Part One: Remedy for America Deindustrialized

AI, America & Advanced Manufacturing, Part One

Can AI fix advanced manufacturing and make it thrive again?

FIRST: What Is Advanced Manufacturing?

The National Strategy for Advanced Manufacturing defines advanced manufacturing as the innovation of improved methods for manufacturing existing products, and the production of new products enabled by advanced technologies. Adler and Bonvillian, in their paper America’s Advanced Manufacturing Problem—and How to Fix It, elaborate on the definition by writing: “Advanced manufacturing can be defined as the application of innovative technologies to improve manufacturing processes and products, adding significant value through productivity advances and innovation. These would include digital technologies, robotics, 3-D printing, advanced materials, bio-fabrication, artificial intelligence, and nanofabrication.”

Is there a fix for advanced manufacturing?
America made a mistake. A big one. A mistake that cost it advantage in advanced manufacturing, which eventually will become the bane of all the nation’s manufacturing.

That’s the consensus of MIT professors David Adler and Willian Bonvillain in their provocative and well-researched paper America’s Advanced Manufacturing Problem—and How to Fix It. Lots of additional online research back up Adler and Bonvillian’s claims. Did the world’s largest economy go to sleep on itself, or was it something worse?

Who is to blame? Seems there’s enough to go around for everyone! Now, however, the situation is beyond blame. Still smoldering, the ashes from that mistake can either extinguish themselves into America becoming an also-ran in the dash for advanced manufacturing or do a Phoenix and rise up into a formidable force again.

Current world champs in advanced manufacturing are Germany, Japan, China, and Korea. Ravaged by world wars, each of these countries put innovation manufacturing at the core of their economy and then directly supported and guided advanced R&D from labs to factories. America’s government has not been as deeply involved in manufacturing as the world champs currently are; at least,  not since Roosevelt’s wartime National Defense Research Committee (NDRC), except for, of course, the present-day Department of Defense (DoD).

“If you want to build new production facilities in the U.S.,” says Torsten Gede, a manager at German investment group Deutsche Beteilgungs AG, “a large part of the machinery and technology has to be imported because local alternatives are rarely available.”

The German VDMA (Mechanical Engineering Industry Association) reports that the U.S. provided nearly 80 percent of the country’s industrial machine needs until 1995, but by 2015 was producing only 63 percent. Today, even less; the overall trend is, unfortunately, going down.

In the 1980s, “almost seven of 10 American machine‐tool companies closed due to falling demand. The decline continued this century as U.S. manufacturers outsourced more and baby boomers retired. Shrunken manufacturers demanded fewer production experts, accelerating the factory‐technology decline.”

See related: Machine Tools

In the late 1980s, there were over forty indigenous industrial robot makers in America. That was back in the days when Cincinnati Milacron boasted of becoming a world leader in industrial robotics. Today, well, there are none. America uses foreign industrial robots.

According to a RAND report from 2004 that quoted an Office of Technology Assessment (OTA) 1988 report:  “There are signs that the United States is losing its once substantial edge in technology, a crucial factor in competitiveness for an advanced, high-wage nation and that American manufacturers have fallen behind in the practical application of technology.” OTA concluded, saying: “American companies are trying to compete on world markets using relatively unskilled (but highly paid) American workers, old ideas, and old machines.”

These days, some thirty-six years later, Adler and Bonvillain write that advanced technologies are largely imported by the United States. In fact, the trade deficit in advanced technology products is accelerating, growing from $128 billion in 2019, to $195 billion in 2021, to $244 billion in 2022.

For example, “Tesla, often cited as a model for high-value, U.S.-based manufacturing, has its Fremont, CA factory packed with red Kuka robotic arms from Germany. Tesla bought German factory-automation specialists Grohmann GmbH to help build its Nevada battery factory.”

And of course, constant reminders of America’s big mistake show up daily in its ports where cargo vessels arrive laden with foreign automation that America can no longer build on its own.

Today, there’s a rising urgency to somehow fix it all, and get the Phoenix to rise up.  Luckily for America’s advanced manufacturing, there’s AI…artificial intelligence in the form of generative AI or GenAI. America is a leader. There’s a clear and present opportunity for GenAI to ensure America’s redemption, if America acts quickly.

When the makers lost their jobs
Three decades ago, America began deindustrializing, sent multi-billions of dollars in manufacturing overseas, and dismissed 7.5 million workers. Skilled workers who were America’s manufacturing might punched out for the last time; and here in 2024, thirty years later, American industry is in a desperate hunt to get those skills back again.

“The United States created breakthroughs in technologies that can transform advanced manufacturing: 3-D printing, advanced composites, new materials, biomanufacturing, photonics, power electronics, and other emerging fields, including AI manufacturing. But these advanced technologies have yet to be mainstreamed to the nation’s manufacturing industry.”

Why is that? It’s because “the United States does not currently have the correct institutional infrastructure and accompanying operational mechanisms to support advanced manufacturing,” said Adler and Bonvillian. “Industry, government, and academia are largely unlinked when it comes to advanced production technology and processes, and there is a similar lack of interagency coordination within the government. Pathways necessary for diffusing new technologies and getting them to market are missing, including a lack of scale-up financing mechanisms.”

They go on to say: “These industrial and innovation strategies are underpinned by a common vision, one centered on nurturing advanced technologies. The belief is that these policies will result in the United States once again being able to manufacture critical technologies at home.

For example: “Despite the initial invention of key technologies, the United States has ceded manufacturing leadership of one energy sector after another, from solar to offshore to wind to batteries to nuclear power.

Adler & Bonvillian Explain It All

The bad stuff in a nutshell According to Adler and Bonvillian here are the failings that brought America’s advanced manufacturing to this crisis point.

  • America does not currently have the correct institutional infrastructure or operational mechanisms to support advanced manufacturing.
  • There is a disconnect between industry, government, and academia in terms of advanced production technology and processes, leading to a lack of coordination and pathways for the diffusion of new technologies to market.
  • Unlike the current world champs (Germany, Japan, Korea, Taiwan, and China; America ranks 9th), America failed to prioritize manufacturing at the center of its innovation system.
  • There is a pervasive source of weakness in the U.S. due to the disconnect between the production system and the innovation system. While the innovation system focused on R&D, it did not consider manufacturing as part of innovation, leading to a situation where the U.S. innovation system is maladapted to global economic competition. The innovation system in the U.S. was built around R&D, assuming its lead in manufacturing would be eternal, which has led to disconnects between the production system and the innovation system.
  • America’s financial markets tend to favor a capital-light production model rather than focusing on production. This preference for financial engineering over production innovation poses a challenge to the advancement of advanced manufacturing in the country.
  • Mainstream economics in America has shown disdain for manufacturing, viewing deindustrialization as progress. This attitude has influenced policy decisions and hindered the focus on manufacturing innovation and competitiveness in the global market.

What should be done?
Establish and improve manufacturing innovation institutes to foster collaboration between industry, universities, and state governments, focusing on key manufacturing technology strands like robotics, digital production, and bio-fabrication.

Remove term limits for the manufacturing innovation institutes to ensure a sustained commitment and long-term funding for transformational manufacturing technology initiatives.

Implement mechanisms for scale-up financing to support manufacturing production, including assisting entrepreneurial start-up firms in the manufacturing sector.

Offer direct production support for critical technologies by funding new advanced production facilities and acquiring new manufacturing technologies.

Offer a mix of top-down tools for identifying technology challenges and supporting specific companies and bottom-up tools for broader industry support and innovation.

By focusing on these strategies, the United States can take significant steps towards revitalizing its advanced manufacturing sector and enhancing its global competitiveness.

What about people?
Adler and Bonvillian once again.

America needs to rebuild and reskill its manufacturing workforce.

Address the deep disconnect between the education system and workplaces, which requires rebuilding much of workforce education at all levels. Community colleges should introduce advanced manufacturing curricula, create short programs for upskilling workers, establish certificates that stack toward degrees, and increase completion rates.

Integrate disconnected Labor and Education Department programs, accelerate efforts to expand registered apprenticeship programs, and establish collaborations between industry, community colleges, and high schools for new training and apprenticeship programs.

Transform the vocational education system into an effective work-learn model supporting skilled manufacturing jobs, akin to successful programs in other industrial countries like Germany (the German Ausbildung) and Japan.

Create a system for lifelong learning to support ongoing skill development and advancement in manufacturing technologies.

Enhance funding and support for community colleges, integrate advanced manufacturing programs, promote apprenticeships, and closely collaborate with industry to reform curricula and training programs.