
universities, the federal government, and other stakeholders to create universityindustry partnerships that identify emerging technologies with the potential
to create high-quality domestic manufacturing jobs and enhance U.S. global
competitiveness. A group of states is working together to encourage growth
opportunities in manufacturing through innovation, entrepreneurship, and
investment. And in the private sector, the March 2012 Harvard Business Review—
titled Reinventing America—and other journals have reported that manufacturers
Peter Marsh, The New Industrial Revolution: Consumers, Globalization and the End of Mass Production (New Haven and London: Yale University Press, 2012).
Global wicked problems refer to public policy challenges to which there is no immediate or simple solution. The term was introduced by Horst Rittel and Melvin Webber in
“Dilemmas in a General Theory of Planning,” pp. 155–169, Policy Sciences, Vol. 4, Elsevier Scientific Publishing Company, Inc., Amsterdam, 1973.
1
2
n
Introduction
3
Box 1. The NGA Policy Academy Process
The NGA Policy Academy provided the states a venue in which to develop their strategies to encourage growth in manufacturing
through innovation, entrepreneurship, and investment.
The NGA Center’s Policy Academy gathers governor-designated state teams for an intensive, year-long strategic planning process
that creates a unique forum for advancing state policy. A policy academy is a process, not an event. What distinguishes it from
“one-shot” meetings is that an academy requires a long-term investment of time, energy, and resources in a facilitated process
that is designed to produce tangible outcomes such as executive orders, changes in administrative practices, and new legislation.
During the policy academy, NGA Center staff and other experts provide workshops, dedicated technical assistance, and
information and reports to help a state achieve its own policy objectives. Furthermore, because the NGA Center works with a
group of states simultaneously, it creates an opportunity to have a national impact in a way that individual state efforts do not.
The state teams are selected for participation by a group of independent expert reviewers through a competitive application
process. Each state team has four to seven members, designated by the governor. The teams include members from the
governor’s office and from workforce and economic development agencies, university presidents, state legislators, state
business leaders, and others.
such as General Electric and investors such as
The Carlyle Group are beginning to recalculate
their rush to globalize and reverse course to
renew American manufacturing operations.
This report describes what states are doing to support
this new shift in direction. States are looking to bring
new focus to advanced manufacturing, set the stage to
ensure that their companies and workers are ready for
the challenges ahead, and thus generate new business
and good jobs. It focuses especially on recent actions by
eight states: California, Colorado, Connecticut, Illinois,
Kansas, Massachusetts, New York, and Pennsylvania.
Their new focus on advanced manufacturing has
grown out of a recently concluded National Governors
Association Center for Best Practices Policy Academy
designed to generate a new scale of effort, a sharp
focus on the future, and opportunities for states to
work together and learn from one another. The NGA
Policy Academy process is described in Box 1. NGA
collaborated with, and received funding support from,
the U.S. Department of Commerce’s National Standards
of Institutes and Technology (NIST) Manufacturing
Extension Partnership (MEP) Program and the U.S.
Department of Commerce’s Economic Development
Administration to expose states to leading edge thinking
and best practices and to help shape strategies to
support a new policy direction.
4
As a result of the NGA Policy Academy, the eight states:
? Established new programs, such as
Connecticut’s innovation voucher program,
which is providing $800,000 to help connect
small and medium-size businesses to partners
and to universities to encourage them to take
up regular R&D and innovation activities;
? Redesigned organizations or created new ones,
such as the Colorado Advanced Manufacturing
Alliance and the Pennsylvania Governor’s
Manufacturing Advisory Council, to ensure
a consistent industry voice about the issues
and policy priorities and to seed a strong
connection among manufacturers, suppliers,
financiers, academic research centers and
universities, and key government agencies;
? Passed legislation, such as California’s
measure to renew and extend the
community college initiative that funds
manufacturing and other regional industry
workforce partnerships, or Connecticut’s
establishment of a bipartisan legislative
advanced manufacturing caucus to identify
top issues for legislative action in 2013; and
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
? Secured funding allocations for their
manufacturing priorities, such as the $1
million for the Massachusetts Advanced
Manufacturing Futures Fund, for initiatives
across five high-priority areas.
The eight states that participated in the NGA Policy
Academy are not the only ones taking a new look at
manufacturing. Maryland, for example, recently launched
a manufacturing commission to find new ways to
support manufacturing in the state. In August 2012, the
governors of Illinois, Michigan, Missouri, and Tennessee
formed a bipartisan National Governors Auto Caucus to
help foster growth of the U.S. industry and its suppliers.
And the Southern Governors Association is focusing on
manufacturing in 2012–2013. The work that the eight
states that participated in the NGA Policy Academy are
doing is of particular relevance because of the following:
n
Introduction
? Together the states represent 30 percent
of total U.S. manufacturing GDP, one-third
of U.S manufacturing jobs, and more than
25 percent of U.S. exports of manufactured
goods (see data spread on page 6 and 7);
? They signal a common agenda for states.
Although each of the eight states arrived at
its agenda independently, their agendas are
remarkably similar in the priorities they set
and the policies they are implementing; and
? As an eight-state cohort working on similar
priorities, they can scale up efforts and
generate effects that are greater than what
can be done by a single state working alone.
5
State Impact on U.S. Manufacturing
Eight states account for 30% of total U.S. manufacturing GDP.
Manufacturing as a % of Total US Manufacturing GDP (2011)
Source: US Bureau of Economic Analysis
Further, manufacturing makes a significant contribution to state GDP, and in
several states that contribution has grown over the past two years.
Manufacturing as a % of Total State Gross Domestic Product
Source: US Bureau of Economic Analysis
6
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
The 8 Policy Academy states also account for…
More than 25 percent of manufactured goods exported.
3 out of 10 U.S. manufacturing jobs.
State Contribution to the Exporting of US Manufactured Goods (2011)
Manufacturing as a % of Total US Manufacturing Employment (2012)
Source: US Census Bureau, Foreign Trade Division
Source: Economic Modeling Specialists, Inc. 2012 Q2 Covered Employment Data
Manufacturing Jobs Pay Average of Nearly 25 Percent More than the Average Job Across Policy Academy States
State
MFG Jobs
MFG as a % of Total Emp
Avg Annual Wages in MFG (2012)
MFG Wages Relative to Overall State Avg Wages
Massachusetts
256,744
7.9%
$78,703
132.4%
Connecticut
165,703
10.1%
$76,868
126.2%
1,244,995
8.2%
$76,649
138.9%
Colorado
131,891
5.7%
$62,000
126.9%
Illinois
587,131
10.3%
$61,600
121.3%
New York
457,149
5.3%
$61,231
99.3%
Pennsylvania
571,435
10.1%
$55,723
118.4%
Kansas
164,217
12.0%
$52,328
129.6%
11,886,075
8.9%
$59,787
124.2%
California
USA
Source: Economic Modeling Specialists, Inc. 2012 Q2 Covered Employment Data
n
Introduction
7
Taking a New Look At Manufacturing
Why shift policy gears? Although the specific economic environment
and historical context vary across the eight states participating in the
NGA Policy Academy, the states are similar in the ways that they
frame the reasons for a renewed drive to be competitive and the
strategies for getting there. Their reasons include the following:
First, evidence is growing that:
? Manufacturing is too important to lose;
? Manufacturing has changed and is changing;
? Too many small and medium-size manufacturers are not
growing through innovation and global exports—but could; and
? The “deindustrialization” of the United States is not inevitable.
In fact, new technologies and advanced manufacturing
processes create a new opportunity in the United States.
Second, belief is widespread that:
? Leadership in this “new” manufacturing is still
up for grabs—but it requires understanding and
developing innovation ecosystems; and
? States control a variety of policies associated with
well-developed ecosystems of innovation.
Each of those points is briefly reviewed here because they
form the foundation of the eight states’ choices of initiatives
and strategies that are discussed in the report and also
because other states may benefit from the logic.
n
TAKING A NEW LOOK AT MANUFACTURING
9
Manufacturing Is Too Important to Lose.
Although in 2010 China overtook the United States as
the world’s largest manufacturing nation, measured
by value of output, manufacturing is the third-largest
sector in the U.S. economy. It pays premium wages and
includes activities that extend far beyond production, for
example, into research, design, technological services,
and logistics. On average, every manufacturing job
supports 2.5 jobs in other sectors. At the upper end,
every high-tech manufacturing job supports 16 others.3
Box 2. Manufacturing Matters to the
U.S. Economy
• Manufacturing as an industry accounted for 18.6
million jobs in 2009—11.8 million direct jobs,
and 6.8 million indirect jobs in industries such as
transportation and warehousing and professional,
business, and financial services.
• Manufacturing in the United States offers premium
jobs. Manufacturers pay 9 percent more in wages and
benefits than the entire economy. On average, U.S.
manufacturing jobs are more likely to provide health,
pension, and other benefits than ones in other sectors.
• Manufacturing has a greater secondary economic
impact (multiplier effect) than any other sector of
the economy, with an estimated additional $1.40 in
output from other sectors being generated for every
$1.00 in final sales of manufactured products.
• The United States attracts the most foreign direct
investment of any nation in the world, as investors
continue to be drawn by its large and open market,
the quality of its infrastructure, high income levels,
and access to cutting-edge technology and research.
Source: L. Woolsey and G. Yakimov, “Innovation and Product Development in the 21st Century,” Hollings
Manufacturing Extension Partnership Board, February 2010.
3
4
5
6
Manufacturing also is integral to American
innovation, accounting for two-thirds of private
sector research and development—which is a key
driver of innovation—and employing 63 percent of
domestic scientists and engineers.4 The high level
of innovation that characterizes so much of U.S.
manufacturing depends in large part on production
and R&D being located in close proximity.5
Manufacturing accounts for about 65 percent of all
U.S. trade, including both exports and imports.6 It
makes an outsize contribution to GDP growth: in the
16 years from 1997 to 2012, real manufacturing
output grew by an average of 3 percent per year,
compared to the average of 2.3 percent for the
overall economy (see Box 2 for more evidence that
manufacturing matters to the U.S. economy).7
Adding to that, manufacturing is part of the supply
chains for health care, business services, national
defense, energy, construction, and environmental
sustainability; that is, manufacturing products and
technologies are required to create better health
care systems, more energy-efficient buildings, and
alternative energy sources (photovoltaics, advanced
energy storage devices); to ensure U.S. security; and
to create better transportation systems. Box 3 shows
the cross-cutting importance of manufacturing.
Manufacturing Has Changed and Is Changing.
A lot is happening, everywhere. Today’s factories
are high-tech and highly efficient. The dirty, boring
factory jobs of 50 years ago are now done by
robots. The jobs of today require skill, know-how,
and ability in everything from R&D to data analytics
to product design. (See Box 4 for an example of
how manufacturing employment has changed.)
Ross DeVol et al., “Manufacturing 2.0: A More Prosperous California” (Santa Monica: Milken Institute, June 2009), www.milkeninstitute.org/pdf/CAManufacturing_ES.pdf.
Charles W. Wessner and Alan Wm. Wolff, eds., Rising to the Challenge: U.S. Innovation Policy for Global Economy (Washington DC: Committee on Comparative National Innovation Policies: Best Practice for the 21st Century; Board on Science,
Technology, and Economic Policy; Policy and Global affairs; National Research Council; National Academies Press, 2012), 79-102; and Stephen J. Ezell and Robert D. Atkinson, Fifty Ways to Leave Your Competitiveness Woes Behind: A National
Traded Sector Competitiveness Strategy (Washington DC: Information Technology and Innovation Foundation, September 2012).
Susan Helper, Timothy Kruger, and Howard Wial, “Why Does Manufacturing Matter? Which Manufacturing Matters? A Policy Framework” (Washington DC: Brookings Institution, Metropolitan Policy Program, February 2012).
Ibid.
7
Mark J. Perry, “U.S. Manufacturing Leads Current Economic Growth as It Has for 15 Years,” SeekingAlpha, May 20, 2012.
8
National Academy of Engineering, Making Value: Integrating Manufacturing, Design, and Innovation toThrive in the Changing Global Economy (Washington DC: National Academies Press, 2012).
10
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
This is partly because of the increase in resources
being directed toward the design, development,
and marketing parts of the product development
cycle. As the National Academy of Engineers has
noted, “Rapidly advancing technologies in areas
such as biomanufacturing, robotics, smart sensors,
cloud-based computing, and nanotechnology have
transformed not only the factory floor but also the
way products are invented and designed.”8
The new areas of nanotechnology and synthetic biology
illustrate the trend. Scientists, engineers, and manufacturers are finding a wide variety of ways to deliberately
make materials at the nanoscale level to take advantage
of enhanced properties such as higher strength, lighter
weight, increased control of light spectrum, and greater
chemical reactivity than their larger scale counterparts.
Synthetic biology offers the hope of creating biological
factories for a virtually unlimited number of products.
Box 3. Manufacturing Covers a Wide Array of Disciplines, Systems, Applications, and Environments
MODELING &
SIMULATION
DEFENSE/
AEROSPACE
MEDICAL
DEVICES
ROBOTICS
(nano materials,
plastics, textiles,
plasma tools)
ENERGY &
ENVIRONMENTAL
TECHNOLOGY
BIOTECHNOLOGY
ENGINEERING
SYSTEMS
TECHNOLOGY
• Test and evaluation
support
• Concept definition
and analysis-ofalternatives
• Rapid prototyping
• Precision
• Manufacturing
manufacturing
process modeling
for process
• Testing
improvement &
control
• Human effects
monitoring
• Mission planning &
exercise modeling
• Highperformance
composites
• Propulsion
systems
• Directed
energy (lasers,
microwaves)
• Drug development
• In-vivo health
monitoring
• Clinical trials
design & analysis
• Advanced
therapeutics
• R&D
instrumentation
• Nano materials
• Nano
manufacturing
• Highperformance
composites
• Environmental
science
• Translational
genomics/medicine
• Biomanufacturing
• Process design
• Product
engineering
• Nanosensors
• Nano materials
• Nano
manufacturing
• Climate monitoring
systems
• Environmental
• Health monitoring
sensors
systems
• Smart grid
• Environmental
components
monitoring systems
• Smart
transportation /
infrastructure
• Systems
integration
• Process design
• Product
engineering
• Process
engineering
• Renewable energy
components
• Manufacturing
technology
• Process design
• Product
engineering
• Precision
manufacturing
• Testing
• Health monitoring
• Test and evaluation
support
ANALYTICAL
INSTRUMENTS • Concept definition • Precision
and analysis-of(signal processing,
manufacturing
alternatives
navigational, optic,
• Testing
•
R
apid
prototyping
measurement
tools)
• Manufacturing
process modeling
ELECTRONICS
& SEMICONDUCTORS
MATERIALS
SCIENCES
• Rapid prototyping
• Manufacturing
process modeling
• Test & evaluation
support
• Precision
manufacturing
• Testing
• Nano materials
• Nano
manufacturing
• Highperformance
composites
• Systems
integration
• Computation
• Process design
• Product
engineering
Source: Collaborative Economics, Inc.
n
TAKING A NEW LOOK AT MANUFACTURING
11
Box 4. Manufacturing Jobs Are Changing
In the United States, production jobs make up less than half of the total
manufacturing-related employment
Too Many Manufacturers
Are Not Growing through
Innovation and Global
Exports—but Could.
US Manufacturing Employment, 20101 (Million)
Leading firms do more
than survive. They thrive by
17.2
continuing to innovate their
way through economic and
technological shocks and
disruptions, and even use
them to their advantage (see
Box 5). But only 20 percent
Total
Service and other
Manufacturing
Service-type jobs
Assembly jobs
of manufacturers can be
manufacturingjobs linked to
employment3
in manufacturing4
related employment manufacturing2
considered truly advanced
and engaged in continuous
innovation, according to
1 Employment is total FTEs plus self-employed.
one 2009 survey.9;10 The
2 4.7 million jobs in services and 1 million jobs in primary resource industries that are directly and indirectly linked to manufacturing. Employment multipliers
were applied to import-adjusted final demand for manufacturing. Employment mulitpliers were calculated applying employment to output ratios to the
remaining 80 percent say
output multiplier table. Output multipliers were advanced using an inmport-adjusted input-output table.
3 Manufacturing employment as reported by the US Bureau of Economic Analysis.
that they are struggling to
4 Non-production jobs in manufacturing sectors, such as product R&D, marketing and sales, customer care and service, back-office functions, and facilities
management.
adapt to change, to connect
Source: McKinsey Global Institute, Manufacturing the Future: The Next Era of Global Growth and Innovation, November 2012.
to the global marketplace,
or do more than stay afloat.
Recent survey data show that
only
25
percent
rank
their
business’s progress toward
Meanwhile, a shift toward smaller runs and custombecoming a world-class, global business as good or
designed products is favoring agile and adaptable
better. Although an array of agencies, programs, and
workplaces, business models, and employees—and
policies exists to support and facilitate innovation,
creating entirely new opportunities for entrepreneurs to
commercialization, and the launch and growth of new
start, grow, and renew businesses. With developments
ventures, a substantial number of manufacturers,
such as three-dimensional printers, computational
particularly small and medium-size enterprises (SMEs),
modeling and simulation, and Internet connectivity,
are not connected to such services and resources.
more ideas than ever before are making their way
Only 5 percent to 8 percent of manufacturing SMEs
from the research stage, to development, to market.
nationally are receiving services from the federal
At the same time, technological improvements in
communication, logistics, and IT make it possible
to integrate players in multiple countries into
Box 5. New Products, Processes Key to
global supply chains—and the management of
Company Growth
the mix is becoming a highly prized skill.
Michael Porter, of the Harvard Business School, told the
These features are important not only because they
nation’s governors in 2011, “If a company in your state
illustrate how manufacturing has changed and is
is doing the same thing that it did 10 years ago—using
changing, but also because they emphasize that
the same production processes, producing the same
entrepreneurs, economic developers, educators,
products—it’s going to be very hard to succeed” (National
students, and parents will need new approaches
Governors Association Winter Meeting, Washington, D.C.,
and capabilities to boost competitiveness and
February 2011).
gain the maximum benefits from the changes.
12
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
government’s Manufacturing Extension Partnership
(MEP) program,11 for example, and most SMEs do
not benefit from frequent and extensive contacts
with universities, as many large manufacturers do.12
In fact, large corporations increasingly emphasize
access to key resources such as universities for
talent and R&D partnerships as they look for new
places to set up shop in the United States.13
Box 6. Nothing Is Inevitable about the Industrial Decline of the United States
Anecdotal Evidence in California… A reporter for the San Jose Mercury News put it vividly when he reported on September
2, 2012, that the Silicon Valley and Bay Area are in the midst of a modern manufacturing revival, thanks in part to China.
“Rising wages and other increasing costs there help make the case for manufacturing here. Add to that the other advantages
of manufacturing domestically—more control, quicker turnaround, higher quality, more secure intellectual property—and it
makes abundant sense for some companies to sell products designed in California and made in California.” He goes on to say,
“If someone told me the same thing six months ago, I would have said they were nuts. But I’ve spent that time visiting factories
and talking to dozens of academics, executives, economists, production workers, policymakers and educators. I’ve talked to a
CEO bringing jobs back to San Jose from China, a team that is building desktop computers in Santa Clara and an East Bay CEO
who is starting production in Asia to serve customers there, but who is also hiring at his Livermore factory.”
Source: Mike Cassidy, “Silicon Valley, Bay Area Poised for Manufacturing Revival,” September 2, 2012, Mercury News,http://www.mercurynews.com/business...valley-bay-area-poised-manufacturing-revival.
Empirical Evidence in Massachusetts… Report cards on Massachusetts manufacturing in 2008 and 2012 indicate “staying
power” for advanced manufacturing. Although many manufacturers have either left the state or ceased production altogether
because they could not compete in national and international markets, what is left in the state—among its more than 7,500
manufacturing firms—are enterprises that for the most part have remained competitive by investing in advanced technologies
that boosted productivity at prodigious rates and by training their labor force to take advantage of the new technologies.
That is true not only of “new” manufacturing companies in state-of-the-art, high-technology industries, but also of “old”
manufacturing firms in traditional industries such as food processing, fabricated metal operations, and plastic extrusions.
Using a “technological intensity” indicator, based on a methodology provided by the Organization for Economic Cooperation and
Development (OECD), Northeastern University researchers tracked the technological intensity of the entire manufacturing sector
in the state from 1970 to 2010. The level of technology (low-technology, medium-low-technology, medium-high-technology,
and high-technology) specific to an industrial sector is measured by the ratio of research and development (R&D) expenditure
to value-added in an industry and the technology embodied in purchases of intermediate and capital goods. In 1970, nearly
40 percent of the Massachusetts manufacturing workforce was in low-tech industries, with less than 20 percent in the hightech sector. But in 2010, the low-tech sector had shrunk to less than 25 percent and the high-tech sector had expanded to 31
percent of the total workforce. Employment in the two medium-tech sectors grew by one to two percentage points during the
same 40 year span. That important finding suggests that the strength of Massachusetts manufacturing is not only in the most
R&D-intensive sectors, but also in a broad range of companies that remain competitive by redesigning product lines and the
ways in which they manufacture them. In short, the evidence is clear that low-tech manufacturing is a thing of the past in U.S.
manufacturing. High-tech manufacturing is the current driver and appears to be growing.
Source: Barry Bluestone, et al., Staying Power II A Report Card on Manufacturing in Massachusetts 2012 (Northeastern University Kitty and Michael Dukakis Center for Urban and Regional Policy, 2012.)
Lindsey Woolsey and Gary Yakimov, “Innovation and Product Development in the 21st Century,” (Hollings Manufacturing Extension Partnership Board, February 2010.)
A study of U.S./U.K. manufacturing sectors found that approximately 33 percent and 37 percent of the manufacturing sectors, respectively, can be characterized as having low technological intensity. Another 23 percent of the manufacturing sector
can be characterized as having medium-high technological intensity. Reported in the Information Technology and Innovation Foundation (ITIF) report, Stephen J. Ezell and Robert D. Atkinson, International Benchmarking of Countries’ Policies and
Programs Supporting SME Manufacturers, September 2011, 41.
11
The MEP Program of the U.S. Department of Commerce, which helps small businesses apply new techniques and technologies, has a modest $125 million annual budget that is spread among 66 centers across the country; it is supported on a
matching basis by the states, as well as through fees.
12
Interviews with both small manufacturers and universities indicate that SMEs do not engage as often as big companies. In The Report to the President on Capturing Domestic Competitive Advantage in Advanced Manufacturing (July 2013), the
President’s Council of Advisors on Science and Technology suggests that more than 300,000 small and midsized firms are largely outside the U.S. innovation system.
13
Members of the 2005 Rising Above the Gathering Storm Committee, National Academy of Sciences, National Academy of Engineering, and Institute of Medicine, Rising Above the Gathering Storm, Revised, Rapidly Approaching Category
(Washington DC: National Academies Press, 2010).
9
10
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TAKING A NEW LOOK AT MANUFACTURING
13
The “Deindustrialization” of America Is
Not Inevitable. In Fact, New Technologies
and Advanced Manufacturing Processes
Create a New Opportunity for America.
During the last few years positive indications have
appeared that technologically sophisticated, highvalue manufacturing—advanced manufacturing, as it
is sometimes called—can thrive in the United States.
First, the Bureau of Labor Statistics projects a continuing
decline in the number of manufacturing jobs in the
United States through 2020 but an increase in value
added by the sector—that means gains concentrated
in particularly high-wage, more productive segments
Box 7. The Keys to Capturing Competitive
Advantage in Advanced Manufacturing
In its Report to the President on Capturing Domestic
Competitive Advantage in Advanced Manufacturing,
the American Manufacturing Partnership recommended
two things. The partnership identified 11 cross-cutting
technology areas for attention because “they are pivotal
in enabling U.S. manufacturing competitiveness, both in
terms of differentiation and tradability of goods.” It also
suggested that “universities, national labs, intermediate
technology institutes, independent research institutions,
and community colleges will need to work together
with industry to support research, development, and
deployment of these manufacturing technologies, and to
develop the talent pipeline for industry”:
• Advanced sensing, measurement, and process control
• Advanced materials design, synthesis, and processing
• Visualization, informatics, and digital
manufacturing technologies
• Sustainable manufacturing
• Nanomanufacturing
• Biomanufacturing and bioinformatics
• Additive manufacturing
• Advanced manufacturing and testing equipment
• Industrial robotics
• Advanced forming and joining technologies
Source: AMP Steering Committee, President’s Council of Advisors on Science and Technology, Report to the
President on Capturing Domestic Competitive Advantage in Advanced Manufacturing (Washington DC: AMP
Steering Committee, President’s Council of Advisors on Science and Technology, July 2012).
14
of manufacturing (e.g., search/detection/navigational
instruments, guided missiles and space vehicles,
and electromedical apparatus).14 Second, changes in
manufacturing are occurring that may favor American
ingenuity, entrepreneurship, and “tight connections
among innovation, design, and manufacturing, and also
our ability to integrate products and services.”15 Third,
manufacturing companies are returning to, or reinvesting
in, North America, particularly manufacturers that rate
high in product innovation, intensive customer service,
supply chain connectedness and cost.16 Recent case
studies show that companies that previously sent work
offshore are bringing it back to the United States because
of “rising oil prices, longer shipping times, rising wages in
coastal Chinese cities, intellectual property leakage, the
desire to create innovation hubs, and a fuller appreciation,
based on years of experience, of the downsides of
offshoring 17 (See Box 6 for state examples.) American
firms are now more likely to appreciate ‘hidden costs’ of
production abroad, such as administrative costs, legal
costs, risks and complexities.”
Leadership in This “New” Manufacturing
Is Largely Up for Grabs—but It Requires
Understanding and Developing Innovation
Ecosystems Like Those that Created Companies
such as Apple, Amazon, and Google.
Although not everyone agrees that a new industrial
revolution has begun, it is widely agreed that nearly all
the features of manufacturing—technology platforms,
consumer choice, value chains, markets, and new
manufacturing nations and clusters—are changing
and becoming increasingly intertwined.18 (Some
of the new opportunities are described in Box 7.)
Grabbing leadership in this dynamic and complex
context requires businesses and policymakers to
decide to compete in innovating new technologies, new
production processes, and new business models and
in initiating new ventures. They must also lay the basis
for well-developed ecosystems of innovation, such as
Bureau of Labor Statistics, “Employment Outlook: 2010-2020, Overview of Projections to 2020,” Monthly Labor
Review, January 2012.
National Academy of Engineering, Making Value: Integrating Manufacturing, Design, and Innovation to Thrive in the
Changing Global Economy. (Washington DC: National Academies Press, 2012).
16
Paul Bjacek and Larry Oglesby, “North America Flexes Its Industrial Muscle,” in Accenture Outlook, June 2012. http://
www.accenture.com/us-en/outlook/Pages/outlook-journal-2012-north-america-flexes.
17
Helper, Kruger, and Wial, “Why Does Manufacturing Matter?”
18
Marsh, The New Industrial Revolution.
14
15
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
establishing collaborations between universities and
business and between public and private pools of risk
capital. They must generate a strong, reliable, and welltrained workforce that will support the entire life cycle
of technology development—from R&D, invention,
innovation, and commercialization, to scale-up for
efficient production and export development—and the
emergence of new, and newly enhanced, advanced
manufacturing clusters and global value chains.
Belief Is Widespread that States Control a Variety
of Policies Associated with Well-Developed
Ecosystems of Innovation.
Increasingly states are helping to create innovation
ecosystems, or innovation hubs, of the type that have
made Austin, Texas, and San Diego, California, leaders
in specific industry clusters (in Austin, semiconductors
and software; in San Diego, biotechnology). Although
not every state has a Silicon Valley or a Stanford
University, they know that public and private leaders
can work together to develop an array of statewide
proficiencies—smart people, unique research
institutions, strong collaborations, and other links and
resources—both to help entrepreneurs establish highgrowth businesses and to create strategic advantages
for existing small and medium-sized companies that
must compete in the global economy. States such
as Arizona, Oregon, Ohio, New York, and Utah are
already benefiting from their stepped-up efforts during
the last decade to support and facilitate innovation
ecosystems for biosciences, nanotechnology, and
alternative energy (see Box 8 on results in Oregon).
More and more governors and other state leaders
are gaining confidence that their states can apply the
lessons learned from earlier efforts in biosciences
and nanotechnology industry clusters to catalyze and
support next-generation advanced manufacturing.
Box 8. Best Practice Model—Oregon’s Innovation Ecosystem for Nanotechnology
Through NGA’s policy academy process, states had an opportunity to learn from organizations that connect small businesses
to an ecosystem of supports, including access to research, commercialization assistance, and shared facilities. Oregon’s
Nanoscience and Microtechnologies Institute (ONAMI) is fostering research and development capacity in the new field of microand nanotechnologies among Oregon’s four research universities, the Pacific Northwest National Laboratory, and the state’s
“Silicon Forest” high-technology industry cluster.
To facilitate commercialization, ONAMI offers proof-of-concept grants to university researchers and companies to advance
technology into the marketplace. Funding comes with business development services, as ONAMI operates with the understanding
that new companies have two major gaps to overcome: the gap between a research result and a manufacturable product, and the
gap between a technology-based solution and demand for that solution from an established market.
ONAMI has 250 researcher members from its four partnering research institutions. Members are eligible for competitive participation in
ONAMI-sourced large projects, and they can apply for matching funds for research, workforce development, and equipment purchases.
ONAMI provides a 5 percent match if only one ONAMI-affiliated institution participates. Matching increases to 7 percent if two or
more institutions participate. Shared equipment proposals are matched up to 16.5 percent of the value of the equipment. In addition
to funding, ONAMI staff have built collaborative teams of university and industry researchers for research and commercialization.
ONAMI operates facilities that provide access to specialized equipment and promotes them to businesses statewide via the
State Business Development Office. The ONAMI high-tech extension service connects a group of shared/open user facilities to
industry—now over 150 companies of all sizes—on a fee-for-service basis.
Its effort to “bootstrap an ecosystem” is already paying off for Oregon, generating new firms, new jobs, and new economic
strengths. As of May 2011, ONAMI had invested $4.6 million in its commercialization gap fund to assist 23 start-up companies
that have raised a total of $93.3 million in external funding. New research awards and contracts to ONAMI researchers grew from
less than $10 million in 2002 to more than $50 million in 2010. ONAMI can also link increases in company revenue to increased
industrial use of the shared-user facilities, including access to focused ion beam and microanalytical and XPS capabilities.
Source: Oregon Nansocience and Microtechnologies Institute, “Metrics and results,”http://www.onami.us/index.php/economic-impact/metrics_and_results (accessed May 29, 2012).
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TAKING A NEW LOOK AT MANUFACTURING
15
TECHNOLOGY AND TIME BRING A NEW PERSPECTIVE
All eight NGA policy academy states emerged from independent
analyses of strengths, weaknesses, opportunities, and threats
with the view that (a) manufacturing matters to economic
growth, and (b) their public policy choices will strengthen that
economic role. Two perspectives appeared to carry the day:
? Technology. New technologies (e.g., robotics, 3D
printing, additive manufacturing) and business models
will continue to shake up manufacturing, and that opens
new opportunities to lead in global manufacturing.
? Time. Times have changed since the United States first
experienced massive offshoring, and important trends are
beginning to favor U.S. locations. Those include rapidly rising
wages in emerging economies, increasing transportation
and logistical costs, and shortening product life cycles.19
Moreover, after a decade or so of practicing cluster-based,
science and technology–oriented economic development
strategies, states are now more assured that they know how
to strengthen the nation’s competitive advantage in advanced
manufacturing by embracing innovation hubs and ecosystems.
19
Michael E. Porter and Jan W. Rivkin, “The Looming Challenge to U.S. Competitiveness,” Harvard Business Review, March 2012, 55–62.
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TECHNOLOGY AND TIME BRING A NEW PERSPECTIVE
17
Figure 1. Key Elements of Innovation Ecosystems
Research
Universities
Entrepreneurs
Quality of Life
Intermediary
and Integrative
Organizations
Investment
Capital
Business
Environment
Social and
Professional
Networks
Workforce
Source: Mary Walshok et al, Closing America’s Job Gap: How to Grow Companies and Land Good Jobs in the Age of Innovation (University of California Regents, Business Books, 2011).
Both Republican and Democratic governors have
supported the development of clusters in their
states. Key features of this strategy, as characterized
by the NGA Center for Best Practices (the NGA
Center), are state actions in four areas:
? Investing to build strong research
capabilities, provide shared facilities,
and produce and attract globally
competitive talent in strategic areas;
? Encouraging interaction by requiring
collaboration among universities, firms, and
others and cultivating strong networks, industrydriven intermediaries, well-designed research
facilities, and compact geographical location
(because proximity enables greater interaction);
? Putting people from diverse industries,
knowledge fields, and cultures together
by cultivating strong networks and welldesigned research facilities to increase
collective capabilities and creativity; and
18
? Encouraging the application and commer-
cialization of research by experimenting with
university-industry partnerships, pioneering
open intellectual property policies and faculty
tenure changes, and keeping industry
continuously engaged.
The essence of the strategy is tight alignment of
industry, university, and government resources
so that all components of the system are moving
toward the same goal: to be the best location for
high-value, specialized, and innovative activities.
A number of diagrams of “innovation ecosystems”
have been created to help guide coordinated public
policy and investment choices. One of them, shown
in Figure 1, depicts eight elements that San Diego
identifies as the sources of the innovation performance
and global competitiveness of its high-technology and
life science clusters.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
Box 9. Several Caveats About U.S. Manufacturing
Good signs come with caveats, and the eight NGA Policy Academy states are not Pollyannas. They recognize that all is not well
with American manufacturing:
• The number of jobs in manufacturing dropped 41 percent between 1979, when manufacturing employment peaked, and the
end of 2009, when it reached its recent low point.20
• Facilities involving large numbers of jobs and high-end work moved out of the United States over the past decade at a
faster rate than that at which some companies are currently bringing facilities back. Harvard Business School conducted
a survey of 1,700 alumni who were personally involved in firm location decisions and found that more than half of the
decisions concerned the possibility of moving existing activities out of the United States, whereas only about 10 percent
considered moving activities from another country into the United States.21
• A manufacturing revival will not solve the country’s problem of unemployment, partly because modern plants use robots and
fewer workers and run day and night, 365 days a year, and partly because the jobs that new factories do create will be highskill jobs, requiring workers trained in “STEM” subjects—science, technology, engineering, and math.
• The United States is lagging in innovation in the manufacturing sector relative to high-wage nations such as Germany
and Japan, and it has been losing significant elements of the research and development activity linked to manufacturing
to other nations. It has also been losing its ability to compete in the manufacturing of many products that were invented
here—from laptop computers, to flat panel displays, to lithium ion batteries.22
• “Whether it is Apple iPhones or Rolls-Royce Trent aero engines, the real profit is not made in the basic assembly of goods.
The margins are in servicing, brands, design and after-sales.”23
• Nations around the world, most notably China, Germany, Korea, and India, are improving the climate for new industrial
plants and encouraging business investment locally. For example, China has more than 300 research centers, second
only to the United States, and the number is increasing. A multiyear initiative is under way to make India a global
nanotechnology hub, including the establishment of 14 new world-class universities.24
Michael E. Porter and Jan W. Rivkin, “The Looming Challenge to U.S. Competitiveness,” Harvard Business Review, March 2012, 55–62.
Susan Helper and Howard Wial, “Accelerating Advanced Manufacturing with New Research Centers” (Washington DC: Metropolitan Policy Program at Brookings, Brookings Institution, February 2011).
Michael E. Porter and Jan W. Rivkin, “Prosperity at Risk: Findings of Harvard Business School’s Survey on U.S. Competitiveness” (Boston: Harvard Business School, January 2012).
22
AMP Steering Committee Report, President’s Council of Advisors on Science and Technology, Report to the President on Capturing Domestic Competitive Advantage in Advanced Manufacturing (Washington DC: President’s Council of Advisors on
Science and Technology, July 2012).
23
Luke Johnson, “Making It in the New Industrial Revolution,” Financial Times, August 28, 2012; and Dan Breznitz and Peter Cowhey, “America’s Two Systems of Innovation: Recommendations for Policy Changes to Support Innovation, Production and
Job Creation” (San Diego: CONNECT Innovation Institute, February 2012).
24
Members of the 2005 Rising Above the Gathering Storm Committee et al.
19
20
21
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TECHNOLOGY AND TIME BRING A NEW PERSPECTIVE
19
WHAT STATES ARE DOING TO FORGE
NEW MANUFACTURING STRENGTHS
Although the eight states arrived at their agendas independently
of one another, their agendas are remarkably similar in key
issues and priorities. This part of the report discusses policies,
programs, and approaches that the states have been pursuing that
appear to be both innovative and promising for helping American
manufacturers begin operations, grow, and compete globally.
Four objectives rose to the top across all states as the focus for
their strategies:
? Pursue an integrated approach to developing an advanced
manufacturing strategy, connecting large and small
manufacturers, as well as state, federal, and
regional partners;
? Develop and implement industry-driven priorities
and partnerships;
? Boost the innovation and commercialization
capacities of manufacturers, particularly small and
midsized firms, by connecting them to partners,
consortia, and a whole system of supports; and
? Provide talent both to fill the immediate specialized
needs of employers and to deliver lifelong, industryrelevant training for workers at all levels.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
21
Pursue an Integrated Approach to Developing a
Manufacturing Strategy, Connecting Large and
Small Manufacturers, as well as State, Federal,
and Regional Partners.
The states participating in the NGA Policy Academy
independently developed similar lists of the most
critical areas of focus for manufacturers. The areas
included access to capital, industry-relevant workforce
and education, streamlined business services and
environment, innovation, and improved marketing
and branding. States also similarly realized that
duplication in effort, parallel but disconnected policies
and programs, and misaligned approaches across
federal, state, and local programs are a problem
for manufacturers trying to navigate public support
programs. Comprehensive manufacturing strategies
were essential to connect the many needed pieces.
Broadly, there were three approaches
to strategy development:
? Using statewide councils comprising
large, midsized, and small manufacturers
(Pennsylvania and Massachusetts);
? Emphasizing a regional, bottom-up
process, involving a series of meetings
of local public and private stakeholders
(Colorado, New York, and California);
? Assembling, improving, and coordinating
activities that are already in progress
(Kansas and Connecticut).
The Statewide Council Approach
Pennsylvania In fall 2011, Governor
Tom Corbett formed the Governor’s
Manufacturing Advisory Council (GMAC)
as a public-private partnership. He
appointed the secretary of the Department of Commerce
and Economic Development and the president and
CEO of Kennametal, Inc., as co-chairs, along with
24 manufacturing leaders and experts from across
the commonwealth as its members. The members
included a cross-section of manufacturing interests
from the areas of heavy manufacturing, minerals,
22
pharmaceuticals, plastics, steel, and textiles. The GMAC
was given six months to develop recommendations for
sustaining and growing Pennsylvania manufacturing.
The governor assigned the Team Pennsylvania
Foundation (a unique, nonpartisan, charitable
nonprofit, created in 1997 to allow government and the
private sector to collaborate for the betterment of the
Commonwealth of Pennsylvania) to manage the GMAC
without using tax dollars. With support from the NGA
Policy Academy and the Pennsylvania staff leadership
team, the council organized its work around six monthly,
full-day meetings, each focusing on a specific topic,
including an overview of the manufacturing environment
in Pennsylvania; talent and workforce development;
opening new domestic and international markets;
making government work for manufacturers; innovation;
and access to capital. The final meeting summarized
findings, challenges, opportunities, and next steps. The
governor released the council’s recommendations at
a press event on August 21, 2012. The Pennsylvania
policy academy leadership team received the task of
developing a plan to implement the recommendations.
In September 2012, the Pennsylvania policy academy
leadership team met with other stakeholders to
begin developing the implementation plan. They
organized into four teams based on the categories of
recommendations in the GMAC paper:
? Talent and workforce;
? Opening new markets (international,
domestic, and emerging energy);
? Innovation; and
? Access to capital.
Massachusetts Beginning in 2010,
Massachusetts began consultations
with manufacturers about their needs,
including a wide array of state agencies, federal
programs, and local institutions and organizations
to identify potential solutions and complementary
roles. Massachusetts’ approach emphasizes
regional collaboration among manufacturers,
educators, and other civic leaders but recognizes
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
that those collaborations will be most effective when
connected to statewide collaboratives composed
of policymakers, academic and civic leaders,
and manufacturers from throughout the state.
In November 2011, Governor Deval Patrick established
the Advanced Manufacturing Collaborative to align
and focus public and private resources statewide in
support of manufacturing initiatives, to enhance the
effectiveness of regional networks, and to promote the
visibility of manufacturing in and outside the state. The
collaborative developed five working groups focused
on particular areas identified through the consultative
process: promoting manufacturing; workforce and
education; technical assistance and innovation; access
to capital; and the cost of doing business. Each working
group continues to be led by industry co-chairs and
includes representatives of education and state and
federal government, as well as other stakeholders.
In July 2012 the state legislature formally established
the Advanced Manufacturing Collaborative in
statute, to sustain the integrated approach, and also
established an Advanced Manufacturing Futures
Fund, with authority to finance initiatives in the five
areas. In addition, the legislature increased the
funding of key partners in the strategy, including
Massachusetts’ Manufacturing Extension Partnership
(MEP) and existing workforce training activities.
The Regional Bottom-Up Approach
Colorado Colorado’s approach to
building a comprehensive manufacturing
strategy started with regional meetings of
local public and private stakeholders as
part of Governor John Hickenlooper’s intensive program
of listening sessions, conducted around the state early
in his administration. Those sessions led to the Colorado
Blueprint, a framework for strengthening Colorado’s
industries, including advanced manufacturing, around
six core objectives:
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
1. Build a business-friendly environment;
2. Retain, grow, and recruit companies;
3 Increase access to capital;
4. Create and market a stronger Colorado brand;
5. Educate and train the workforce of the future; and
6. Cultivate innovation and technology.
Since the regional listening sessions, the governor’s
office and the Colorado Office of Economic Development
and International Trade (OEDIT) have convened
CEOs and other top executives from 14 key industries
into individual industry steering committees. Those
steering committees create business plans for their
industry networks, centered on the six core objectives.
Tactical teams on workforce development, education,
economic development, and other support programs
then are responsible for implementing the actions in
the business plans. Advanced manufacturing was the
first industry to create a business plan, in early 2012.
The original Advanced Manufacturing Steering
Committee represented 26 industry leaders from across
the state’s regions, its diverse manufacturing, and its
small and large companies (including Vestas Towers and
Intrex Aerospace, for example). The steering committee
concluded that Colorado lacked a unified structure or
association aligning issues and goals across the industry
to meet the needs of small and medium-sized enterprises
(SMEs) and original equipment manufacturers (OEMs).
In response, OEDIT joined with industry members to
create the Colorado Advanced Manufacturing Alliance
(CAMA), a 501(c)(6) organization guided by a board
made up of the original steering committee and a fulltime president and funded by private investments. The
alliance is organized across three areas:
? Member strategic services, which focuses on
implementing the advanced manufacturing
business plan, includes increasing and
streamlining access to state programs
related to business development, access
to capital, branding and marketing,
and workforce development;
23
? Direct services to manufacturers, which will
incorporate a partnership with manufacturing
service providers, such as a restructured
Manufacturing Extension Partnership
Center focused on continuous improvement
services, innovation engineering assistance,
and a workforce training network; and
? Technology and innovation acceleration, which
includes a new Center for Entrepreneurship
(inclusive of various existing Colorado
incubator and entrepreneurship programs)
and a new Colorado Advanced Manufacturing
Innovation Institute, whose form is currently
being analyzed but which may be modeled
on Virginia’s Commonwealth Center for
Advanced Manufacturing (see Box 10).
New York When Governor Andrew
Cuomo took office in 2011, he
created a new plan for economic
development, one that changed New
York’s economic development strategy
from one in which leadership and decision making
were concentrated at the state level to a model that
empowers regions to develop and invest in their own
strategies for job creation and business growth.
Regional economic development councils were
created in each of the state’s 10 regions. Local
business, university, labor, and community leaders
were charged to develop their own strategic plans
based on their region’s assets, strengths, and
aspirations. It is important that each regional council
is co-chaired by a business leader and a university
leader. That choice expressed the governor’s
fundamental belief that economic growth in today’s
global environment requires a strategic link between
the state’s business and university strengths.
Through an intensive, deliberative process, each region
discussed, debated, and designed its own strategic
plan. The state received 10 different plans tailored to
the strengths, needs, and opportunities of each region.
25
Although the plans were unique, common elements
were found in almost all. Most relevant to the NGA
Policy Academy work was the emphasis that each
region placed on entrepreneurship and innovation for
growth. The regional councils expressed the need to
create cultures of innovation and entrepreneurship on
their campuses, in their communities, and within their
corporations. Another common characteristic was an
emphasis on manufacturing, particularly advanced
manufacturing, as a catalyst for the growth of the
regions. The plans of Western New York, the Finger
Lakes Region, Central New York, the North Country,
the mid-Hudson Valley, and Long Island all placed
a high priority on the growth of manufacturing.
The governor’s office charged state agencies to align
their programs and resources to respond to the needs
and opportunities identified by the regional councils.
The state provided an initial round of $785 million in
funding, through a consolidated application process
that combined resources available from individual
state agencies. The state made more than $700
million available in a second round of funding to
maintain the regional councils as the driving force
for economic development. Eleven state agencies
participated in the 2012 consolidated funding
application, including Empire State Development,
the New York Department of Labor, the Council on
the Arts, the New York Power Authority, Homes and
Community Renewal, and the New York State Energy
Research and Development Authority, among others.25
The state received more than 2,800 finalized
applications in the latest round of consolidated
funding. The regional councils completed their
ranking of projects, giving special attention to those
that aligned with the regional strategic plans and
awarding the highest scores to projects that are
“regional priorities.” Many of those projects are based
on new partnerships in which business and industry
are attempting to unleash the innovation potential
of new technologies or addressing specific industry
needs, such as shortages of workers in skilled trades.
New York Works for Business, Regional Economic Development Councils,http://regionalcouncils.ny.gov/.
24
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
During fall 2012, Governor Cuomo and a strategic
implementation assessment team met with each
council in their region to assess how well each
region is progressing toward its objectives.
Both competitive and collaborative processes are
at work. Regions compete for funding, and that
competition has required that partners identify and
leverage their greatest strengths. It also is forging
collaborations, as individuals and institutions learn
more about their regional assets and how they
can be collectively deployed to address common
objectives. Round two has witnessed the development
of some collaborative projects between regions,
many of which address technological and innovation
needs of companies throughout the state.
California California’s manufacturing
policy academy team linked to and
leveraged a new, strategic statewide
economic policy process. The California
Economic Summit process was initiated by
two civic organizations—California Forward
and the California Stewardship Network—to identify and
mobilize around economic priorities for the state. The
summit process involved more than 1,400 Californians,
who attended one of the 14 regional forums or a
statewide meeting and launched seven major “signature
initiatives” in areas such as workforce development,
innovation, infrastructure, access to capital, and
regulatory reform. During the process, participants
voiced support for stronger efforts to promote
manufacturing, resulting in a specific recommendation
to seed “regional manufacturing pilot projects” across
California. In turn, based on discussions between
policy academy and state community college leaders,
manufacturing was made eligible as a focus for regional
industry partnership seed funding. Funding was
awarded to more than 10 manufacturing partnerships
statewide. In addition, legislation was passed to
renew and extend the California community college
initiative responsible for funding manufacturing and
other regional industry workforce partnerships.
n
WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
The Assembling and Coordinating Approach
Sensing that manufacturers had little or no appetite
for another manufacturing strategy and prioritysetting exercise and wanted “action” instead,
Kansas and Connecticut took the “assemble
and coordinate” approach for their initiative.
Kansas A series of regional meetings
with manufacturers, local officials, and
higher education and other service
providers revealed a number of common challenges:
? Numerous initiatives, programs, and
organizations focused independently on
different dimensions of manufacturing;
? A lack of consistent and comprehensive
communication to manufacturers about
the array of assistance available;
? No systematic mechanism for feedback
to policymakers on manufacturing needs
and limited manufacturing presence in
commercialization and technology transfer
discussions at state universities; and
? No actionable evaluative process to measure
the impact of various programs and
investments designed to help manufacturers.
Rather than focus on a statewide effort, the state
embarked on several regional initiatives to integrate
a multitude of plans and bring a coherent focus to
advanced manufacturing using the strengths and assets
of each region. For example, Wichita is exploring ways
to extend technologies, facilities, equipment, workforce
programs, and partnerships within aviation to other
advanced manufacturing industry segments. Those
transferable assets can support new opportunities for
existing companies, stimulate new, high-growth startups, and attract new businesses to the area. Leaders
are also looking outside the metro area to identify
new collaborations that will build on Wichita’s existing
and emerging industrial and research strengths.
25
Kansas City is partnering with a number of groups
to use its newly designated National Cancer Institute
Center and technology upgrades related to the
Google Gigabit Fiber pilot as focal points for attracting
new wealth to the region. In addition, the city has
created a new program, funded by the board of
public utilities and industry with technical expertise
in sustainable manufacturing (provided by the MidAmerica Manufacturing Technology Center, the local
MEP center and a Department of Commerce affiliate)
to improve the competitiveness of its manufacturers
by reducing energy costs in aging facilities.
that the high cost of energy in Connecticut was a
challenge for manufacturers, so the Department of
Economic and Community Development joined with
the Clean Energy Finance and Investment Authority to
develop and launch a Clean Energy Business Solutions
program. The program is designed to address energy
cost challenges for existing Connecticut businesses
or potential new arrivals. That program will provide
financing to targeted companies of strategic importance
for economic development in Connecticut, with the goal
of improving their competitiveness by delivering cleaner,
cheaper, and more reliable energy to their operations.
At the state level, to reinforce the integrated approach,
the Mid-America Manufacturing Technology Center, a
Department of Commerce affiliate, is implementing a
partnership plan and an information/collaboration portal
as a centralized reference point for manufacturers.
At the same time, State Senator Gary LeBeau, who
was a member of the policy academy team, launched
a bipartisan “advanced manufacturing caucus”
in the legislature to identify the most important
issues for legislative action in 2013. The caucus
now includes 30 legislators, spanning the state
and representing various legislative committees.
Connecticut Connecticut started
the NGA Policy Academy process
already having a good understanding
of the top issues for Connecticut manufacturers,
partly because it had already conducted studies.
Rather than reconvene manufacturers to discuss
challenges that had already been identified, the
policy academy team took the issues that they knew
were priorities and created an action plan, with input
from representatives of manufacturing companies,
the state legislature, and universities, and workforce
and economic development leaders in the state.
The priority areas identified by the policy academy
team include (1) creating a sustainable, businessfriendly environment for manufacturers; (2) improving
connectivity among manufacturers, institutions, and
companies in relevant fields, leading to new ideas and
partnerships for commercial opportunities; (3) helping
manufacturers enhance their technology and processes;
and, (4) attracting, educating, and maintaining strong
talent to support current and future manufacturing.
For each area, the team worked to identify actions
that could be implemented quickly and could lead
to long-term change. For example, the team knew
26
Develop and Implement Industry-Driven
Priorities and Partnerships.
It is widely agreed that employer engagement is
critical in making any state manufacturing strategy a
success. However, many programs engage employers
through a one-time (or sometimes annual) solicitation
of information about their needs, then design and
provide services for them as customers. Often that
approach has yielded disappointing results. And
efforts to foster engagement in additional ways, such
as industry association meetings and workshops,
tend to yield recommendations for general business
environment priorities (taxes and regulations) but not
much in terms of concrete industry research priorities
or types of real-time services useful for manufacturers
seeking to produce globally competitive products.
Some states are moving to a more systematic and
lasting employer engagement strategy of working with
manufacturers as partners in both setting priorities
and implementing them. In that way, employers share
ownership of the strategy and continue to contribute
their guidance and unique resources to drive results.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
During their NGA Policy Academy work, both
Massachusetts and Colorado formed new publicprivate partnerships to ensure that industry leaders are
staying engaged and working with other public and
private entities to help implement specific initiatives.
Both states saw a need to engage stakeholders
in additional ways besides industry associations.
Both states spent considerable time looking at
the purpose and structure of the Commonwealth
Center for Advanced Manufacturing (CCAM), which
NGA suggested as one model for more structured
coordination among industry, university, and
government (see Box 10 for a description of CCAM).
Massachusetts Massachusetts
consulted with hundreds of employers
of all sizes across every region of the
state to determine priorities and then established the
Massachusetts Advanced Manufacturing Collaborative,
led by industry, to focus on five major priority areas.
Most members of the collaborative are manufacturers,
plus leaders from academia, the legislature, and
Box 10. Best Practice Model—Commonwealth Center for Advanced Manufacturing
Through the policy academy process, states had an opportunity to learn about a new kind of organization that uses industry
funding and input to advance industry priorities, particularly in workforce development and industry-relevant research. Virginia’s
Commonwealth Center for Advanced Manufacturing (CCAM) is a collaboration among the state, the University of Virginia, Virginia
Tech, Virginia State University, and manufacturing companies worldwide. The state was primarily responsible for developing a
large and diverse partnership to bring a Rolls Royce production facility to Virginia. The partnership now provides tailored research
and development (R&D) and workforce training to eight large manufacturing companies, and expanded participation by supplier
companies is being planned.
By pooling resources and keeping research focused on company needs, CCAM increases the value of the R&D dollar. Members
share facilities, personnel, and pre-competitive research. The partnership bridges the gap between fundamental research
typically performed at universities and product development routinely performed by companies. Research is conducted in areas
(for example, surface engineering) that add value to manufacturers in diverse sectors. Manufacturers are able to direct the
research toward production and focus it on commercial uses.
CCAM’s eight industry members, including Newport News Shipbuilding, Rolls Royce, and Siemens, make sizable contributions to
the partnership. Tier 1 industry members contribute $400,000 annually for at least five years, have one full-time staff person onsite at the CCAM facility, and engage two other companies (often smaller suppliers) as Tier 2 members. Tier 1 membership fees
cover two kinds of research—generic and directed. All members have a nonexclusive, royalty-free license to intellectual property
developed from generic research. Directed research is owned by the member company that funded it. The cost of entry for Tier 2
members is lower. They have access to generic but not directed research. Industry partners have committed to contribute more
than $25 million to CCAM over five years.
CCAM’s collaborative pre-competitive model is also focused on preparing a skilled workforce for manufacturing jobs. Students
participate in CCAM’s research and development through internships and graduate student internships, which foster the
transfer of skills between seasoned industry veterans and students. CCAM is also partnering with Virginia’s community college
system to develop training that meets the specific workforce needs of its industry members.
The state has made a number of commitments to CCAM’s continued development, including matching research funds and
funding laboratory renovations, faculty hires, graduate research assistantships, undergraduate student interns, and workforce
development programs. The state’s contributions to CCAM will total at least $40 million over five years.
The three founding universities also contribute resources to CCAM. Each university member commits one staff person to be onsite at CCAM facilities full-time. The universities are committing $10 million to CCAM over five years through faculty hires and
start-up packages, matching research funds, new manufacturing courses, and research equipment funding.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
27
government agencies. The five priorities were assigned
to working groups with co-chairs from industry. Specific
actions in each area were identified and refined and
became the scope for the the new $1 million Advanced
Manufacturing Futures Fund (Futures Fund) created
by the legislature. The futures fund will help seed
industry-led regional manufacturing partnerships that
pursue a customized workforce, technical assistance
and innovation, and other strategies. The statelevel Advanced Manufacturing Collaborative, now
formalized in statute, will promote and oversee action
in all five priority areas. It will be led by two industry
co-chairs and include strong employer participation.
Colorado The Colorado Advanced
Manufacturing Alliance (CAMA)
identified two big obstacles impeding
the ability of programs and policies to
meet the needs of industry: the lack of a consistent
industry voice about issues and needs and the absence
of a strong network to facilitate business-to-business
activity and partnering. Regional manufacturing sector
partnerships exist in the southern and western parts
of the state, but they are disconnected from one
another and are not present in other regions. Like
other states, Colorado has had industry networks or
clusters rolled out before, but this time the governor
and OEDIT staff deliberately sought out permanent
homes for each of the governor’s 14 key industry
networks, so that industry executives can convene
regularly and so that one organization, in partnership
with other stakeholders, is responsible for keeping
the industry voice front and center while aligning,
improving, or creating policies and programs. In the
case of advanced manufacturing, a credible convener
did not exist, and so CAMA was created. In addition to
its 26-member board, CAMA is propelled by industryled committees. It established a membership goal of
more than 100 manufacturers in its first six months.
28
Boost Innovation and Commercialization Capacity
of Manufacturers, Particularly for Small and
Midsized Firms, by Connecting Them to Partners,
Consortia, and a Whole System of Supports.
The common challenges of manufacturers across
the United States are well documented, and despite
increases in overall productivity by U.S. manufacturers,
largely because they have adopted lean processes,
individual manufacturers still report barriers to
growth that prevent them from creating new jobs.
Barriers that affect small and midsized companies
(SMEs) directly can include a lack of access to:
? Modernized equipment, high-powered
computing or modeling, and simulation
and analysis software to create new
products and implement new technologies,
processes, and techniques;
? Rapid cycle product development techniques
and the specialized capabilities to produce
a rapid prototype for proof of concept;
? Local laboratories for testing, inspection,
process development, interoperability,
environmental, and other similar resources
critical for translating research into innovations
and innovations into successful new products;
? State universities and federally funded
R&D activities and new product
or process innovations; and
? Networks, relationships, and spaces
(physical and virtual) that connect
government, universities, and industry—and
permit real-time information exchanges,
knowledge flows, and collaborations—
to achieve a higher level of innovation,
entrepreneurship, and commercialization.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
As part of their NGA Policy Academy work, the states
undertook a number of actions to address challenges
facing small and midsized manufacturers, including
the following:
? Creating an innovation voucher program,
modeled after successful programs in
Europe, to help connect SMEs to partners
and universities that can help their R&D
and new product development efforts;
? Building formal and informal institutions and
networks (including portals to build virtual
networks) that promote detailed information
and technology transfer and joint problem
solving among manufacturers, federal labs,
academic research center, and universities;
? Providing shared scientific infrastructure,
such as high-powered computing or
modeling, simulation and analysis
software, and the like, which can be
expensive for smaller firms to own;
? Addressing gaps in access to capital
for innovation, commercialization,
and business expansion; and
? Providing export assistance to
expand into new markets.
Box 11. Best Practice Model—Encouraging SMEs to Take Up Regular R&D and Innovation Activities
As part of the policy academy process, states learned from a number of countries or international regions that have created
innovation voucher programs to strengthen ties between small and medium-sized companies and sources of innovation, such
as universities or research organizations. Those programs provide companies with relatively small vouchers (typically $5,000 in
value), which a company can use to purchase innovation expertise and services; the vouchers are designed to have a fast and light
application and administration process. The NGA Center for Best Practices assisted with a virtual, conference-call-based “study
tour” of programs in the Netherlands, Germany, Austria, Switzerland, and Canada. Those calls informed the design of Connecticut’s
innovation vouchers program. Many of the key lessons learned are summarized below.
Goals of the program. Common goals of innovation voucher programs include bridging the gap between companies and universities,
expanding innovative capacity within a company by helping to solve a particular problem, or spurring innovation in companies that
have not traditionally tried to develop new products or processes. Many of the programs aim to engage small and medium-sized companies
that have limited interaction with universities or government programs to encourage them to cooperate with research organizations.
Voucher size. Programs tend to offer vouchers in the range of $5,000 to $15,000. Smaller vouchers are often easier to administer, tend
to not require a company match, and are often used to promote either new innovative activity in a company or a new relationship with
a partner such as a university or other service provider. Larger vouchers tend to require some form of match from the company, often
include a longer and more rigorous vetting process, and are targeted to solve a problem for which a company needs very specific expertise.
Eligible services to companies. Countries that have implemented an innovation vouchers program have defined eligible services
differently. For the smaller voucher programs, some countries decided that all services were eligible and approved all applications.
In contrast, Austria focused its services mostly on idea studies and proof of concept, R&D studies, prototyping, and innovation
management. Germany followed suit, with the main focus on R&D and innovation. Innovation voucher programs that limit eligible
services tend not to allow vouchers to be used for projects such as training, financing, IT consulting, and investment because they
are difficult to define or are only loosely connected to innovation.
Approved service providers. In some cases, innovation voucher programs limit eligible service providers to public universities
and research institutions, but others allow private service providers to participate. When providers are limited to public sector
institutions, the reason is often that the country is focused on improving connections between companies and research institutions.
Application process. The length and rigor of the innovation vouchers application process often depend on how companies structure
the voucher size, eligible services, and approved providers. For example, if eligible services are focused on technical projects that
address a specific company problem, then a technical review by an expert may be required before the voucher can be approved. This
level of review adds time to the application process and requires access to technical experts in a range of technology areas.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
29
Creating an Innovation Voucher Program
Connecticut Connecticut is launching
an innovation voucher program, based on a
best practices review of programs in other
countries, to better connect small and medium-size
companies to sources of innovation and the technical
assistance they need to develop and commercialize
new products (see Boxes 11 and 12 for international
examples and lessons learned). The state has allocated
$800,000 to launch its innovation vouchers pilot
program, which will be administered as part of Governor
Dannel Malloy's Innovation Ecosystem Initiative, which
has designated four innovation hubs in the state.
The goal of the program is to help some of the state’s
most promising early stage companies develop their
ideas and get products to market faster. To spur
collaboration between early stage companies and
service providers in the innovation ecosystem, the
Box 12. Best Practice Model—Innovation Voucher Program Results
As part of the policy academy process, states learned from a number of countries or international regions that have created
innovation voucher programs to strengthen ties between small and medium-sized companies and sources of innovation, such as
universities or research organizations. Evaluations of the programs have uncovered a number of important lessons learned:
Very small, innovative companies are most likely to use innovation vouchers. Innovation vouchers are attractive to very small
firms because they are easily accessible and are not difficult to administer. They thus can be effective in reaching companies
that have not sought out state resources in the past, but which could benefit from innovation assistance. The vouchers tend
to be used by the more innovative companies. In the Netherlands, an evaluation found that less-innovative SMEs often apply
for the vouchers but fail to redeem them. In Alberta, the companies that applied for vouchers were regionally diverse, but the
program was particularly successful with rural areas.
Vouchers most often fund projects that would not otherwise be undertaken. Evaluations of the European programs have
found strong “additionality.” “Additionality” is a measure of whether a firm would have undertaken a project without a voucher.
An evaluation of the Dutch program found that 81.5 percent of the firms receiving small vouchers would not have undertaken
their project without it. In Austria, 80 percent would not have carried out the project without the voucher. Of those that would
have carried out the project, 35 percent would have carried it out differently. The evaluation concluded that “the innovation
voucher makes SMEs conduct a larger, better project more quickly.” Some SMEs noted that the voucher reduced time-to-market
by as much as 50 percent. In the Swiss case, 90 percent of the firms that received innovation vouchers said that they would not
have undertaken their project without the innovation voucher.
Vouchers promote continued interaction between companies and universities. In the evaluation of the Swiss and Austrian
programs, a significant number of companies reported new and intensified contacts with research organizations, follow-up
activities, and less reluctance to cooperate with a research organization. In the Netherlands, an evaluation found that companies
did not go back for a repeat project but expressed interest in staying in contact with the research organization. It also found that the
program prompted research organizations to adopt a more active approach to SMEs.
Services exist that universities and other research organizations will offer for $5,000. Those services most often include
technical development, proof-of-concept, design services, product development, technology exploration, intellectual property
management, and market studies. Projects funded by innovation vouchers in the Netherlands included developing a prototype
of a women’s shoe with an adjustable heel, testing systems to catch mussel larvae, finding a market niche in Internet music
databases that led to the creation of a new music platform, and increasing patent protection for a product whose export base
is growing. In many cases, though the individual voucher was small, universities saw an opportunity in the potential volume of
vouchers. Universities also began to inventory the services they could offer to SMEs.
Sources: Barbara Good and Brigitte Tiefenthaler, “Innovation Voucher - Small Is Beautiful,” Platform FTeval, December 2011. European Commission, Availability and Focus of Innovation Voucher Schemes in European Regions, November
2009. Interview with Alex Umnikov, Advanced Technology Industries Division, Alberta Enterprise and Advanced Education, July 2012.
30
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
program gives companies a voucher to purchase
innovation or commercialization services from a specific
provider. Service providers are public and private
entities (for example a university or an engineering firm)
that have a specific expertise that can help a company
develop or commercialize a new product or service.
Companies that are selected to participate in the pilot
program will be provided with a $5,000 voucher that they
can use to purchase specific services from an approved
provider. The company is not required to provide a
financial match. Services could include anything from
small-scale prototyping or preparatory work for research
and development, to an innovation audit, an engineering
design, or the preparation of legal documents to protect
new intellectual property. To be eligible for a voucher,
companies must propose a clear deliverable in one of
four categories: research and development, business
model development or market feasibility, operations, or
legal assistance. A recipient company must also be a
start up (that is, not yet profitable and often employing
fewer than 10 people) or a stage 2 company (that is,
profitable and often employing between 11 and 100)
and be identified as high-performing by the Connecticut
Innovation Ecosystem staff.
Implementing a program with a quick turnaround time
was of particular importance to the state. A 2010 study
of high-growth companies found that many did not have
a positive view of state programs and were not likely to
interact with the state. Designing a program with small
grants and quick turnaround was therefore a priority.
A joint application process is expected to speed the
time between application and project approval, which
is expected to be no more than four weeks. Companies
can apply for two innovation vouchers within one year,
but they must apply jointly with a service provider
partner. Paired with the innovation hubs initiative,
the vouchers provide a way for the hubs to connect
with a large number of high-potential companies and
service providers. The vouchers program thus becomes
a front door to the other resources and services
to which the innovation hubs can link companies,
such as training and education, peer networks,
mentoring, and strategic and technical support.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
Building Formal and Informal Institutions
and Networks that Promote Technology
Transfer and Joint Problem Solving
New York New York has focused
a good deal of attention on better
connecting SMEs to the technology
resources that already exist at the
state level, including university
technology centers and MEP centers. Encouragement
and direction provided by the NGA Policy Academy
led to an unprecedented meeting of all the state’s
Centers for Advanced Technology (15), Centers of
Excellence (6), and Regional Technology Development
Centers (10). It was followed by the launch of
an interactive portal with a systemwide customer
relations and referral protocol to encourage better
collaboration among resource providers. The academy
assisted Empire State Development in its work with
the state’s Centers of Excellence in developing
center-specific commercialization plans designed to
expand strategic industry outreach efforts to serve
more companies in more regions of the state.
In its most recent effort to align its technology
resources with the needs of SMEs, the MEP network
of Regional Technology Development Centers
(RTDCs) is conducting 10 region-based “Solution
Fairs.” The Solution Fairs are designed to take the
state’s technology resources to industry customers.
A half-day forum in each region of the state allows
companies to discuss their individual technology need
or challenge with university technology centers.
That effort is consistent with the NGA Policy Academy's
efforts to identify new models for more effective delivery
of services to SMEs. It is also consistent with Governor
Cuomo’s directive to align existing resources with
regional needs and regional priorities.
Illinois The Illinois Open Innovation
Network is currently being developed to
forge better connections between SMEs and
sources of innovation. The Open Innovation
Network is a partnership between the
Governor’s Innovation Council, the Illinois Department
31
of Commerce and Economic Opportunity, the Illinois
Science and Technology Coalition, and Illinois’ major
research institutions. It will connect industry to research
institutions, and research institutions to one another.
The network will aggregate researcher expertise,
publications, available technologies, unique facilities,
and collaborative history. Its goals are (1) to enhance
university-industry collaboration; (2) to facilitate the
capture of federal funding; and (3) to maintain Illinois’
prominence in research, development, and innovation.
California California has found
that its small and medium-sized
manufacturers (SMEs) need to be world
class to compete, but most lack access
to technical assistance, resources, and
innovation services that are required
to be competitive in global markets. Although highquality research and development is taking place
at the state’s universities and technology industries,
that R&D is often disconnected from the realworld challenges facing SMEs. Although California
will remain a high-cost location relative to Asia,
manufacturers can compete on innovation, flexibility,
and quality, meeting rapidly changing consumer
demands by remaining closer to design. In fact,
some flexible, high-value manufacturing has been
returning to the state. However, better links between
California technologies in such areas as modeling and
simulation, robotics, and information technologies
and the manufacturing community are needed.
California is focusing on the establishment of a
California Network for Manufacturing Innovation to
build a bridge between technology developers and
manufacturers. The collaborative presently includes the
state’s two MEP centers, Lawrence Livermore National
Laboratory, the University of Southern California,
iHubs, Research Triangle Institute (RTI) and El Camino
Community College (also representing the 11 Centers
for Applied Competitive Technologies in California).
California’s iHub network was established in 2010 to
leverage the state’s innovation assets (e.g., research
parks, technology incubators, universities, and federal
laboratories) and codify relationships among them.
32
This network has provided a platform for start-up
companies, economic development organizations,
business groups, and venture capitalists to improve
the state’s national and global competiveness.
Colorado Colorado is working with
the National Aeronautics and Space
Administration (NASA) to create a
first-of-its-kind, statewide partnership
between CAMA and NASA. The partnership will explore
opportunities for collaboration around topics such as
incubation and technology transfer, STEM education,
commercialization and acceleration, open innovation,
and economic development. There will be several
subagreements, the first of which will be the existing
NASA agreement with the Colorado Association for
Manufacturing and Technology (CAMT) that defines the
partnership around technology transfer, getting NASA’s
technologies commercialized, especially among SMEs.
Kansas Kansas has developed
an “Innovation Community” pilot in
the city of Pittsburg with economic
development officials, university leaders and company
executives implementing a set of prioritized initiatives,
tools and processes designed to help the manufacturing
industry thrive in a newly connected innovation
ecosystem. The city has taken the leadership role for
the entire project while the Mid-America Manufacturing
Technology Center, with help from partner Network
Kansas, is guiding the implementation of the strategies
at the university and company level. Pittsburg is adding
additional support by addressing policy, incentives,
infrastructure and marketing. Initial focus areas include
the roll out of a newly-developed innovation engineering
minor at the university and individualized innovationbased growth plans at the participating companies.
Addressing Gaps in Access to Capital for Innovation,
Commercialization, and Business Expansion
Massachusetts Massachusetts is
implementing a series of workshops on
access to capital. Sponsored by several
banks in the state, the workshops will help companies
to better understand the financial system and their
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
Box 13. Federal Resources and Centers Are an Important Part of State Networks
States have found that federal resources and centers have played
an important role in building formal and informal networks to
promote technology and joint problem solving. Two examples are
the resources provided by the Manufacturing Extension Partnership
(MEP) Program at the National Institute of Standards and
Technology and the U.S Economic Development Administration:
Manufacturing Extension Partnership
NIST MEP is a public-private partnership with a nationwide
network of over 1,400 technical experts located in every state in
the form of state, university-based, or non-profit organizations.
MEP centers work with U.S. manufacturers to help them create and
retain jobs, increase profits, and save time and money. Services
include: innovation strategies, product design and protyping,
supply chain opportunities, reshoring, process improvements,
green manufacturing and exporting. MEP partners at the state
and federal level on programs that position manufacturers to
develop new customers, expand into new markets and create new
products. More than 460,000 of these types of projects have been
completed since the program's inception 25 years ago. Customers
are usually manufacturers with fewer than 500 employees in
virtually every type of industry – from food processors to solid state
circuitry assemblers to medical device manufacturers.
MEP Client Impacts
Results reported by MEP clients receiving services in FY 2011.
Of the 9,952 cleints selected to be surveyed, 7,658 completed
the survey. Recurring or cumulative benefits may be larger.
Retained Sales
| $8.2 Billion
otal Increased/
T
Retained Jobs
| 60,497
Total Increased/
Cost Savings
ew Client
N
Investments
| $1.3 Billion
| $1.9 Billion
MEP delivers a high return on investment. For every one dollar of federal investment, the MEP generates around $30 in new sales
growth. This translates into $3.6 billion in new sales annually among MEP clients. And for every $2,067 of federal investment, MEP
creates or retains one manufacturing job.
U.S. Economic Development Administration
As the only federal agency with economic development as its exclusive mission, the U.S. Commerce Department’s Economic
Development Administration (EDA) promotes the economic ecosystems in which jobs are created. EDA strives to advance global
competitiveness, foster the creation of high-paying jobs, and leverage public and private resources strategically.
EDA builds a foundation for sustainable job growth upon two key economic drivers: innovation and regional collaboration.
Innovation is the key to global competitiveness, new and better jobs, a resilient economy, and the attainment of national economic
goals, including the advancement of the manufacturing sector. The new global economy is built on centers of excellence and
competition. Those regions that work together to leverage resources and use strengths to overcome weaknesses will fare better
against global competition than those that do not.
EDA works directly with local economic development officials to support their bottom up, regionally-owned economic development
initiatives. Linking EDA’s investments to a community’s strategic economic development plan enables the federal government to
better leverage public and private sector investments in order to achieve economic development goals.
EDA offers a complementary, balanced portfolio of tools designed to help rural and urban communities evolve through the economic
development process to become robust regional engines for business creation and job growth.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
33
options within it, as well as help them to recognize
investment opportunities offered by SMEs that are
moving into advanced manufacturing products and
processes. The Advanced Manufacturing Collaborative’s
capital access work group is joining with the Boston
Federal Reserve Bank to identify and work through
any specific regulatory hurdles that may keep banks
in the state from lending to manufacturers. The work
group is creating a matchmaking guide to resources,
which will include a matrix that matches manufacturers’
needs with relevant public and private capital sources.
Colorado Based on needs expressed
by manufacturing executives, Colorado
is creating a capital resource portal to
connect industry with capital resources.
The state is also looking into creating a fund of private
investment capital to be channeled toward high-growth
companies in industry sectors including advanced
manufacturing.
Providing Export Assistance to Expand into New Markets
California California discovered
growing interest in exporting among SMEs
but found that most such businesses
did not know how to take the initial
steps. The state also found that current
approaches to educating small and
midsized manufacturers and matching them to
export opportunities are ineffective, largely because
of poor alignment among the public and private
sector organizations focused on export development.
Although many individual services are available,
including workshops, seminars, and trade missions for
manufacturers, no overall methodology, curriculum,
or coordinated effort exists to establish a systematic
approach for SMEs to follow. Recognizing that
problem, the state is implementing a series of “Trade
Connect” workshops to build a consistent message
among participating export assistance partners about
benefits and available services and how they work
together. The state is also piloting the use of ExporTech
training for Trade Connect partners, a shared method
for working with SMEs in manufacturing. Additional
funding from the State Trade and Export Promotion
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Box 14. Best Practice Model—Washington’s
Workforce Intermediaries
Through the policy academy process, states learned from
workforce intermediaries that involve industry in developing
curriculum and in both funding and providing training.
Two of those intermediaries are based in Washington
state: the Center of Excellence for Aerospace and
Advanced Materials Manufacturing and the Aerospace
Joint Apprenticeship Committee.
Washington established 10 industry-specific centers of
excellence, each located at a community or technical
college, to serve as central points of contact and resource
hubs for industry trends, curriculum development, and
fast, flexible, customized training. The centers were
originally established to serve regional industry needs but
have evolved to oversee the services and training provided
in their sector across all 34 two-year colleges in the state.
The Center of Excellence for Aerospace and Advanced
Materials Manufacturing, through Workforce Investment
Act (WIA) funding, was able to cross-map community
college course codes in aerospace and manufacturing with
Boeing’s entry level job codes. The cross-mapping catalog is
a first step in creating a cohesive training program within
Washington’s community college system that aligns with the
knowledge, skills, and abilities that industry is looking for.
In addition, the center convenes the Aerospace Curriculum
Alignment Team (ACAT), a growing consortium of colleges,
training centers, and industry representatives that
clarifies industry needs and matches them with college
and training center capabilities and programs.
Washington’s Aerospace Joint Apprenticeship Committee
(AJAC) was established to help meet the demand for
skilled workers in the aerospace industry by creating new
apprenticeship programs. The committee is composed
of industry employers, employees, and the International
Association of Machinists and Aerospace Workers. AJAC
develops and implements apprenticeship programs for
multiple aerospace and manufacturing occupations. Ninetythree percent of the education takes place as paid on-thejob training that is managed by an AJAC apprenticeship
coordinator. The apprentice is supervised by a journey-level
employee from their workplace. Apprentices must also
attend related college classroom instruction to learn the
theory behind what they are learning on the job.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
(STEP) grant has helped export promotion activities
through partnerships among the Governor’s Office
of Business and Economic Development (GO-Biz),
California Community Colleges’ Centers for International
Trade Development (CITD), California Chamber of
Commerce, and other agencies throughout the state.
Provide Talent Both to Fill the Specialized Needs
of Employers Quickly and to Deliver Lifelong
Training for Workers at All Levels.
The importance of a skilled workforce to the success
and growth of all manufacturing companies cannot be
overstated. Yet across the country, the education and
training programs that could prepare job seekers for
successful careers in manufacturing are underused
or, where they exist, are often misaligned with the
actual needs of industry. Successful models that
engage industrial firms, assess their needs, and create
programs and credentials that provide real currency for
job seekers are gaining more attention. For example,
Box 14 presents some examples from Washington,
and Box 15 contains a snapshot of the growing
support for sector partnerships across the country.
For SMEs, finding and keeping a skilled workforce can
be particularly challenging because of the following:
? Rapidly changing and increasing skill
requirements to operate manufacturing
equipment make it difficult for education
and training providers—as well as
employers themselves—to stay current;
? It is often difficult to attract and retain
middle-skill workers with significant
engineering and technical skills, as
well as problem-solving acumen;
? Customized on-the-job training of incumbent
workers often entails risk and high cost; it
can take equipment out of production or
cause damage to valuable equipment; and
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
? The public has a generally negative
perception of manufacturing careers,
and awareness is lacking about career
opportunities in manufacturing, resulting
in young people being discouraged from
considering manufacturing as a career.
Although the states participating in the policy
academy took a number of approaches to producing
and attracting globally competitive talent for
manufacturers, all the approaches emphasized
public-private partnerships and industry-driven
solutions. A number of states also found that many
such activities already exist and that immediate
benefit was to be gained by improving, replicating,
and scaling up those existing resources.
Colorado Gaps in the skills and
experience of workers are top priorities
for both the OEMs and the SMEs
in Colorado. More than 25 percent
of human resource executives in the state rate the
skills and experience of workers as their company’s
number-one concern for the next three to five years.
The persistent problems of Colorado manufacturers
include the lack of a strong trade school network
and limited access to opportunities for workplace
experience through internships, job shadowing,
pre-apprenticeships, and apprenticeships. State
labor statistics indicate that the average Colorado
manufacturing employee is within 10 years of
retirement. Members of CAMA have made it clear that
there is no time to waste in engaging current workers
in developing and mentoring the next generation
of the state’s manufacturing employees. Colorado
manufacturers also believe that they do not consistently
engage the K–12 and higher education communities
in constructive conversation about the opportunities in
manufacturing or about crafting curricula to align with
the needs of Colorado’s manufacturing companies and
with national manufacturing credentialing standards.
Colorado is not at square one, however. Its recent
work in implementing regional sector partnerships is
proving effective in engaging industry and coordinating
35
education and training providers to meet the real
needs of industry. Two regional manufacturing sector
partnerships currently exist. The Colorado Office
of Economic Development and International Trade
(OEDIT) is now working with the Colorado Workforce
Development Council (the state workforce investment
board) to find ways to align, expand, and replicate them.
Massachusetts Massachusetts’
manufacturing education and workforce
strategy is focused on three priorities:
first, expanding use of the existing workforce training
fund for on-the-job-training for new hires and incumbent
worker training in manufacturing; second, providing
technical assistance to new regional manufacturing
sector partnerships that are getting started; and third,
providing support to accelerate the work of existing
sector partnerships through resources such as the
state’s workforce competitiveness trust fund.
Massachusetts has strong regional networks that are
organized to meet the needs of manufacturers and
provide pathways to jobs for new workers. For example,
in Worcester County, the workforce and training
system, led by Quinsigamond Community College,
WPI, MassMEP, and Fitchburg State, has organized a
seamless approach to training and educating workers.
MassMEP has led in training returning veterans for
manufacturing jobs. For this and other reasons,
MassMEP received a nearly 50 percent increase in
Box 15. Best Practice Model—Industry Sector Partnerships
Through the policy academy process, states could build on national experiences, as well as their own (in the cases of Massachusetts,
Colorado, and California), with sector strategies. An estimated 1,000 regional sector partnerships are operating across the country,
and more than 25 states are exploring or implementing sector strategies to address industry needs through education and training.
The strategies are known by different names in different states: Industry Partnerships in Pennsylvania, Skill Alliances in Illinois,
and Clusters of Opportunity in California. Massachusetts has been using a sector strategy approach for almost three decades,
funding hundreds of local partnerships through its workforce competitiveness trust fund. Pennsylvania’s investment has seeded
over 90 industry partnerships since 2005, more than 40 of which are still active. Washington State launched its first skill panels
in 2000 and since then has funded more than 100 public-private partnerships among business, labor, and education.
Regardless of what they are called, at the regional labor market level, these are partnerships of employers within one industry
that bring together government, education, training, economic development, labor, and community organizations to focus on
the workforce needs of their industry. At the state level, they are policies and investments that support the development of local
sector partnerships. At both levels, a growing body of evidence demonstrates their effectiveness for employers and workers.
In a survey of employers participating in sector partnerships in Massachusetts, 41 percent reported a reduction in turnover;
19 percent reported a reduction in rework on the job; 23 percent reported a reduction in customer complaints; and 100 percent
reported that participation in a sector partnership was valuable. In 2009 in Pennsylvania, 84 percent of surveyed employers
participating in industry partnerships reported significant increases in productivity.
Workers also benefit from training and education programs that develop out of sector partnerships. A 2009 random assignment
evaluation of three sector partnerships found that participants earned significantly more (18 percent more, or $4,500 over a
24-month period) than the control group. The reasons were that they were more likely to work, worked more consistently, and
worked in jobs with higher wages. They also had higher-quality jobs, as measured by benefits such as health insurance, paid
vacation, and paid sick leave. In short, sector partnerships are being adopted by more workforce development organizations,
education institutions, and other stakeholders because they work: they provide a process and mechanism to engage industry
and assess its workforce needs and to create customized solutions across multiple training and education programs in a way
that provides job seekers real currency in today’s labor market. For more context and details, see the NGA publication Sector
Strategies Coming of Age—Implications for State Workforce Policy Makers.
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“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
funding, and it remains a key partner in the work of the
Advanced Manufacturing Collaborative across the state.
In Hampden County, the region’s precision
manufacturers, working with the Hampden
County Regional Employment Board, established
a sector partnership involving all of the region’s
educational and training partners, including the
seven vocational schools, Springfield Technical and
Holyoke Community Colleges, and UMass Amherst.
The industry-led Precision Manufacturing Regional
Alliance Project (PMRAP), as the partnership
is known, identified a need for over 1,600 new
manufacturing workers in the following 40 months,
and the Hampden County Regional Employment
Board received $750,000 to train the region’s workers
for those jobs, including the region’s returning
veterans, the unemployed, minorities, and youth.
The Massachusetts Workforce Competitiveness Trust
Fund has been an important source of resources
and expertise to build regional sector partnerships in
many industries, including advanced manufacturing.
The state legislature authorized the recapitalization
of the fund with $5 million. The Commonwealth
Corporation, which administers the fund, is a part
of the Advanced Manufacturing Collaborative and is
designing additional technical assistance to support
new regional sector partnerships along the lines of the
successful central and western Massachusetts models.
As the focus of the state’s efforts turns to supporting
and scaling regional sector partnerships, the
Advanced Manufacturing Collaborative is launching
a statewide forum for sharing best practices and
for continuous improvement that includes the
state’s community colleges, workforce investment
boards, and vocational schools. The collaborative
is also aligned with the major, U.S. Department of
Labor–funded $20 million initiative by the state’s
community college system to establish seamless
career pathways for workers in growing industries.
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WHAT STATES ARE DOING TO FORGE NEW MANUFACTURING STRENGTHS
At the same time, Massachusetts has launched a
multifaceted outreach campaign to fill the workforce
pipeline, aiming to increase interest in career
opportunities in manufacturing among students,
parents, counselors, and others. MassDevelopment
and the Advanced Manufacturing Collaborative are
launching a new campaign to promote manufacturing
careers throughout the commonwealth. The
campaign, “AMP it up,” is designed to reach young
people and provide career information to parents,
career counselors, and teachers—the people
who most influence young people’s choices.
California California has realized
that as its small and medium-sized
manufacturers have emerged from the
recession and are executing growth
strategies, they have workforce skills
requirements that are not being met
through existing training programs. Clear pathways
from K–12 through community colleges or through
the workforce training system do not exist for students
and workers to gain needed skills. Because of the
economic diversity of California, every region needs its
own approach, based on its unique set of industries and
skill needs. With the formation of the California policy
academy team, conversations took place at the state
level with the vice chancellor of workforce and economic
development of California’s community colleges. The
team discussed with her the significance of advanced
manufacturing for the state’s economy. That resulted
in the inclusion of advanced manufacturing as an
industry sector in the Chancellor’s Office’s Doing
What Matters for Jobs & the Economy report and
made the manufacturing sector eligible for state
grant funding. Eight grants supporting manufacturing
throughout the state were awarded earlier this year.
California has begun moving on several fronts to
meet the immediate needs of manufacturers and
establish a foundation for longer-term support for
developing the state’s manufacturing workforce. In
May 2012, the California Economic Summit process
(caeconomy.org) issued a call to action to “prioritize
37
existing workforce-training and career-education
resources to focus on major regional industry sectors.”
Manufacturing was specifically identified as a major
sector for several regions. Subsequently, the California
community college chancellor’s office directed funding
to 10 manufacturing-focused partnerships through
its industry-driven regional collaboratives, responsive
training fund, and job development incentive fund.
Two legislative bills were enacted to sustain community
college efforts in this area and to align career technical
education with regional industry needs. In addition,
funding for the state’s “Regional Industry Clusters
of Opportunity” program has been increased, with
a specific focus on creating sector partnerships in
clean transportation manufacturing and fuels.
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Illinois Illinois recently launched the
Manufacturing STEM Learning Exchange,
a statewide public-private network that will
coordinate resources and investments that
support the manufacturing talent pipeline.
The Manufacturing STEM Learning Exchange will be
led by the Illinois Manufacturers Association Education
Foundation and has initially targeted work-based
learning as a priority area. The learning exchange will
aggregate industry partners to provide mentorships,
internships, apprenticeships, and other practical training
and learning opportunities. That partnership network
will also monitor P-20 (pre-school through grade 20)
and workforce talent pipeline performance and advise
the state on coinvestment strategies and supports.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
BEST PRACTICE LESSONS OFFERED FOR OTHER STATES
In preparing this report on the results from the NGA Policy Academy
on advanced manufacturing, NGA recognized that other states would
benefit from knowing of the optimistic vision and associated policy
steps taken by the eight states to encourage growth in manufacturing
through innovation, entrepreneurship, and investment. In particular,
other states would benefit from knowing that these states:
Did not see their work as “saving manufacturing.” Rather, they saw their
work as creating the best location for the development of new technologies
that radically improve production processes or that can be transformed
into innovative new products.
Their ongoing work is to strengthen the innovation system within their states
by providing manufacturers streamlined access to specialized workforces,
research and development partnerships, commercialization services, innovation
networks, and unique business infrastructure to support quick, sustained,
and spectacular competitive advantage in developing commercial devices,
manufacturing them in the state, and getting them into global markets.
Recognized a big missed opportunity with small and medium-sized
companies (SMEs) and thus emphasized doing a better job of
supporting startups and SMEs.
Recognizing that 62 percent of net new jobs from 1992 to 2010 were created by
SMEs and that recently the success rate of small businesses has dropped, states
did not believe that they could be a part of the new manufacturing leadership
without helping SMEs build their capacity to innovate and commercialize new
products. Accordingly, they plan to encourage SMEs to take up regular R&D
and innovation activities, enlarging their R&D base and their opportunities for
growth through innovation and global exports. From this overarching objective
came a wide range of efforts, including programs to increase universities’ ability
and willingness to cooperate with SMEs and overcome companies’ reluctance
to approach and work with research organizations; programs to get people
into apprenticeships, internships, and education programs designed to lead to
full-time jobs with small and medium-sized manufacturers; and programs to
mentor SMEs in working more successfully as suppliers to large companies.
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BEST PRACTICE LESSONS OFFERED FOR OTHER STATES
39
Determined that because of important developments
already occurring, the most immediate benefits
can be obtained by assembling, improving,
coordinating, connecting or replicating, and
scaling up those resources to manufacturers.
That means proactively ensuring that manufacturers
know what is available, that manufacturers are directly
involved in program design and consulted on program
effectiveness, and that manufacturers are encouraged
(even provided incentives) to approach and work with
government or university organizations. But it also
means that universities, community colleges, financial
institutions, and other key parts of the innovation
system have to embrace the new opportunities related
to advanced manufacturing, as well as the concept that
manufacturers, just as bioscience or clean energy firms,
will benefit from specialized (sector-focused) programs
and services promoting innovation, entrepreneurship,
investment, and education as crucial for business
growth and competitiveness. In short, states realize
they must build on what works. Examples include the
ways in which Colorado, California, and Massachusetts
have found ways to replicate their business sector
partnerships and expand them to advanced
manufacturing. New York has adopted a similar
approach by funding regional partnerships focused
on new technologies and related workforce training.
Found crucial voids remaining to be filled,
sometimes because the right services for
manufacturers did not exist and sometimes
because the services needed lacked the scale
and commitment for success.
Reinforcement of this message came as the policy
academy states studied what some other states and
other nations such as Germany are doing to support
their industries. Some states are engaged in big
collaborations, such as the Automotive Manufacturing
Technical Collaborative (AMTEC), which involves 30
community colleges and 34 auto-related plants in
12 states in a new kind of public-private partnership
for training and retraining workers. In Germany,
organizations such as the Fraunhofer Institutes partner
with companies to turn advanced technologies into
40
production processes and commercial products. These
initiatives are coupled with active export promotion
support from the highest level of government. Both
of these efforts—AMTEC and Fraunhofer Institutes—
underscore what is missing in terms of focus,
scale, and steady commitment in many states.
Recognized that an intermediary valued by all
parties (particularly industry) is crucial not only
for developing an effective policy framework, but
also for sustaining broad support for advanced
manufacturing as a high state priority.
It must be some entity’s responsibility both to sort
out the complex interplay between different actors
and mechanisms crucial to research and product
development activities and to connect the activities of
dozens or perhaps hundreds of firms and organizations.
Both the Colorado Advanced Manufacturing Alliance
and the Massachusetts Advanced Manufacturing
Collaborative and Advanced Manufacturing Futures
Fund illustrate the deliberate and strategic play
that states are making to create new public-private
partnerships that the community values and that can
push all players to align their investments and improve
their support for advanced manufacturing firms
within their borders, so as to capture the economic
activity and high-quality jobs that they can bring.
Focused on the interplay between
state policy and regional action.
States recognized that a combination of state
enabling actions and regional collaboration, with
strong industry engagement, would be necessary
to implement an effective advanced manufacturing
strategy. STEM exchanges in Illinois, regional
manufacturing partnerships in Massachusetts
and California, customized regional initiatives in
Kansas and New York all are examples of how
state policy encourages, seeds, and rewards
effective action at the regional or local level.
“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
Recognized the value of finding investments
in the immediate term and mobilizing support
for the future.
Most of the policy academy states acknowledged that
funding exists, but it is often a matter of finding it for
the right purposes, both in the immediate term and
for future needs. New York provides a great example
of bringing multiple state agencies together to fund an
initiative that speaks to their different missions. Joint
agency funding carries a lot of weight, especially for
operating programs that otherwise would not work
together. Connecticut’s foresight in engaging members
of the state legislature during its planning process
led to a bipartisan legislative manufacturing caucus,
now positioned to act for the benefit of advanced
manufacturing during upcoming legislative sessions.
Understood that they must “just get started” and
secure some early achievements and momentum
that make a difference to manufacturers.
No strategic plan is successfully launched without early
wins. Achieving them requires figuring out what actions
can be implemented in a short time, with few or no
new resources, that will garner increased support going
forward. For Colorado, that meant launching CAMA—
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BEST PRACTICE LESSONS OFFERED FOR OTHER STATES
quickly and with private sector funding. For Connecticut,
it meant the innovation voucher program; for New York,
the Solutions Fairs; and for Illinois, the Open Innovation
Network. Rolling out programs like these does not imply
abandoning the fuller strategic plan; these are the
programs that demonstrate real action to existing and
new stakeholders while the fuller plan is implemented.
Recognized that traditional metrics may need to
be updated for advanced manufacturing.
Colorado is revising performance metrics based on
best practices and discussions through the NGA
Policy Academy. Because innovation and productivity
growth has become a critical component of the
state’s advanced manufacturing platform, OEDIT has
expanded its current metrics to include not only net
new jobs but also capital investment and gross state
product, on the theory that innovation investment may
lead to increased productivity and profitability but not
necessarily new jobs. The performance metrics used
by MEP centers, which employ third-party survey
organizations to document jobs created and retained,
sales increased or retained, cost savings achieved,
and investments leveraged, provide a model that has
been widely recognized in the federal government.
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“Making” Our Future: What States Are Doing to Encourage Growth in Manufacturing through Innovation, Entrepreneurship, and Investment
NGA CENTER DIVISIONS
The NGA Center is organized into five divisions with some collaborative projects across all divisions.
n Economic, Human Services & Workforce provides information, research, policy analysis,
technical assistance, and resource development on key issues relevant to governors and their
staff across a range of current and emerging issues, including economic development and
innovation, workforce development, employment services, research and development policies,
and human services for children, youth, low-income families, and people with disabilities.
n
Education provides information, research, policy analysis, technical assistance and
resource development for governors and their staff in the areas of early childhood, K-12
and postsecondary education. Issue areas include birth to 3rd grade access, readiness
and quality; the Common Core State Standards, STEM and related assessments; teacher
and leader effectiveness; turning around low-performing schools; high school redesign;
competency-based learning; charter schools; and postsecondary (higher education &
workforce training) access, success and affordability.
n Environment, Energy & Transportation provides governors and their staff with analysis and
information about best practices, tailored technical assistance, and insights into emerging
policy trends across the energy, environment, and transportation sectors. The division helps
states promote the efficient use of energy across all sectors; improve the use of traditional
and alternative fuels for electricity and transportation; better protect and cleanup the
environment; effectively manage their natural resources; and develop a transportation system
that safely and efficiently moves people and goods.
n
Health provides information, customized technical assistance, policy analysis, best practices
and periodic national meetings facilitating peer exchange for governors and their staff.
The Health Division covers issues in the areas of health care service delivery and reform,
including payment reform, health workforce planning, quality improvement and public health
and behavioral health integration with the medical delivery system.
n Homeland Security & Public Safety provides governors and their staff with analysis and
information about best practices, tailored technical assistance, and insights into emerging
policy trends across homeland security and public safety. The division provides detailed
analysis and technical assistance to governors on all matters related to homeland security,
emergency management, public safety, and criminal justice.
National Governors Association Center for Best Practices
444 N. Capitol Street, Suite 267
Washington, DC 20001
202.624.5300
www.nga.org/center
doc_756311348.pdf