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Spring/Summer 2015 Vol. 15 Number 1

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The Future of Manufacturing

Strengthening Innovation, Productivity, and Workforce Training in the U.S.

©Phil & Jim Bliss/Illustration Source Globalization, technological advances, and changing business practices are dramatically transforming manufacturing. While technological developments offer companies new ways to understand customers' needs and in turn increase demand for their products, automation and streamlined operations will increasingly supplant workers in a variety of occupations. By some estimates, almost 50 percent of U.S. jobs will be disrupted as a result of the factors changing manufacturing. For example, an automobile plant can now be run by one-third as many people as were needed in 1965 due to advances in automation and computer-aided design, engineering, and production, yet the quality, sophistication, and timely delivery of vehicles have dramatically improved.

With reduced demand for production workers, total U.S. manufacturing employment dropped from approximately 19 million in 1980 to 11.5 million in 2010, according to the Bureau of Labor Statistics. These job losses were concentrated in the portion of the manufacturing workforce without a high school diploma.

To help ensure that the U.S. thrives amid these global changes and remains a leading environment for innovation, U.S. companies, government, and educators should collaborate to confront workforce challenges and improve productivity, says a recent report from the National Academy of Engineering. Specifically, they must strengthen workforce training and improve innovation to make sure manufacturers are "making value" for customers. Making value is the process of using ingenuity to convert resources into goods, services, or processes that create solutions, serving the welfare of humanity and the needs of society.

Businesses should establish training programs to prepare workers for modernized operations and invest in the education of their low- and middle-skilled workforce, as well as implement programs to attract and retain diverse workers with respect to gender, race, and socio-economic background because this diversity improves a team's innovation performance. Businesses, local school districts, workforce organizations, community colleges, and universities should form partnerships to help students graduate from high school, earn an associate's or bachelor's degree, and take part in continuing education and training programs in the workplace.

The report also says that Congress and state legislatures should create tax credits or other incentives for businesses to invest and be involved in education programs that provide students and displaced workers with the knowledge and skills needed for higher-paying careers.

Companies also need to find new ways to make value, the report says. For instance, when the rise of digital photography changed the value of film, Fujifilm harnessed its expertise working with the antioxidant chemicals used in photography to develop antioxidants for cosmetics and optical films for use in flat-panel screens. Although Fujifilm for decades created film and the materials to develop photographs, this now accounts for a small percentage of its sales.

Businesses, economic development organizations, educational institutions, research organizations, as well as federal, state, and local governments all have important roles to play to guarantee that U.S. manufacturing strengthens its capacity for innovation. The report offers several recommendations as a blueprint for action.

To foster the creation of new businesses and to connect entrepreneurs with the individuals, investors, tools, and institutions in their region and around the world that they need to help their businesses grow, metro area and state governments, industry, higher education, investors, and economic development organizations should unite to create local innovation networks.

Manufacturing can no longer be considered as something separate from the value chain -- the system of research and development, product design, software development and integration, and lifecycle service activities performed to deliver a product or service to market. Businesses focusing on the entire system help make value for their customers and are less likely to be disrupted by new technologies or increased competition from emerging economies around the world.

-- Dana Korsen

Making Value for America: Embracing the Future of Manufacturing, Technology, and Work. Committee on Foundational Best Practices for Making Value for America, National Academy of Engineering (2015, 144 pp.; ISBN 978-0-309-32653-7; available from National Academies Press, tel. 1-800-624-6242; $46.00 plus $5.00 shipping for single copies).

The study committee was chaired by Nicholas Donofrio, former executive vice president of innovation and technology, IBM. The study was funded by NAE along with Gordon E. Moore, Robert A. Pritzker and the Robert Pritzker Family Foundation, Jonathan J. Rubinstein, Edward Horton, and by a number of U.S. companies -- Boeing, Cummins, IBM, Qualcomm, Rockwell Collins, and Xerox.

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