COLLABORATION The Answer to Sustainable Manufacturing

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

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

3. U.S. Manufacturing Strategy & Policy • 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. • However, losing ground in the face of global competition. • Trade gap has widened to nearly $100 billion.

4. 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. • 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.

5. (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. • Given PCAST’s recommendations, the President has made revitalization of manufacturing a key part of his economic strategy.

6. Structural Cost of Manufacturing • U.S. Manufacturers face a 20% cost burden over competitors from our largest trading partners. • Corporate tax rates make up over half that burdenas other countries have reduced rates. The Manufacturing Institute & MAPI - October 2011

7. 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’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.”

8. Manufacturing Innovation

9. Additive Manufacturing • 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. • I understand that Airbus is even talking about printing out most of an airplane someday.

10. 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. • 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.

11. Service Oriented Manufacturing • 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. • Rockwell Automation is looking at cloud/SOA as the means for controlling factory operations and extending into the supply chain.

12. IMS Program

13. IMS Background • 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 • Feasibility study conducted in 1992 – 1994; formal program began in 1995 with seven participating Regions • 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) • World Manufacturing Forums on the future of advanced manufacturing held periodically • Intellectual Property (IP) protected

14. Why IMS? (Rationale) • 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 • 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 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 amulti-lateral basis.

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

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

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

18. The IMS Strategy • 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

19. Conclusion 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.

20. BACK – UP SLIDES

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

22. The Public Supports Manufacturing

23. The Public Supports Manufacturing

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

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

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

27. The Skills Gap in Manufacturing • 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. • 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. The Manufacturing Institute & Deloitte - September 2011

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

29. The IMS Strategy 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.

30. 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.

31. The IMS Strategy Focus on Manufacturing Technology Platforms (MTPs) • What are MTPs? 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? Ongoing or new start Regional initiatives can be integrated within an MTP and “kicked off” under a simple Memorandum of Agreement