COLLABORATION The Answer to Sustainable Manufacturing Robert G. Kiggans Vice Chairman, SCRA Applied R&D U.S. IMS Head of Delegation

AGENDA U.S. Manufacturing Strategy & Policy U.S. Manufacturing Strategy & Policy Manufacturing Innovation Manufacturing Innovation IMS Program IMS Program

U.S. Manufacturing Strategy & Policy U.S. Manufacturing sector valued at about $1.6 Trillion. Represents 60% of U.S. exports. U.S. Manufacturing sector valued at about $1.6 Trillion. Represents 60% of U.S. exports. Accounts for 70% of private sector research and development. Accounts for 70% of private sector research and development. However, losing ground in the face of global competition. However, losing ground in the face of global competition. Trade gap has widened to nearly $100 billion. Trade gap has widened to nearly $100 billion.

President’s Council of Advisors on Science & Technology (PCAST) Issued report on Advanced Manufacturing and reminded us why manufacturing remains an essential driver of our economy. Issued report on Advanced Manufacturing and reminded us why manufacturing remains an essential driver of our economy. Government should play an important role through the development of an innovation policy. Government should play an important role through the development of an innovation policy. Support sustained investments in basic research to promote scientific discoveries, but also co-invest in precompetitive applied research. Support sustained investments in basic research to promote scientific discoveries, but also co-invest in precompetitive applied research.

(PCAST) Report also looked at areas such as tax, trade, workforce, small business, and education policies and how each either helped or hindered the manufacturing sector. Report also looked at areas such as tax, trade, workforce, small business, and education policies and how each either helped or hindered the manufacturing sector. Given PCAST’s recommendations, the President has made revitalization of manufacturing a key part of his economic strategy. Given PCAST’s recommendations, the President has made revitalization of manufacturing a key part of his economic strategy.

Structural Cost of Manufacturing U.S. Manufacturers face a 20% cost burden over competitors from our largest trading partners. U.S. Manufacturers face a 20% cost burden over competitors from our largest trading partners. Corporate tax rates make up over half that burden as other countries have reduced rates. Corporate tax rates make up over half that burden as other countries have reduced rates. 6 U.S.CanadaMexicoJapanChinaGermanyU.K.KoreaTaiwanFrance %44%34%51%33%57%31%30%25%36% %31%30%40%25%29%28%24%17%33% The Manufacturing Institute & MAPI - October 2011

U.S. Manufacturing Strategy and Policy President has established the Office of Manufacturing Policy to coordinate the federal government’s manufacturing programs. Office co-chaired by Secretary of Commerce and Director of the National Economic Council. President has established the Office of Manufacturing Policy to coordinate the federal government’s manufacturing programs. Office co-chaired by Secretary of Commerce and Director of the National Economic Council. President’s FY 2013 budget $2.2 billion for federal advanced manufacturing R&D. (19% increase over 2012) President’s FY 2013 budget $2.2 billion for federal advanced manufacturing R&D. (19% increase over 2012) “An economy built to last demands that we keep doing everything we can to….keep strengthening manufacturing.”

Manufacturing Innovation

Additive Manufacturing A production technique using 3D laser printing and advanced materials to “print out” physical products A production technique using 3D laser printing and advanced materials to “print out” physical products While not new (20 years in the making), could be poised to be the next real game-changer for the manufacturing industry. While not new (20 years in the making), could be poised to be the next real game-changer for the manufacturing industry. I understand that Airbus is even talking about printing out most of an airplane someday. I understand that Airbus is even talking about printing out most of an airplane someday.

Crowdsourcing The act of outsourcing tasks, traditionally performed by an employee or contractor, to a large group of people or community, through an open call. The act of outsourcing tasks, traditionally performed by an employee or contractor, to a large group of people or community, through an open call. Expect small to medium sized companies to apply this technique (using the web) to solve tough manufacturing problems Expect small to medium sized companies to apply this technique (using the web) to solve tough manufacturing problems Motivation…access wider array of talent, generate better results, etc. Motivation…access wider array of talent, generate better results, etc.

Service Oriented Manufacturing Vision where everything in the product life cycle is information driven and is encapsulated in modular “services”. Vision where everything in the product life cycle is information driven and is encapsulated in modular “services”. Concept could enable a new class of businesses---brokers who have service agreements to rent excess capacity in manufacturing plants. Concept could enable a new class of businesses---brokers who have service agreements to rent excess capacity in manufacturing plants. Rockwell Automation is looking at cloud/SOA as the means for controlling factory operations and extending into the supply chain. Rockwell Automation is looking at cloud/SOA as the means for controlling factory operations and extending into the supply chain.

IMS Program

IMS Background Industry-led, global, collaborative research and development program providing the framework for conducting international manufacturing research Industry-led, global, collaborative research and development program providing the framework for conducting international manufacturing research Japanese initiative proposed in 1989 with a vision of global industrial cooperation and technology sharing Japanese initiative proposed in 1989 with a vision of global industrial cooperation and technology sharing Feasibility study conducted in 1992 – 1994; formal program began in 1995 with seven participating Regions Feasibility study conducted in 1992 – 1994; formal program began in 1995 with seven participating Regions Structure consists of: Structure consists of: –International Steering Committee (ISC) led by a Chairman –Inter-Regional Secretariat (IRS) –Head of Delegation for each Region –Regional Secretariat in each Region ISC Chairmanship and IRS rotates every two years (currently headed by the European Union) ISC Chairmanship and IRS rotates every two years (currently headed by the European Union) World Manufacturing Forums on the future of advanced manufacturing held periodically World Manufacturing Forums on the future of advanced manufacturing held periodically Intellectual Property (IP) protected Intellectual Property (IP) protected

Why IMS? (Rationale) Recent advances in electronic networks make global-level collaboration feasible and cost effective Recent advances in electronic networks make global-level collaboration feasible and cost effective Environmental aspects of manufacturing and consumption cannot be tackled on merely a local or national level Environmental aspects of manufacturing and consumption cannot be tackled on merely a local or national level Effective use of knowledge as a foundation for addressing world-wide problems requires access to all available knowledge sources Effective use of knowledge as a foundation for addressing world-wide problems requires access to all available knowledge sources Manufacturing is no longer a national or regional concern. Consumers are demanding a free flow of products and services which requires a global scope Manufacturing is no longer a national or regional concern. Consumers are demanding a free flow of products and services which requires a global scope While many countries have negotiated bi-lateral agreements to conduct cooperative research, the IMS charter takes this one step further -- facilitating global solutions to manufacturing challenges on a multi-lateral basis.

What is the IMS Vision? Enlarge and open world-wide markets Enlarge and open world-wide markets Improve the utilization efficiency of resources (sustainable) Improve the utilization efficiency of resources (sustainable) Significantly enhance the quality of life in the world community through new product creation Significantly enhance the quality of life in the world community through new product creation Enable greater standardization and sophistication in manufacturing operations Enable greater standardization and sophistication in manufacturing operations Improve the quality of the manufacturing environment and the global environment Improve the quality of the manufacturing environment and the global environment Disseminate results of IMS projects and transfer knowledge Disseminate results of IMS projects and transfer knowledge Advance manufacturing professionalism Advance manufacturing professionalism

United States of America European Union And Norway Switzerland Korea Who are the Member Regions? Mexico

The IMS Strategy What are the five Manufacturing Technology Platforms (MTPs)? What are the five Manufacturing Technology Platforms (MTPs)? Sustainability Sustainability Energy Efficiency Energy Efficiency Key Technologies Key Technologies Standards Standards Education Education

The IMS Strategy What are the Requirements for an MTP initiative? What are the Requirements for an MTP initiative? –Three or more participating Regions sign a Memorandum of Agreement –Minimum resource / funding level of $1M –Funding for meetings/workshops provided by each partner or participating IMS Region –Minimum duration of 12 months –Partners will meet a minimum of two times per year »May meet in conjunction with the ISC meetings

The IMS strategy provides a strong framework for global cooperative research, facilitates quick consortium formation and networking on a global basis, and stimulates the broad dissemination of information from these initiatives. Through collaboration in the IMS program, we will strengthen U.S. manufacturing and enhance the quality of life of the world community. Conclusion

BACK – UP SLIDES

Manufacturing’s Multiplier Effect 21 Source: U.S. Bureau of Economic Analysis, 2007 Annual Input-Output Tables

The Public Supports Manufacturing 22 The Manufacturing Institute & Deloitte - September 2011

The Public Supports Manufacturing 23 The Manufacturing Institute & Deloitte - September 2011

A Renaissance in Manufacturing? Over 400,000 jobs added in the last two years. Over 400,000 jobs added in the last two years. Major consulting firms issue reports predicting a return of manufacturing from Asia. Major consulting firms issue reports predicting a return of manufacturing from Asia. 24 Manufacturing Jobs in U.S. (000s)

Manufacturing Jobs for Someone Else 25 The Manufacturing Institute & Deloitte - September 2011

Manufacturing Jobs for Someone Else 26 The Manufacturing Institute & Deloitte - September 2011

The Skills Gap in Manufacturing 82% of manufacturers report a moderate or serious skills gap in skilled production. 82% of manufacturers report a moderate or serious skills gap in skilled production. 74% of manufacturers report that this skills gap has negatively impacted their company’s ability to expand operations. 74% of manufacturers report that this skills gap has negatively impacted their company’s ability to expand operations. 69% of manufacturers expect the skills shortage in skilled production to worsen in the next 3-5 years. 69% of manufacturers expect the skills shortage in skilled production to worsen in the next 3-5 years. 5% of all jobs in manufacturing unfilled due to lack of qualified workers. 5% of all jobs in manufacturing unfilled due to lack of qualified workers. 27 The Manufacturing Institute & Deloitte - September 2011

Manufacturers Need New Workforce Strategies Top sources for new employees 28 The Manufacturing Institute & Deloitte - October 2011

1. Sustainability Sustainable manufacturing is a platform for development of innovative manufacturing technologies which address world wide resources shortages and excess environmental load to enable an environmentally benign life cycle. 2. Energy Efficiency Energy Efficient manufacturing is a platform for improving efficiency and reducing the carbon footprint in energy utilization for manufacturing and operational processes. The energy efficiency platform will result in reduced manufacturing costs and global warming impact. 3. Key Technologies Key Technologies is a platform that includes those technologies that will yield a high impact on the next generation of manufacturing. These technologies include Model Based Enterprise, nanotechnology, and Smart materials. The IMS Strategy

4. Standards Standards is a platform that will focus on manufacturing research issues that can benefit from standardization to create open manufacturing and product standards that are accessible to everyone and enhance innovation globally. IMS involvement in standards would also focus on key areas where the lack of standards is impeding progress in any of the other MTP areas. 5. Education Education is a platform for educational programs designed for an information based knowledge worker environment that supports manufacturing in the future. Research listed under this platform will contribute to the development of a coherent vision of manufacturing education across the whole vocational and professional community. The IMS Strategy

Focus on Manufacturing Technology Focus on Manufacturing Technology Platforms (MTPs) Platforms (MTPs) What are MTPs? What are MTPs? Knowledge sharing platforms meant to facilitate the exchange of information and generate new ideas and research goals Knowledge sharing platforms meant to facilitate the exchange of information and generate new ideas and research goals What is unique about MTPs versus traditional IMS projects? What is unique about MTPs versus traditional IMS projects? Ongoing or new start Regional initiatives can be integrated within an MTP and “kicked off” under a simple Memorandum of Agreement Ongoing or new start Regional initiatives can be integrated within an MTP and “kicked off” under a simple Memorandum of Agreement