American Manufacturing Innovation Network A National Network for Manufacturing Innovation (NNMI) Chris Conrardy Chief Technology Officer EWI 614.688.5191 CConrardy@ewi.org Gardner Carrick Senior Director of Strategic Initiatives The Manufacturing Institute 202.637.3491 GCarrick@nam.org

Thesis Innovation is the key driver of competitiveness, wage and job growth, and long term economic growth. The U.S. is lagging behind in innovation in its manufacturing sector relative to high-wage nations such as Germany and Japan. Individual companies cannot justify the investment required to fully develop many important new technologies or to create the full infrastructure to support advanced manufacturing. Private investment must be complemented by public investment (public-private partnership). A sustainable, lean, industry-focused innovation model will create an environment for American manufacturing innovation that will advance U.S. manufacturing competitiveness and drive export growth.

Global Competitiveness Challenge: Disturbing Trends The 2010 trade deficit for all manufactured goods was $565B; and for advanced technology products was $81B Manufactured Goods U.S. Trade Balance Source: The Manufacturing Mandate, Unleashing a Dynamic Innovation Economy, Aug. 2010 The Association For Manufacturing Technology

Global Competitiveness Challenge: Disturbing Trends U.S. Manufacturing Employment Thousands Source: The Competitiveness and Innovative Capacity of the United States, Dept. of Commerce January, 2012

Priorities to Improve Manufacturing Competitiveness Challenges Opportunities Percentage of votes for an option

Manufacturers Recognize the Importance of Innovation to Competitiveness How important will having world-class manufacturing technologies be to your company's overall competitiveness in the next 5 years? Extremely important Percentage of respondents selecting an option Not at all important Source: 2011 EWI Member Survey; 350 respondents

Importance of Innovation Widely Recognized June 2010 Global Manufacturing Competitiveness Index; Primary driver of competitiveness is “talent-driven innovation” June 2011 PCAST Report to the President on Ensuring American Leadership in Advanced Manufacturing: “The United States is lagging behind in innovation in its manufacturing sector relative to high-wage nations such as Germany and Japan” October 2011 Economist Intelligence Unit survey of senior executives from U.S. manufacturing firms 90% identify innovation as the key to long-term success January 2012 Dept. of Commerce report “The Competitiveness and Innovative Capacity of the United States” “Innovation is the key driver of competitiveness, wage and job growth, and long-term economic growth.”

US Innovation Gap: Insufficient Emphasis on Maturing New Manufacturing Technology Structural problem requires a structural solution Basic Research/ Education Universities, NSF Centers, Federal Labs High-risk research Long time horizon Not focused on shop floor implementation Manufacturing Technology Innovation Technical Innovation Missing Middle Manufacturing technology innovation, maturation, commercialization, insertion Medium time horizon High impact Best Practices Industry, NIST MEP Incremental improvement Off the shelf technology Short time horizon Time to deployment

An Effective Model Must Overcome Four Principle Barriers What are the biggest barriers to successful collaborative manufacturing technology development? 1. Funding 2. IP ownership 3. Competition 4. Delivery Percentage of respondents selecting option Source: Aug. 2010 EWI member survey; 550 respondents

2011 Manufacturing Innovation Summit October 27, 2011, Columbus OH 25 industry participants Large, medium, and small companies Range of sectors Confirmed need for an infrastructure to mature manufacturing technology Reviewed innovation models Consensus behind a proposed innovation model to develop, mature and implement advanced manufacturing technology

Necessary Attributes of an Innovation Model Government not picking favorites, but creating an environment for manufacturing innovation Elements needed in an innovation infrastructure: Independent organizations with industry-focused mission Agile, self-sustaining, entrepreneurial businesses World-beating advanced manufacturing technology capabilities in strategic, targeted areas Capability to mature and commercialize advanced technologies Multi-sector relevance Accessible to small, medium, and large businesses anywhere Linkage to existing national lab, university, and MEP assets for research, education, and outreach IP framework that facilitates implementation

A new American model is needed Many Innovation Models Fraunhofer Institutes (Germany) A*STAR (Singapore) SEMATECH NCMS NIST MEPs University Centers EWI Edison Center DoD MANTECH EPRI Federal laboratories One-off federal solicitations None of these models alone is sufficient to bridge the U.S. “Manufacturing Innovation Gap” A new American model is needed

2 Components of the Manufacturing Accelerator Network Industry Consortia Application Centers Sector specific; organized around industry clusters Member based collaborations; financial support to demonstrate relevance Government/industry cost share pre-competitive technology development Engages universities and national labs to address “grand challenges” Workforce development through educational institutions IP framework that reduces barriers to collaboration Manufacturing technology specific; capabilities that are world-beating Facilities and expertise to support all sectors and business sizes 501(c)(3) not-for-profit corporations focused on industry clients Primarily industry funded to implement technology for proprietary applications Modest government funding to build core capabilities IP framework that reduces barriers to implementation

Bridging the Innovation Gap Universities, NSF Centers, Federal Labs High-risk research Long time horizon Not focused on shop floor implementation Technical Innovation Industry Consortia Precompetitive technology development Workforce Training Application Centers Mature and commercialize technology Implement for industrial applications National network of industry-focused application centers and consortia linked to existing assets Industry, NIST MEP Incremental improvement Off the shelf technology Short time horizon Time to deployment

Industry support drives particular entries and exits Illustration of Center/Consortia Synergies Industry support drives particular entries and exits Manufacturing Applications Centers Industry Consortia

Light-weighting Consortium Joining Application Center View Slide Show to See Progression Example: From Pre-competitive R&D to Industry Application Center recognizes potential benefit for commercial clients; licenses IP from university; works to mature technology and expand IP; enages commercialization partners results Consortium roadmap identifies joining of high-performance aluminum castings to steel structure as a technology gap University shows feasibility of magnetic pulse joining Universities, NSF Centers, Federal Labs Center adds technology to portfolio and makes network aware of the new capability Technical Innovation Light-weighting Consortium Joining Application Center funding Industry, NIST MEP Consortium manages portfolio Issues RFPs Gov’t / industry cost share Both early and later stage technologies IP terms require a free licenses for consortium members Center performs proprietary applications development for specific companies providing competitive advantage and business growth Time to deployment

Benefits of the Consortia to Industry Engage industry leaders to identify and solve common challenges Leverage industry and government funding to develop pre-competitive technologies Access wide range of technical organizations for innovative technology development Advance industry codes and standards Support workforce training and education programs Program management to ensure timely and efficient execution Royalty-free licenses to IP created by the consortium

Benefits of Application Centers to Industry Practical application of the technologies leveraging proven solutions from a wide range of industry sectors Access to world-beating manufacturing technology expertise and high-value capital equipment Robust network to rapidly connect small, medium, and large manufacturers with the best technical assets Network collaboration to advance cross-cutting technologies, e.g., modeling and design methodologies Client ownership of IP developed on client projects Leverage Application Centers background IP

Borrows Proven Elements from EWI Experience Broadest materials joining technical capabilities in the Western Hemisphere; many world-beating manufacturing technologies Serves over 240 member companies at over 2,000 locations Sustainable model; >$25M revenue, >$20M capital; majority industry funded; leverage from competitive government programs Delivers both pre-competitive R&D and client solutions Independent 501(c)3; close relationship with Ohio State University Many markets Aerospace Alternative energy/battery Automotive/consumer products Defense Heavy equipment/rail Energy/oil and gas/power Public-private partnerships (PPPs) Additive Manufacturing Consortium Advanced Energy Manufacturing Center Nuclear Fabrication Consortium Navy Joining Center Rail Manufacturing Center Joint industry programs

Manufacturing Accelerator Network Pilot Concept February 15, 2012

Pilot Objective Establish a low-risk, subscale network of linked centers and consortia with sufficient critical mass to demonstrate effectiveness Build on existing capabilities Impact multiple sectors and critical technology gaps Leverage existing industry consortia and technology center capabilities with proven industry commitment Establish objective success metrics Deliver measurable results within a year

Sub-Scale Pilot Network Launching 3 consortia and 4 centers provides critical mass to produce measureable impacts for back-bone industries Manufacturing Applications Centers All address known industry needs with opportunities to leverage ongoing or planned investments Industry Consortia

Vehicle Light-Weighting Consortium Sectors: automotive, defense, aerospace Meeting CAFE standards, safety requirements, and customer expectations is a major challenge Requires radical changes to auto structure and drive train designs, materials, and manufacturing methods Major supply chain impacts expected

Net-Shape Manufacturing Consortium Sectors: aerospace, defense, medical, energy Reduce energy usage, carbon intensity, manufacturing operations, and cost Improve competitiveness and sustainability Conserve strategic materials Enable higher performance product designs

Large Component Fabrication Consortium Sectors: energy, mining equipment, ships, defense Large component fabrication is often manually intensive and requires large capital investment Domestic suppliers at a disadvantage with low labor cost countries, or heavily subsidized competitors Opportunity to leapfrog foreign capability through agile, high-productivity fabrication technologies

Facility expansion in progress Agile Automation Center Automation has not been effectively applied for large structures or small batch sizes Agile automation could enable large-scale equipment to efficiently produce low volume lots This center will provide world-beating development and education environment for agile automation Agile processes Agile configurations Facility expansion in progress

Additive Manufacturing Center Disruptive technology to produce parts in one manufacturing operation: “From Art to Part” Launch products faster, radically improve designs, reduce material waste, make supply chains more agile This center will mature AM technologies and qualify them for specific applications

Materials Forming Center Dramatic increase in use of new high-performance materials are making legacy forming technologies obsolete More technically complex approaches required Asia and Europe are investing heavily in technology development while the U.S. is falling behind This center will help American supply chains adopt the latest forming technologies to meet emerging requirements Volvo Strategy Hot Stamp 20%  45%

Materials Joining Center Increasing performance requirements and new material combinations are pushing limits of joining Need new methods to join dissimilar materials and predict performance during the design stage Center investment will create unique capabilities for dissimilar material joining and simulation

Gov’t center investment Gov’t consortium investment ROM Investment Plan Government investment in initial pilot: ~$25M Build out network (10 centers and 6 consortia) within 4 years Cost to build out and maintain network: ~$50M/year Contracted services grows to become dominant share of funding within 5 years Contracted Services Resources (millions $) 5:1 multiplier Gov’t center investment Gov’t consortium investment Year

Success Metrics Network Effectiveness Industry Engagement Results Progress Process # of joint projects and technology transfers/transitions # of network partners and partner events Outreach to industry, MEP, university labs Industry Engagement Results Progress Process Amount of competitive research funding # of industry members Growth in programs/cross-sector relevance Technology Advancement Results Progress Process Deployed technology adoption and end-user investment Progress toward commercial use New IP generation/patents and licenses Workforce Development Results Progress Process # of graduates placed in targeted industry sectors Skill advancement of workers and students Worker and student program involvement

MI/EWI February 15 Washington Briefing Objective: To inform policymakers and managers of relevant Federal programs Government Participants: White House Office of Science and Technology Policy DARPA Open Manufacturing program DOE Advanced Manufacturing Office NIST Chief Manufacturing Officer NIST Associate Director for Innovation and Industry Services Office of Secretary of Defense, Manuf. & Industrial Base Policy National Science Foundation Industry: Babcock & Wilcox, Honda of America, GE Aviation, Manufacturing Institute, EWI, AMT

March 9 Announcement President Obama announced a proposal for a "National Network for Manufacturing Innovation" Network of up to 15 "Institutes for Manufacturing Innovation" which would serve as "regional hubs of manufacturing excellence" across the country

Opportunity A sustainable, lean, industry-focused innovation model will create an environment for American manufacturing innovation that will advance U.S. manufacturing competitiveness and drive export growth A targeted, strategic investment by the government can quickly create a pilot network that delivers significant, measureable impact for American industry

Questions? Chris Conrardy Chief Technology Officer EWI 614.688.5191 cconrardy@ewi.org Gardner Carrick Senior Director of Strategic Initiatives The Manufacturing Institute 202.637.3491 GCarrick@nam.org