[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
BUILDING A NETWORK FOR
MANUFACTURING INNOVATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
DECEMBER 12, 2013
__________
Serial No. 113-59
__________
Printed for the use of the Committee on Science, Space, and Technology
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Available via the World Wide Web: http://science.house.gov
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR., DANIEL LIPINSKI, Illinois
Wisconsin DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas ERIC SWALWELL, California
PAUL C. BROUN, Georgia DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi ALAN GRAYSON, Florida
MO BROOKS, Alabama JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois SCOTT PETERS, California
LARRY BUCSHON, Indiana DEREK KILMER, Washington
STEVE STOCKMAN, Texas AMI BERA, California
BILL POSEY, Florida ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky MARK TAKANO, California
KEVIN CRAMER, North Dakota ROBIN KELLY, Illinois
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS COLLINS, New York
VACANCY
------
Subcommittee on Research and Technology
HON. LARRY BUCSHON, Indiana, Chair
STEVEN M. PALAZZO, Mississippi DANIEL LIPINSKI, Illinois
MO BROOKS, Alabama FEDERICA WILSON, Florida
RANDY HULTGREN, Illinois ZOE LOFGREN, California
STEVE STOCKMAN, Texas SCOTT PETERS, California
CYNTHIA LUMMIS, Wyoming AMI BERA, California
DAVID SCHWEIKERT, Arizona DEREK KILMER, Washington
THOMAS MASSIE, Kentucky ELIZABETH ESTY, Connecticut
JIM BRIDENSTINE, Oklahoma ROBIN KELLY, Illinois
CHRIS COLLINS, New York EDDIE BERNICE JOHNSON, Texas
LAMAR S. SMITH, Texas
C O N T E N T S
December 12, 2013
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Larry Bucshon, Chairman, Subcommittee
on Research and Technology, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 8
Written Statement............................................ 9
Statement by Representative Daniel Lipinski, Ranking Minority
Member, Subcommittee on Research and Technology, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 10
Written Statement............................................ 11
Statement by Representative Eddie Bernice Johnson, Ranking
Member, Committee on Science, Space, and Technology, U.S. House
of Representatives............................................. 13
Written Statement............................................ 13
Witnesses:
Panel I
Mr. Jonathan Davis, Global Vice President of Advocacy, SEMI
Oral Statement............................................... 15
Written Statement............................................ 18
Dr. Richard A. Aubrecht, Vice Chairman of the Board, Vice
President, Strategy & Technology, Moog Inc.
Oral Statement............................................... 22
Written Statement............................................ 24
Dr. Stephan Biller, Chief Scientist Manufacturing Technology, GE
Global Research
Oral Statement............................................... 28
Written Statement............................................ 30
Dr. Stan A. Veuger, Resident Scholar, American Enterprise
Institute for Public Policy Research
Oral Statement............................................... 38
Written Statement............................................ 40
Panel II
The Honorable Tom Reed, Member, U.S. House of Representatives
Oral Statement............................................... 68
Written Statement............................................ 66
The Honorable Joseph P. Kennedy, III, Member, U.S. House of
Representatives
Oral Statement............................................... 70
Written Statement............................................ 72
Appendix I: Additional Material for the Record
Submitted letters for the record by The Honorable Joseph P.
Kennedy, III, Member, U.S. House of Representatives............ 78
Submitted statement of Representative Lamar S. Smith, Chairman,
Committee on Science, Space, and Technology.................... 116
Discussion draft................................................. 88
BUILDING A NETWORK FOR MANUFACTURING INNOVATION
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THURSDAY, DECEMBER 12, 2013
House of Representatives,
Subcommittee on Research and Technology
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:05 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Larry
Bucshon [Chairman of the Subcommittee] presiding.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Bucshon. Good morning. The Subcommittee on
Research and Technology will come to order. We are going to
have a little bit of a change of order today, because, on our
first panel, Congressman Tom Reed is in a markup in another
Committee that, he is delayed, and couldn't testify first, so
we are going to go to our second panel.
So I would like to welcome everyone to today's hearing,
titled ``Building A Network For Manufacturing Innovation.'' In
front of you are packets containing the written testimony,
biographies, and truth in testimony disclosures for today's
witnesses. I will recognize myself for five minutes for an
opening statement.
I am pleased to call to order this morning's hearing to
examine the need for a manufacturing innovation network, and to
review H.R. 2996, the Revitalization American Manufacturing
Innovation Act of 2013, authored by Representative Tom Reed of
New York and Representative Joe Kennedy of Massachusetts. I am
pleased that Congressman Reed and Congressman Kennedy will be
joining us later today as witnesses to discuss their proposed
legislation.
Nationally, manufacturing supports 17.2 million jobs, with
12 million Americans, or roughly nine percent of the workforce,
employed directly in manufacturing. Manufacturing represents
approximately 11 percent of the American economy, and has the
greatest multiplier effect of any major sector in the American
economy. According to the Bureau of Economic Analysis, each
dollar spent in manufacturing generates an additional $1.35 in
spending. In Indiana, there are nearly 10,000 manufacturers,
employing more than a half a million workers, which represents
1/6 of Indiana's workforce. Not surprisingly, my state ranks
first in manufacturing employment, and second in manufacturing
as a gross state product.
The 8th District of Indiana is home to many of these
manufacturers, and I have seen the work being done firsthand at
manufacturers like Berry Plastics, Toyota Motor Corporation,
and ALCOA. Along with the many manufacturers in our district,
universities like Vincennes University, University of
Evansville, and University of Southern Indiana offer degrees
related to advanced manufacturing, and work closely with these
entities to develop a talented, well trained workforce.
H.R. 2996 would establish a 600 million dollar new program
based on the President's Fiscal Year 2013 and Fiscal Year 2014
budget request for the National Network for Manufacturing
Innovation. H.R. 2996 would establish a network for
manufacturing innovation, building a public-private partnership
through Centers for Manufacturing Innovation.
Nearly half of the government spending in 2012 was spent
automatically on mandatory entitlement programs. And, here in
Washington, D.C., we are having an ongoing discussion about
reining in the spending on the mandatory programs in order to
prevent budget cuts to government programs, such as research
and development, that also may affect such proposals as H.R.
2996.
I look forward to hearing from all of our witnesses, and
their thoughts about the proposed legislation, and I thank them
for joining us today.
[The prepared statement of Mr. Bucshon follows:]
Prepared Statement of Subcommittee on Research and Technology Chairman
Larry Bucshon
I am pleased to call to order this morning's hearing to examine the
need for a manufacturing innovation network and to review H.R. 2996,
the Revitalize American Manufacturing and Innovation Act of 2013,
authored by Representative Tom Reed of New York and Representative Joe
Kennedy of Massachusetts.
I am pleased Congressman Reed and Congressman Kennedy are joining
us today as witnesses to discuss their proposed legislation.
Nationally, manufacturing supports 17.2 million jobs--with 12
million Americans, or roughly nine percent of the workforce, employed
directly in manufacturing. Manufacturing represents approximately 11
percent of the American economy, and has the greatest multiplier effect
of any major sector in the American economy. According to the Bureau of
Economic Analysis, each dollar spent in manufacturing generates an
additional $1.35 in spending.
In Indiana, there are nearly 10,000 manufacturers employing more
than half a million workers, which represents one sixth of Indiana's
workforce. Not surprisingly, my state ranks first in manufacturing
employment and second in manufacturing as a gross state product.
The 8th district of Indiana is home to many of these manufacturers
and I have seen the work being done firsthand at manufactures like
Berry Plastics, Toyota Motor and Alcoa. Along with the many
manufacturers in our district, universities like Vincennes University,
the University of Evansville and the University of Southern Indiana
offer degrees related to advanced manufacturing and work closely with
these entities to develop a talented and well-trained workforce.
H.R. 2996 would establish a $600 million new program, based on the
President's FY13 and FY14 budget request for the National Network for
Manufacturing Innovation (NNNMI). H.R. 2996 would establish a network
for manufacturing innovation building public-private partnerships
through Centers for Manufacturing Innovation.
Nearly half of government spending in 2012 was spent automatically
on mandatory entitlement programs. Many in Washington D.C. refuse to
discuss and enact real reforms that will rein in spending on mandatory
spending programs in order to prevent budget cuts to government
programs such as research and development on the discretionary side,
affecting programs like the proposal in H.R. 2996.
I look forward to hearing from all of our witnesses on their
thoughts about the proposed legislation, and I thank them for joining
us here today.
Chairman Bucshon. Now I will recognize the Ranking Member,
gentleman from Illinois, Mr. Lipinski, for his opening
statement.
Mr. Lipinski. Thank you, Mr. Chairman. Thank you for
holding this hearing, and I think that--I want someone to count
up the hearings. I believe we--hard to believe anyone has had
more hearings than we have had in the Subcommittee, but that is
great, because we are looking at a lot of very important issues
to the country, such as this one on manufacturing. I am looking
forward to hearing from Mr. Reed and Mr. Kennedy about their
bill. And, prior to that, hearing from our expert witnesses
here in front of us, who are going to testify as the
Subcommittee continues its examination of what we can do to
revitalize America's manufacturing sector.
The legislation we are discussing today is based in large
part on the proposed National Network for Manufacturing
Innovation, or NNMI. I have been a strong supporter of the NNMI
concept, and I am proud to be a co-sponsor of H.R. 2996.
Although we have heard time and time again about the crucial
link between economic growth and a vibrant U.S. manufacturing
sector, I think these facts bear repeating. At 60 percent of
all exports, manufacturing is the largest contributor to U.S.
trade. Manufacturing employs more than 11 million Americans in
jobs providing above-average pay and benefits. The sector adds
approximately $1.6 trillion to our Gross Domestic Product.
According to the Bureau of Economic Analysis, manufacturing has
a larger multiplier effect than any other major economic
activity. One dollar spent in manufacturing generates $1.35 in
additional economic activity. And, finally, manufacturing
accounts for nearly 70 percent of private sector research and
development.
Behind all these facts and figures is a strong link between
manufacturing and innovation. And let's be honest, our Nation's
competitive edge is slipping. We have to take note of countries
such as Korea, Japan, and Germany that have a larger share of
the advanced manufacturing sector than the United States. These
nations, and others, are investing heavily in manufacturing and
innovation, and they are doing so in a much more comprehensive
way than we are. It is not as if the Federal Government isn't
doing any good work in the areas I mentioned, but if we want to
create the environment that will produce the high paying jobs
of the future, and help this country keep its competitive edge,
then we need to do more to support and expand advanced
manufacturing.
The legislation we are discussing today has the potential
to do just that. The manufacturing institutes created under the
proposal can serve as centers of manufacturing excellence,
accelerating innovation in the transition of cutting edge
manufacturing technologies and processes to the marketplace.
They can also serve as a nexus for addressing our manufacturing
talent shortage. I think it is important for our manufacturing
workforce, from scientists and engineers, to production workers
and technicians, to have access to and experience with new,
innovative technologies.
H.R. 2996 is modeled after the successful Fraunhofer
Institutes in Germany. Many experts believe Germany has been
able to withstand a global financial crisis in large part due
to its focus on innovative technologies as a key driver of
economic growth. The Fraunhofer Institutes are widely
considered to be a central and key component of the country's
high tech strategy. Based on Germany's success, a number of
countries, including Britain and France, have adapted the
Fraunhofer model to improve the competitiveness of their
manufacturers. And, in fact, sources ranging from a recent
National Research Council report, to groups like the National
Association of Manufacturers, have called for the establishment
of a similar network of public-private manufacturing centers in
the United States.
Simply put, made in America equals American jobs and a
strong economy. Now, when our position as a global leader in
science and technology is being threatened, we can't afford to
lose our capacity to create the breakthrough technologies of
tomorrow. Mr. Chairman, we must adopt smart policies and
encourage innovation, and investment in manufacturing. I
believe H.R. 2996 is a smart policy. I look forward to working
with you, and all of my colleagues, to advance legislation like
this to help keep American manufacturing strong.
Thank you, Mr. Chairman. I yield back the balance of my
time.
[The prepared statement of Mr. Lipinski follows:]
Prepared Statement of Subcommittee on Research and Technology
Ranking Minority Member Daniel Lipinski
Thank you Mr. Chairman for holding this hearing. I am happy that we
have Mr. Reed and Mr. Kennedy with us today to talk about their bill,
and I look forward to hearing from them and all of our witnesses who
are here to testify as the Subcommittee continues its examination of
American manufacturing and efforts to revitalize this critical sector.
The legislation we are discussing today is based in large part on the
proposed National Network for Manufacturing Innovation or NNMI. I have
been a strong supporter of the NNMI concept and I'm proud to cosponsor
H.R. 2996.
Although we've heard time and time again about the crucial link
between economic growth and a vibrant U.S. manufacturing sector, I
think these facts bear repeating:
At 60 percent of all exports, manufacturing is the largest
contributor to U.S. trade. Manufacturing employs more than 11 million
Americans in jobs providing above average pay and benefits. The sector
adds approximately $1.6 trillion to our gross domestic product.
According to the Bureau of Economic Analysis, manufacturing has a
larger multiplier effect than any other major economic activity--$1
spent in manufacturing generates $1.35 in additional economic activity.
And finally, manufacturing accounts for nearly 70 percent of private
sector research and development.
Behind all of these facts and figures is the strong link between
manufacturing and innovation. And let's be honest, our nation's
competitive edge is slipping. We have to take note of countries such as
Korea, Japan, and Germany that have a larger share of the advanced
manufacturing sector than the United States. These nations and others
are investing heavily in manufacturing and innovation and they are
doing so in a much more comprehensive way than we are.
It's not as if the federal government isn't doing any good work in
the areas I mentioned, but if we want to create the environment that
will produce the high-paying jobs of the future and help this country
keep its competitive edge, then we need to do more to support and
expand advanced manufacturing.
The legislation we are discussing today has the potential to do
just that. The manufacturing institutes created under the proposal can
serve as centers of manufacturing excellence, accelerating innovation
and the transition of cutting-edge manufacturing technologies and
processes to the marketplace. They can also serve as the nexus for
addressing our manufacturing talent shortage. I think it is important
for our manufacturing workforce--from scientists and engineers to
production workers and technicians--to have access to and experience
with new, innovative technologies.
As I understand it, H.R. 2996 is modeled after the successful
Fraunhofer Institutes in Germany. Many experts believe Germany has been
able to withstand the global financial crisis in large part due to its
focus on innovative technologies as a key driver of economic growth.
The Fraunhofer Institutes are widely considered to be a central and key
component of the country's high-tech strategy.
Based on Germany's success, a number of countries, including
Britain and France have adapted the Fraunhofer model to improve the
competitiveness of their manufacturers. And in fact, sources ranging
from a recent National Research Council report to groups like the
National Association of Manufacturers have called for the establishment
of a similar network of public-private manufacturing centers in the
United States.
Simply put, ``Made in America'' equals American jobs and a strong
economy. Now when our position as a global leader in science and
technology is being threatened, we can't afford to lose our capacity to
create the breakthrough technologies of tomorrow.
Mr. Chairman, we must adopt smart policies that encourage
innovation and investment in manufacturing. I believe H.R. 2996 is a
smart policy. I look forward to working with you and all of my
colleagues to advance legislation like this that will help keep
American manufacturing strong.
Thank you, Mr. Chairman and I yield back the balance of my time.
Chairman Bucshon. Thank you, Mr. Lipinski. I now would like
to recognize the Ranking Member of the Full Committee, Ms.
Johnson, for her opening statement.
Ms. Johnson. Thank you very much, Mr. Chairman. I would
like to compliment and praise my colleagues, Mr. Kennedy and
Mr. Reed, for their bipartisan work to advance the legislation
we are considering this morning. The purpose of H.R. 2996 is
conveyed in the legislation's title, the Revitalize American
Manufacturing and Innovation Act. I am supportive of this
legislation, and its purpose to revitalize American
manufacturing, because I strongly believe that if the United
States is to remain competitive in the long term, we need to
ensure that American companies maintain their capacity to
manufacture innovative products right here at home.
The key to maintaining this capacity is through strategic
investments in advanced manufacturing research, development,
and education. While the United States is struggling to sustain
its competitive edge, other countries are focusing their full
attention on manufacturing, they are implementing the policies
and programs necessary to build the 21st century economies now.
We simply cannot afford to stand on the sideline and watch our
competitors pass us by. A vibrant manufacturing sector is just
too important.
That is why, earlier this year, I introduced the Advancing
Innovative Manufacturing Act of 2013, or the AIM Act. My
legislation also brings the public and private sectors together
to tackle the research needs of the industry. Additionally, the
AIM Act focuses on ensuring that small and medium sized
manufacturers have the tools they need to innovate.
Because the decline of U.S. manufacturing is a threat to
the middle class jobs in our economy, the Democratic discussion
draft of the America Competes Reauthorization Act includes a
number of manufacturing related provisions. In fact, the
proposal we are considering today is a part of that discussion
draft. We need our manufacturing sector to be the most
sophisticated in the world, using transformative technologies
and manufacturing processes. By doing this, we can maintain our
global leadership.
And I am hopeful that, as this Committee considers the
reauthorization of NSF, NIST, and DOE's Office of Science, we
can come together across the aisle to include policies that
will stimulate American manufacturing and American jobs. Mr.
Chairman, on a daily basis, many times we hear about spending
so much on Medicaid, spending so much on other aid programs.
Well, Mr. Chairman, until we pass legislation of this sort, we
will be increasing those rolls, rather than eliminating them. I
hope that this legislation can move forward. And I thank you,
and yield back the balance of my time.
[The prepared statement of Ms. Johnson follows:]
Prepared Statement of Full Committee Ranking Member
Eddie Bernice Johnson
Thank you, Mr. Chairman. I'd like to praise my colleagues, Mr.
Kennedy and Mr. Reed for their bipartisan work to advance the
legislation we are considering this morning. The purpose of H.R. 2996
is conveyed in the legislation's title, the Revitalize American
Manufacturing and Innovation Act.
I am supportive of the legislation and its purpose to revitalize
American manufacturing because I strongly believe that if the United
States is to remain competitive in the long-term, we need to ensure
that American companies maintain their capacity to manufacture
innovative products here at home.
The key to maintaining this capacity is through strategic
investments in advanced manufacturing research, development, and
education.
While the United States is struggling to sustain its competitive
edge other countries are focusing their full attention on
manufacturing. They are implementing the policies and programs
necessary to build 21st century economies now. We simply cannot afford
to stand on the sideline and watch our competitors pass us by. A
vibrant manufacturing sector is just too important.
That is why, earlier this year I introduced the Advancing
Innovative Manufacturing Act of 2013--or the AIM Act. My legislation
also brings the public and private sectors together to tackle the
research needs of industry. Additionally, the AIM act focuses on
ensuring small and medium-sized manufacturers have the tools they need
to innovate.
Because the decline of U.S. manufacturing is a threat to middle
class jobs and our economy, the Democratic discussion draft of the
America Competes Reauthorization Act includes a number of
manufacturing-related provisions. In fact, the proposal we are
considering today is a part of that discussion draft.
We need our manufacturing sector to be the most sophisticated in
the world, using transformative technologies and manufacturing
processes. By doing this, we can maintain our global leadership. I am
hopeful that as this Committee considers the reauthorization of NSF,
NIST, and DOE's Office of Science we can come together across the aisle
to include policies that will stimulate American manufacturing and
American jobs.
Thank you, Mr. Chairman and I yield back the balance of my time.
Chairman Bucshon. Thank you, Ms. Johnson. If there are
Members who wish to submit additional opening statements, your
statements will be added to the record at this point.
I am now going to introduce our panel of witnesses, and
then we will hear their testimony. Our first witness is Mr.
Jonathan Davis, Global Vice President of Advocacy for SEMI, the
global industry association serving 2,000 member companies in
the nano and micro electronics manufacturing supply chains.
Prior to this, Mr. Davis served as the head of the
Semiconductor IC Business Unit. Mr. Davis earned a five year
architecture degree from Kansas State University College of
Architecture, and designed and studied at the University of
Missouri at Columbia School of Journalism.
Our second witness is Dr. Richard Aubrecht, Vice Chairman
of the Board, and Vice President for Strategy and Technology at
Moog, Incorporated. Dr. Aubrecht began his career at Moog in
1969 as a design and development engineer. Dr. Aubrecht studied
at the Sibley School of Mechanical Engineering at Cornell
University from 1962 to 1969, where he earned his Bachelor's,
Master's, and Doctorate degrees.
Our third witness is Dr. Stephan Biller, Chief Scientist
for Manufacturing Technologies at GE Global Research. He is
responsible for GE's global advanced manufacturing strategy,
and the development of GE's smart manufacturing initiative
across GE businesses. Dr. Biller received a degree in
electrical engineering from the RWTH Aachen in Germany, and a
Doctorate in Industrial Engineering and Management Science from
Northwestern University, and an MBA from the University of
Michigan.
And our final witness is Dr. Stanley Veuger, Resident
Scholar at the American Enterprise Institute for Public Policy
Research. His academic research focuses on political economy
and applied microeconomics. Before joining AEI, Dr. Veuger was
a teaching fellow at the Harvard Kennedy School, Harvard
College, and the Universitat Pompeu Fabra. He is a graduate of
Altrec University and Erasmus University at Rotterdam, and
holds a Masters in Economics from the Universitat Popeu Fabra--
that is hard to say--as well as a Master's and Doctorate in
Economics from Harvard University.
Welcome to all of our witnesses. As you should know, the
spoken testimony is limited to five minutes, after which
Members of the Committee have five minutes each to ask
questions. Your written testimony will be introduced into the
record of the hearing.
I now recognize our first witness, Mr. Davis, for five
minutes for his testimony.
TESTIMONY OF Mr. JONATHAN DAVIS,
GLOBAL VICE PRESIDENT OF ADVOCACY, SEMI
Mr. Davis. Chairman Bucshon, Ranking Member Lipinski, and
Members of the Committee, thank you for allowing me to be here
to testify before you today on the need to strengthen advanced
manufacturing in the United States through public-private
partnerships, like the ones authorized in H.R. 2996, the
Revitalize American Manufacturing and Innovation Act.
SEMI is a global industry association with about 500 U.S.
member companies that serve the semiconductor manufacturing
supply chain. Semiconductors are small integrated circuits, or
ICs, more commonly known as computer chips, but today these
chips power far more than computers. They are the essential
enabling technology for all electronics and electronic systems.
Computers, cell phones, tablets, TVs, automobiles, medical
devices, and components in systems for national defense and
security.
SEMI represents a manufacturing supply chain that is
heavily dependent on innovation and commercialization to
perpetuate an incredibly advanced pace of technological
development. On average, SEMI North American member companies
re-invest 10 to 15 percent of their annual revenues into
research and development each and every year. The cost to
commercialize technology continues to increase as we compete
with global competitors supported by foreign government
investment. Governments around the world understand the
strategic value of complete manufacturing supply chains. Many
are supporting efforts to assist homegrown manufacturers to
compete with U.S. companies, while also providing powerful
incentives for U.S. manufacturers to move offshore.
In the case of semiconductor manufacturing equipment, we
see intense efforts by foreign governments to commercialize
next-generation technology outside of the United States. In
Europe, they have launched the 10/100/20 strategy that will
supply 10 billion Euros from the EU to leverage large
investments by industry, with a goal of 20 percent market
share. In China, the twelfth five-Year Plan from 2011 to 2015
from the Central Government calls for $600 billion for seven
priority technology areas, two of which include semiconductor
related equipment. Taiwan and Korea also have robust funding
support in efforts to strengthen their local supply chains for
their important national industries. This localization effort
often results in direct pressure on U.S. technology providers
to relocate to their regions. Often, for both financial, or
customer relations reasons, the pressure to relocate overseas
is formidable.
We understand that the U.S. faces its own budgetary fiscal
challenges related to discretionary and non-discretionary
funding. Mandatory funding continues to grow, while non-
discretionary funding becomes smaller, and that model simply
isn't sustainable. It is our hope that Congress will find the
correct balance between discretionary and non-discretionary
programs so that worthy policy objectives, such as H.R. 2996,
can be debated, and we hope implemented.
We believe that 2996, the Revitalize American Manufacturing
and Innovation Act, provides the needed leadership by the
United States government to compete with foreign governments,
and to strengthen and grow strategically important
manufacturing industry. This legislation provides public-
private partnership model that we believe will strengthen the
supply chains of numerous strategic manufacturing industries.
The legislation doesn't help one company, or one
university. It enables an entire vertical supply chain for
specific manufacturing industries. We believe that is the
proper role for the Federal Government to take, assist an
entire industry, with everyone, including academia, state and
local governments, and industry putting skin in the game. 2996
authorizes the creation of Centers for Manufacturing
Innovation. Each center will focus on a specific technology for
the commercialization of manufactured goods. Such a model
allows for pre-competitive research, or pilot scale
manufacturing product development.
As I said earlier, SEMI member companies' cost to
commercialize the next generation of technology into then
manufactured product is extremely expensive. Having a shared
manufacturing pilot line for all companies, including large and
small, that are part of the supply chain saves resources for
everyone. It is especially important for small and medium
suppliers, who cannot afford the high cost to commercialize
technology. The legislation is technology neutral. The
government cannot require specific technologies. Rather, they
will be competed through a merit based solicitation process.
One of the technologies our member companies produce are
light emitting diodes, and I see mine is red now, so I will
refer you to my written testimony, and be happy to answer
questions.
[The prepared statement of Mr. Davis follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Bucshon. Thank you, Mr. Davis.
I will now recognize our next witness, Dr. Aubrecht, for
his testimony, five minutes.
TESTIMONY OF DR. RICHARD A. AUBRECHT,
VICE CHAIRMAN OF THE BOARD,
VICE PRESIDENT,
STRATEGY & TECHNOLOGY, MOOG INC.
Dr. Aubrecht. Thank you very much for this opportunity to
testify. Let me start by giving a little background on Moog. We
are headquartered in Buffalo, New York. We have been in
business for about 60 years. We were actually a spin-out of
Cornell University to begin with. Our primary products and
technologies relate to precision motion control. We supply
flight controls for aircraft. We have all the flight controls
on the F-35. We have the same position with Boeing on the 787,
and with Airbus. This is the first time Airbus has ever gone
outside Europe for that sort of control system. And just
recently we won the same kind of a program at Embraer in
Brazil.
We are a global company, about $2-1/2 billion in sales,
13,000 employees. We are a manufacturing company. We have had a
history of 60 years of being on the leading edge of the
technology, but what enables that is to be a leading edge
manufacturer. It is not just a matter of being able to design
things. You have got to be able to make things. And so, with
our global perspective--I travel all over the world. We have
locations in 30 countries around the world, 15 manufacturing
locations around the world, seven locations in the United
States, and so I am very aware of the competitive nature of
international manufacturing. And what we--a lot of what we sell
overseas we make overseas, but we also export a lot from our
facilities here in the United States.
I am in full agreement with the premise outlined in the
Dear Colleague letter. Manufacturing is very important in the
U.S. economy, and it also is highly dependent upon the skilled
technicians, and machinists, and electronic technicians that
put our products together every day. Currently we are facing a
significant increase in our need for training. We had a great
growth period in the 1970s and '80s. A lot of these people are
retiring over the next ten years, so we have significant need
at this point in time for improved training.
I believe the question we should be asking today is not do
we need more training, but how to more effectively provide
training. This Act is about productivity, and about innovation,
and I would suggest to think about how you can be more
productive and innovative in training. Recently, in the last
five or six years or so, there have been--what are called
massive open online courses have been developed. There are 100
universities that have joined consortia, such as Udacity, and--
ExEd is the other one, and they are redoing the model for
providing education. And it seems to me that you could take
that model and use that for providing a lot of the basic
training that you need for manufacturing technicians of all
kinds, machinists, electronic technicians, software
programmers. It can be done online. That is the whole premise
of that sort of training.
The reason for doing it is that you can get the very best
lecturers to put the courses together, and then provide them
asynchronously to people all over the country. So you have got
an ability to be able to deliver wherever it is. We have some
of our facilities in Murphy, North Carolina. There are no
training facilities in Murphy, North Carolina. This would
enable us to be able to provide courses to these sort of people
all over. The other is it is asynchronous, so people can do it
on their time. You don't have to show up at 7:00 on Tuesday and
Thursday evening, and drive 100 miles to go to the course.
So, to me, the Federal Government could play a very key
role in seeding that sort of capability, work with people like
Coursera and ExEd that have put these programs together. They
have the technology already worked out to provide the courses.
What is needed is somebody to pull that together and provide
the seed funding. There is also, it seems to me, a number of
natural partners for all of that. There are--the companies who
manufacture the equipment, they already have training programs
in place, but they are all in place programs. You have to
travel to wherever their training centers are, very expensive
to do that. The other are--part of what is mentioned in the
material for the Act is talking about supply chain management.
There are two associations of people and supply chain managers.
They already have training and certificate programs. You could
work with them and provide their kind of training online all
over the country.
So it seems to me, when you think about innovation, you
want to think about, how is it we can provide more training at
a much lower cost? The universities that have gone into this
already have seen that their--the cost per student goes down by
an order of magnitude. It is down less than ten percent of what
it costs to do it in place. And the other countries that I
travel to aren't even thinking about this at this point, even
at the university level. So if the United States wanted to gain
a significant advantage in training for manufacturing, this
would be one way of doing, use it--use the online capabilities
that are already there.
In summary, I think the government could very effectively
take that sort of a role, and provide the necessary risk
capital, is the way I think of it, to be able to get some sort
of thing going. It is not going to happen unless somebody like
that steps in and does it. The industry will support it once it
is there, but you have to have somebody who takes and pulls it
together. And, as I say, there are natural partners. You don't
have to start from ground zero.
So thank you very much.
[The prepared statement of Dr. Aubrecht follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Bucshon. Thank you, Dr. Aubrecht.
I will recognize now Dr. Biller for five minutes for his
testimony.
TESTIMONY OF DR. STEPHAN BILLER,
CHIEF SCIENTIST MANUFACTURING TECHNOLOGY,
GE GLOBAL RESEARCH
Dr. Biller. Chairman Buchson, Ranking Member Lipinski,
Members of the Committee, it is a privilege to share with you
today GE's thoughts on the creation of the NNMI program, and
the establishment of Centers of Manufacturing Innovation, or
CMIs.
GE Global Research was America's first industrial research
lab, established in 1900. For more than 100 years, it has been
the cornerstone of innovation for GE, and a proud contributor
to the U.S. lab manufacturing revolution that helped shape and
define the 20th century. Today we would like to share GE's
thoughts on launching an NNNMI, and the critical role such an
initiative can play in helping American companies be leaders in
the next manufacturing revolution that is rapidly defining the
21st century.
Innovation has always been one of our nation's greatest
assets, but if the United States is going to be a leader in
manufacturing moving forward, the country needs to embrace new
trends that are driving our ability to compete.
Mr. Lipinski. Dr. Biller, could you pull the microphone
closer?
Dr. Biller. Is this better?
Chairman Bucshon. That is much better.
Dr. Biller. I am sorry. Okay. To become more competitively
globally, government support for innovation has to become more
targeted, involve more partners, and commit to longer time
horizons that are closer to commercialization. Other developed
high wage countries, such as Germany and Japan, have long taken
such an approach, and found much success, considering their
levels of manufacturing employment. Similarly, the launch of
the NNMI would embrace this innovation model, and significantly
improve the competitiveness of U.S. manufacturing.
The success of the NNMI will depend on having a healthy
ecosystem of centers of manufacturing innovations, or the
CMI's, with participants from academia, government, and
industry. We believe that it is paramount to U.S. manufacturing
competitiveness that the CMIs help small and medium
enterprises, the SMEs, introduce novel manufacturing technology
into the U.S. manufacturing supply chain more rapidly. To
provide these SMEs with the best possible framework to succeed,
we recommend adapting a SEMATECH-like collaboration model that
provides broad access to state-of-the-art equipment, draws
leadership of CMIs from industry, and leverages CMIs as a
training ground to develop an advanced manufacturing workforce.
We believe the NNMI can provide the broad framework that
strengthens the U.S. industrial base position as a global
manufacturing leader.
Last year GE was very pleased when the first innovation
institute was established under the NNMI, in additive
manufacturing, or NAMI, in Youngstown, Ohio, and is proud to be
an industry partner. Already NAMI is beginning to show how big
companies like GE can connect and work effectively with small
and medium companies to push new advancements.
In the same way that CMIs should draw upon the unique
skills of academia, government, and industry, it is equally
important for each of the CMIs' governing boards to draw its
membership from academia, government, and industry. When it
comes to day-to-day operations, however, the leaders for each
institute, and a number of their staff, should be recruited
from private industry, and have demonstrated experience in the
insertion of advanced manufacturing technology into production.
We believe that is really the key. This will ensure that
industry sees the benefit of engagement with CMIs, and
participants in these institutes, on a long term basis.
Many large companies, like GE, have continued to use
apprenticeship programs to build the skilled workforce of
tomorrow. The skills gap, however, is not limited to producing
a production workforce. The proportion of science and
engineering workforce older than 50 has risen significantly in
recent years as well. We must also place emphasis on
replenishing the advanced manufacturing researchers that will
be necessary to develop tomorrow's technology breakthroughs.
The NNMI is really an ideal place to do that.
Regarding the design of these CMIs for broad impact, GE
would like to make the following recommendations. Each Center
for Manufacturing Innovation should focus its effort on
addressing the fundamental technical barriers that prevent
manufacturers from broadly adopting specific technologies. To
accomplish this, each CMI should adopt an inclusive SEMATECH-
like approach that includes participants from each part of the
manufacturer's supply chain. The equipment within each of these
CMIs should be made available to all companies so they can
conduct manufacturing trials to reduce implementation risks,
and improve the productivity and competitiveness of their
manufacturing operations, very much like the Fraunhofer
Institutes in Germany.
At the same time, companies that provide advanced
technology equipment to the CMIs should be allowed to count
these in-kind contributions toward membership or participation
fees. This will ensure that the CMIs will always have access to
state-of-the-art equipment. The advisory boards that provide
direction to the CMIs should be comprised of individuals from
industry, government, academia, but the leadership teams should
be recruited from industry, and should have experience in the
insertion of advanced manufacturing technology. Additionally,
the NNMIs should create a mechanism for collaboration,
technology transfer, and the aspect of sharing.
Finally, working with community college and universities,
CMIs should provide internships to train the future advanced
manufacturing workforce. Furthermore, mechanisms should be
created to allow private sector employees to collaborate at the
CMIs for long term assignments. The NNMIs represent, really, a
significant opportunity for the United States to restore its
manufacturing prowess and improve its competitiveness. GE is
really committed to creating an industrial manufacturing
ecosystem by working with other organizations to form these
CMIs.
Thank you, and I look forward for your questions.
[The prepared statement of Dr. Biller follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Bucshon. Thank you, Dr. Biller.
I now recognize Dr. Veuger for five minutes for his
testimony. Welcome.
TESTIMONY OF DR. STAN A. VEUGER,
RESIDENT SCHOLAR,
AMERICAN ENTERPRISE INSTITUTE FOR
PUBLIC POLICY RESEARCH
Dr. Veuger. Thank you. Mr. Chairman, Mr. Ranking Member, I
would like to thank you for the opportunity to testify today
before the Committee. I am here to discuss the need for a
manufacturing innovation network, as proposed in H.R. 2996.
H.R. 2996 proposes to appropriate $600 million to--for
establishing a network for manufacturing innovation consisting
of Centers for Manufacturing Innovation. These centers are
meant to address challenges in advanced manufacturing to retain
or expand industrial production and jobs in the United States.
They must do so in areas determined by the Secretary of
Commerce to be of importance in attaining these goals, and they
must feature representatives from multiple entities from a
broad range of categories.
The Secretary of Commerce's decision as to which Centers
are worthy of federal funding will be--decides these overall
goals on criteria including the involvement of small and medium
sized manufacturing firms, as well as on how the Center for
Manufacturing Innovation will strengthen and leverage the
assets of a region.
Now, according to the Bureau of Labor Statistics, the
manufacturing sector employs some 12 million workers in the
United States, down from almost 20 million in the late 1970s.
It is about half a million more than at the end of 2009, but
still about two million fewer than before the start of the
Great Recession. These figures do not suggest what is commonly
referred to as a true Renaissance of U.S. manufacturing, but a
look at sales manufacturers' sales figures provides much more
of an underpinning to such a view of U.S. manufacturing.
According to the Census Bureau, manufacturing sales are
indeed back where they were at their previous peak. After
falling by about 25 percent during the recession, they had
rebounded by July of this year. What this suggests, of course,
that most of the recent resurgence of manufacturing in the
United States has been highly capital intensive. That is,
output is increasing without much new hiring. It has been true
for decades. It is mostly a product of technological progress,
and does not appear to be a trend that is about to reverse.
It is also certainly not a phenomenon that is unique to the
United States. Even Germany, touted for its positive trade
balance--manufacturing products in H.R. 2996, have seen
manufacturing employment as a share of total employment plummet
over the past 40 years. These broad long term developments,
driven by technological change more than domestic public
policy, are important to consider when analyzing the state of
manufacturing today. It seems unlikely manufacturing will
regain its old central role in the labor market in our modern
economy, and striving to reverse the trends highlighted before
us is likely to be costly, and ultimately fruitless.
Now, new spending initiatives, like the manufacturing
innovation network proposed here, look even less attractive if
we also consider the state of the Federal Government's
finances. Over the past 40 years mandatory spending,
particularly on entitlement programs such as Social Security
and Medicare, has escalated rapidly. Less than 20 percent of
the Federal budget now goes toward programs other than Social
Security, Medicare, Medicaid, CHIP, other safety net programs,
defense, and interest payments, and almost half of that--half
of the remaining 20 percent pays for benefits for federal
retres and veterans. This development puts immense pressure on
discretionary spending programs, some of which are quite
crucial to the nation's future. Instead of allocating funds to
new manufacturing innovation initiatives, I prefer that current
spending on scientific and medical research be maintained, that
some of the more unfortunate sequestration cuts in those areas
be reversed. More importantly, to preserve such important
programs, Congress needs to commit to serious entitlement
reform in order to keep entitlement spending from further
crowding out all other spending.
At the same time, setting the stage for enduring American
competitiveness is certainly within the realm of the possible.
By removing uncertainty about a country's fiscal policies, but
providing tax and regulatory relief to both manufacturing and
non-manufacturing firms, by training workers to be able to
function in today's globalized economy, and by benefitting from
the domestic oil and gas industry's newfound health, the United
States can continue to be home to extraordinarily successful
innovative firms in manufacturing and elsewhere.
In sum, I believe that there is a variety of ways in which
to address, or at least alleviate, some of the problems often
attributed to the decline of manufacturing in the United
States. None of these are cure-alls, but some of them--though
possibly politically difficult are more genuinely beneficial
than others, including corporate tax reform and entitlement
reform. Thank you.
[The prepared statement of Dr. Veuger follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Bucshon. Thank you, Dr. Veuger, for that
testimony. I would like to thank all the witnesses for their
testimony, and remind the Members that the Committee rules
limit questioning for five minutes. The Chair, at this point,
will open the round of questioning, and I recognize myself for
five minutes.
Dr. Aubrecht, I am interested since your company is so
global, if you had two or three things that are really
potentially disadvantaging the United States versus the rest of
the world when it comes to manufacturing, what would those be?
Dr. Aubrecht. Regulations would be the one that would head
my list.
Chairman Bucshon. And--or--what--I mean, what direction do
you think the rest of world's going when it comes to these type
of things, like regulation, taxation, or--let me just give you
an example. There is a business in my district, a large
company, that, when I talked to the CEO, and he told me what
his offer was to move his company to a foreign country, it
almost seemed like an offer you couldn't refuse, except for the
fact that American manufacturers want to stay in America, and
they want to employ U.S. citizens. But, on the face of it, it
was--it seemed like a pretty difficult offer to refuse,
although they did. What are the few things that you think that
America can--that we should be doing that will make us be able
to compete with offers like that, or from around the world, I
mean, just in general? Other than regulation, as you said.
Dr. Aubrecht. Well, the whole topic of the day is on
innovation and manufacturing, and as I--focused on was the
training aspect of the whole thing. Our assets walk out the
door every night, and you need to maintain the capability of
the people in the organization, from the design engineers, down
to the people that are putting the product together on a daily
basis. And in terms of productivity, our American workforce
that we have in Buffalo is the best that we have anywhere in
the world.
At the same time, the Buffalo economy is not doing all that
well. We put an ad in the paper or online for somebody, we get
100 applicants for one spot. And--so I think the--our
experience that way is not typical for a lot of American
manufacturers. We are able to get the people and retain the
people. We have less than one percent turnover in the company.
But, as I say, we have people retiring, and now trying to find
other younger people to come in and replace them, we are having
to do a lot more training. We have had apprentice programs we
have run with the community college. We have also become a much
more global company. If you go back 20 years, 90 percent of our
manufacturing was done in Buffalo, New York, and today we are
down to maybe 25 percent because we made the acquisitions, we
put facilities in other places in the United States, and we are
finding the training capabilities in those places are not as
good.
The flipside of that is--you are--talking earlier about the
Fraunhofer Institutes, I spent three years living in Stuttgart,
and worked with the Fraunhofer Institutes there. That provides
a great advantage. One of the real advantages that Germany has
is not just that kind of a capability, but the training
programs that they have that start in what you think of as 9th
grade in the United States. People come out--we can hire people
at 19 and put them in front of a half a million dollar machine
tool, and they know what to do with it. And we can't do that
here in the United States. That is the thing we need to improve
on, is the skills to be able to actually execute. We have got
great design engineers, great capability, but the question is,
how well do you execute that?
I would also suggest that one of the other things you ought
to think about with this is about--they say we do about $2-1/2
billion. 700 million of that is sales that ultimately end up to
the U.S. Government. So our productivity is of great interest
to you as well, in terms of how much do you get for your
defense spending dollars. And so I would think that that would
be another place that you ought to be thinking about it, is how
is it you could link with other people who are customers in the
government for the products we end up producing.
Chairman Bucshon. Thank you. And I also serve on the
Education and Workforce Committee, which this is a challenge
that that Committee's working on, as--trying to figure out K
through 12 education, and where--like you pointed out, where we
can make some adjustments that when people finish high school,
that they already have a significant amount of skill, if that
is their area that they want to pursue, and have those options
available to them at the high school level----
Dr. Aubrecht. Um-hum.
Chairman Bucshon. --and come out with up front better
training. And I think we are going to start doing a better job
of that. We have gotten a little bit behind, but I think we are
going to catch up. So that definitely is important.
I am going to--to all witnesses--I will start with Mr.
Davis. We have held a number of hearings in the Subcommittee,
and we are considering legislation to reauthorize funding for
basic research at NSF, NIST, and the DOE Office of Science. As
you know, we are facing difficult budget times, and what
recommendations would you have for policymakers in prioritizing
Federal spending on advanced manufacturing programs?
Mr. Davis. Thank you, Congressman. Clearly, I think in the
context of today's discussion, our industry views the research
and development that is oriented towards commercialization, how
we take innovation and make sure that those innovations propel
economic growth, jobs, and prosperity in the United States.
Chairman Bucshon. Dr. Veuger, do you want--any comments on
that? And then I am going to be out of time. Am I out of time?
I am out of time.
I now yield to the Ranking Member, Mr. Lipinski, for his
questioning. Thank you.
Mr. Lipinski. Thank you. I want to thank all of our
witnesses for their testimony. And, in--pointing out that this
bill really proposes that this is going to be a public-private
partnership led by industry, and I think that is very
important, and that Mr. Davis had brought up that this will
assist an entire industry. I think those are important things
to understand about this bill.
And, Dr. Aubrecht, certainly couldn't agree with you more
on the need to do better with training, and I am glad to hear
in Buffalo that the supply of workers, and qualified ready
workers is there, but I certainly hear from manufacturers in
Chicago that that is not necessarily the case, and I think we
need to do more on that.
But I wanted to ask Dr. Biller, as proposed in this
legislation, the main purpose of the centers for manufacturing
is to close the gap between R&D activities in deployment of
technological innovation in domestic production of goods. I
have--it has been--one of my biggest issues for me is to do
what we can at the Federal level to help to close that gap. We
have great R&D that goes on in this county, and, unfortunately,
so much of it does not get deployed into innovation, and some
of it that does isn't--is not done here.
So, in your testimony, you mentioned that Federal
Government support has to involve more partners, and be
committed to longer time horizons. You also indicate that
research collaborations need to continue to later stages of
R&D, closer to commercialization. So I wanted to ask, does the
legislation address the needs you have identified in your
testimony, and why is it important that research supported by
the centers get to the production level, or later stages of
R&D?
Dr. Biller. It is really all about getting over that Valley
of Death we have been talking about between--for technology at
readiness level four to seven, which is really what the
Fraunhofer Institutes and the SEMATECH model essentially
addressed. So it is important for companies like General
Electric that we have access to that, but I think it is even
more important that we create an ecosystem of small and medium
enterprises that have access to that kind of technology,
because they have neither the skills, nor the money, to develop
technology through that Valley of Death.
And, just as we have seen now in the additive manufacturing
space, where the creation of an ecosystem allows us to draw
upon an innovation capability from a much broader supply base,
we need to think about how we are going to create that
ecosystem of a much broader supply base with SMEs and
traditional manufacturing, which is probably 99 percent of
current manufacturing, and additive being maybe one or less.
So, to us, to stay globally competitive, and particularly
in the United States, it is very, very important that we get
our small and medium enterprise through that Valley of Death,
and give them access to advanced manufacturing technologies.
And I think that is where the NNMIs can play a key role in
accomplishing that. So that is why we are so supportive of this
model. And, again, in Germany and Japan, you have SMEs being so
successful, and being world leaders, because they have support,
like the Fraunhofers, or the Japanese equivalent.
Mr. Lipinski. Okay. And, sir, getting back to the public-
private partnerships, why are these so--and you have talked
about a few things. Are there other things you could talk
about, why these are so attractive to industry?
Dr. Biller. If we think--if you think about, for example,
the suggested DMDI Institute on digital manufacturing
innovation, there the SMEs need to learn simulation
capabilities, capabilities to design product in virtual--launch
the factories in a virtual environment, thereby increasing
innovation, decreasing cost. They have to integrate with the
large companies in a digital space. They currently don't have
the engineers trained to do that. They currently don't have the
software available to them to do that. We need to think of
these CMIs as a commons essentially, where we are going to
train our SMEs, as well as develop technology, and give them
access to that, so that they stay globally competitive. For us
it is always, you know, the best thing is make what you sell,
that--thereby you are the closest to your customer, your
product engineers are together with your manufacturing
engineers. And we need to think of manufacturing as a
requirement for product innovation. That is why we think it is
so important.
Mr. Lipinski. And as manufacturing leaves this country,
that is the great fear, that innovation will also leave the
country, as the people who are doing innovation are moved over,
or it is all done where the manufacturing's done outside the
country, so--thank you. I yield back.
Chairman Bucshon. Thank you. I now recognize Mr. Schweikert
for five minutes for his line of questioning.
Mr. Schweikert. Thank you, Mr. Chairman. I want to sort of
back up, and maybe even move slightly more conceptually.
Gentlemen, if you were to lay out in front of me and say,
here is where we are finding innovation, creativity, sort of
break through concepts as much as technology, and I don't mean
it geographically, I mean it organizationally, are you finding
it coming out of the universities? Are you finding it coming
out of small manufacturers? Are you finding it when a half a
dozen engineers from Intel go off and start their own business?
Where is that ecosystem of the--sort of the cutting edge ideas?
Where is it coming from? Mr. Davis, start there.
Mr. Davis. So if I could say all of the above, and I think
that is one of the attractive elements of this legislation, is
it tries to leverage the synergies between private enterprise,
universities, state and federal governments, small and medium
sized enterprises.
Mr. Schweikert. Well, but--back to the--very precise in the
question. Where do you see the innovation actually happening?
Mr. Davis. So innovation and invention are two different
things, in my mind. I think invention happens in fundamental
research in universities, where basic breakthroughs occur.
Innovation becomes the application of----
Mr. Schweikert. The adoption of?
Mr. Davis. Yeah, the adoption and application of those
inventions in commercial ways. So I think, from an industry
association perspective, we see innovation happening with
companies----
Mr. Schweikert. Okay.
Mr. Davis. --ideas to market.
Mr. Schweikert. Doctor?
Dr. Aubrecht. For us it is primarily our design engineers.
Our fundamental business model is to get very close to our
customers, and find out what their problem is. This is a
classic Clayton Christensen, find out what your problem--
customer's problem is, and go solve it. And it is that
interface with our customers, and that dialogue that happens
between the--our--design engineers for our customers and our
engineers, that is where the innovation happens. When we were
doing the 787 program, we had 25 of our engineers working in
Boeing's Seattle facility for about four years to design our
flight controls right into the aircraft. There is a tremendous
amount of innovation that came out of that. The experience that
our people get doing that is what is led us to do the next
generation for other aircraft, then.
Mr. Schweikert. Okay. So your smart people went on site
with your customer?
Dr. Aubrecht. Exactly, and that is where we see the most
sources of the innovation, is working with your end customer,
and understanding what their problem is, and having your people
work with them. It is the same with manufacturing. It is
getting our manufacturing people to work with--sometimes it is
universities, sometimes it is the equipment manufacturers--
talking to the equipment manufacturer about--your machine is
doing this great, however, if you did this with it--and, again,
it is the same sort of----
Mr. Schweikert. Well, that is the translation of the
knowledge that is been gained. I am sort of trying to
understand where those ideas are germinating.
Dr. Aubrecht. It is the same kind of conversation.
Mr. Schweikert. Okay. Dr. Biller?
Dr. Biller. I agree wholeheartedly with Dr. Aubrecht. It
happens in the factories, when our researchers go to those
factories, try to figure out where the pinpoints--what are the
problems? For us, our factories are the customers. And then,
conversely, when we go into our supply chain, we help our SMEs
and our business partners in the same way. We are trying to
find out what the problem is, go after the problem. Innovation
really happens for manufacturing on the plant floor, with smart
people, including academics, including people from government
labs, including people from industrial research labs.
Mr. Schweikert. Okay. Doctor? This is easy. I can just sort
of go, Doctor, Doctor----
Dr. Veuger. I think I would agree with the all of the above
answer that I think all of the previous speakers have given.
And I think that is what makes it hard to justify the federal
government giving preference to certain processes, certain
groups, certain places over others, and to, you know, to place,
admittedly, a large part of the economy, but still one sector
of one industry over others.
Mr. Schweikert. Can--actually, can you elaborate on that?
Because it is touching on--one of my concerns is often, when a
piece of legislation like this, that is very well meaning,
does--because of the financial incentives and mechanics built
into that, do you start to silo where innovation actually
starts to be developed because of the financial incentives
there. So, Doctor, please continue there.
Dr. Veuger. I mean, I would--I mean, it seems clear that a
bill like this, in a way, subsidizes innovation in
manufacturing over all other innovation and R&D. I mean, that
may be something you want to do for some reason, but it is--I
mean, it is certainly true that there is an element of
prioritization there.
Mr. Schweikert. Okay. And, with that, Mr. Chairman, I am
out of time. Thank you.
Chairman Bucshon. Thank you. I now recognize Dr. Bera----
Mr. Bera. Great. Thank you----
Chairman Bucshon. --five minutes.
Mr. Bera. Thank you, Mr. Chairman, and, you know, I want to
thank my colleague, Mr. Kennedy, for bringing this important
piece of legislation to the forefront. It is incredibly timely
that we are talking about how we revive the manufacturing
sector, and how we create jobs. I had a town hall with my
constituents back in Sacramento County last night, a telephone
town hall, and in that I heard from a number of folks that, you
know, are consistently looking for jobs. I heard from one young
veteran who returned, all she wants is to find a job. She is
not asking for Unemployment benefits or anything, she just
wants to find a job. I also heard from a desperate couple that
is been out of work for two years, and they are incredibly
worried about Unemployment benefits being cut off, but they are
not asking for an extension. They need that extension, but they
want a job. They have been looking for jobs.
Now, Dr. Aubrecht, you touched on part of our challenge,
this skills mismatch. There are plenty of jobs out there, but
our workforce, our graduates, are not trained to meet those
jobs, so we do have to double the effort to make sure we are
addressing that skills mismatch. You know, another challenge
is--maybe Mr. Davis touched on this, or all of you touched on
it, is inconsistent Federal policy. I mean, we have not
defined, you know, what our goal is, how we are going to make
those investments, what kind of a regulatory framework we are
going to do, so we can create that--those jobs, so we can make
those investments, so our kids, our graduates, are able to fill
those needs. In addition, we have seen dramatic reductions on
our investment in R&D, and that creates another challenge for
us.
And then Mr. Lipinski touched on, you know, this issue of
technology transfer, you know, how we quickly get these ideas
out of our academic institutions, and out of R&D, into, you
know, industry so we can commoditize them, and grow industries.
That said, we do have some assets, and some natural advantages.
I think, Dr. Veuger, you touched on this energy Renaissance
that is coming. That will make our manufacturing base much more
competitive.
Dr. Biller, you touched on--I think the term you used was
make it where you sell. And, you know, as I have been talking
to some international multinationals, they are considering
locating their manufacturing sector here in the United States
because the advantages that they have in lower costs of labor,
we are about to potentially outweigh those advantages, given
they are selling to our market. You know, if they build it
here, they don't have the cost of transport, and we have much
lower energy costs, plus we do have the rule of law and so
forth here. So there are some advantages there. We are still
the most innovative economy.
I haven't asked a question yet, but on that sector of
investment in R&D, and on technology transfer, coming out of an
academic background myself, and any of you can answer this
question, what can we do to allow industry to partner much more
closely with our academic institutions to make it easier to
take those ideas to market as quickly as possible? Maybe Dr.
Aubrecht?
Dr. Aubrecht. Yeah. One of my other involvements--I am a
trustee at Cornell. I have been a trustee there for about 25
years, and one of my primary interests there has been
technology transfer. And I have looked at models elsewhere
around--some of my other trustee colleagues have looked at
models elsewhere around the country. There was an experiment
that was run in the California university system about ten
years ago. Berkeley lives in the same neighborhood as Stanford.
Stanford had a tremendous amount of industry sponsored
research. Berkeley had relatively little, and it all had to do
with licensing. And what Berkeley did was to run an experiment
and allow the researchers to do royalty-free non-exclusive
licenses. And, as a result of that, in a relatively short time
period, Berkeley went from under $10 million to over $100
million a year in industry sponsored research. And it seems to
me it is the same sort of model.
There are places where that doesn't work. If you think
about medical research for drugs, drugs--a drug company is
going to want to have an exclusive license, otherwise they are
not going to put a billion dollars into developing a drug. But
for a lot of other things, what they found is--they put
together industry consortia--we are currently partnering with
about six universities that have industry sponsored consortia,
and a lot of those it is royalty-free non-exclusive licenses.
It is a pre-competitive sort of research that ends up going on.
And if you look at the research that the federal government
sponsors, coming out of the NSF, or NIH, or whatever, it seems
to me that more of that ought to be done with royalty-free non-
exclusive licenses.
What happens is researchers get together, or the engineers
are talking to each other, that is great. They can see the
problem, they get it defined, and then they spend a year and a
half with the attorneys trying to work out a contract. This is
nuts. So do it royalty-free non-exclusive wherever possible.
And it seems to me you could roll that into the legislation for
NSF and NIH to say, we want royalty-free non-exclusive
licenses. We want the scientists and engineers talking to each
other, not the attorneys.
Mr. Bera. Great. Sounds great.
Chairman Bucshon. I would agree with Dr. Aubecht.
Mr. Bera. Okay.
Chairman Bucshon. I now recognize Mr. Collins for his
questioning.
Mr. Collins. Thank you, Mr. Chairman, and Dr. Aubrecht.
Very good to see you again today. Moog is in my district, if
you will, in East Aurora, but also they have their rocket
facility up in Niagara Falls, which is also in my district, so
I like to think at some point in time we may have more rocket
scientists in the 27th Congressional District than in any other
in the country.
And I have toured your facility, so here is my question.
And I am involved in manufacturing and in high tech businesses,
and many case, it is the IP that makes you who you are.
Dr. Aubrecht. Um-hum.
Mr. Collins. So Moog, a multi-billion dollar corporation,
does R&D all the time. You protect what you do with IP. That is
what differentiates you, whether it is rocket engines, or a new
fuel source, or whatever. And now we are talking about
something like the antithesis to that, that you are going to
sit down in an industry group, so this isn't going to be a Moog
facility, and in that jointly develop technology where you
don't have a competitive edge any longer. And I am--being, you
know, I very much support this, I am co-sponsoring this
legislation, but the naysayers might say, you know, help me
through that loop of what you do now. You protect your IP at
all costs, and now you are going to go try to leapfrog
somewhere, and you don't have any IP. Help us through that a
little bit.
Dr. Aubrecht. So to me it is a question of, you know, you
talked about technology readiness level. When you are down with
the technology, one and two, three sort of level, that is pre-
competitive kind of stuff most of the time, and while you can
generate some IP coming out of that, what is really important
is the intellectual engagement of the scientists and the
engineers at that point in time to see what is possible and
with a lot of the innovation that happens today, it is not just
in one field. Where we are innovating, where usually people are
involved with five or six or seven disciplines, and the
question is how you bring them together and provide a way that
people can openly exchange their ideas.
Mr. Collins. Can you give like an example, like something
that somebody can grab hold of and say, okay, now I got it? You
are a little bit conceptual there.
Dr. Aubrecht. Okay. Aircraft flight controls. It is the
computer, but it takes people who understand the software
architecture, the digital programming for all of that, how it
is going to function in the aircraft, you need to have the
aerodynamicists involved, you have to have the structural
engineers involved. They all need to come together and be able
to say, here is what the fundamental problem is and then the
people who have the specific technologies in digital hardware
and digital software and systems engineering can go create a
new product. And that is where the IP is created.
So you can have--we have conversations with all sorts of
people in those other disciplines out of pre-competitive. We
are not telling them where we are going to head with it, but
ultimately there are ideas that come out of that. We have this
kind of relationship with MIT right now. It is all pre-
competitive sort of things that we are taking those ideas and
learning how to implement them. To me it is the intellectual
engagement that really drives all of that, and so with this
sort of legislation what you'd like to do in these centers is
to provide that sort of independent zone where people can trade
ideas and talk about things before they are, before you create
IP that you consider is going to be proprietary.
Mr. Collins. And so one follow-up question. Since this is
at max seven years of funding----
Dr. Aubrecht. Uh-huh.
Mr. Collins. --50/50 federal government and either industry
or states, and then the money is gone. And from what I am
hearing this isn't going to be a facility that is going to be
making things, having sales, making profits, covering their own
costs. So it is a cash burn operation, technology one, two,
three. So what happens at the end? Does it go out of existence
since it is not generating income and the money's gone? What
happens after seven years. Anybody want to----
Mr. Davis. I will take a shot at trying to answer both
those questions. You had asked for an example of how companies
might want to participate and preserve their IP. In my
industry, a state-of-the-art, high-volume manufacturing
facility for integrated circuits can cost 5 or $6 billion or
more because of the high capital equipment costs.
So if you are a small or medium-sized enterprise that is
trying to develop a new process or introduce a new material or
test a kind of component, it is very difficult to engage. The
cost of entry is so high that it is very difficult.
But a shared facility would enable multiple entities to use
that facility to develop processes that could then be
commercialized, differentiated, and have IP associated with it.
So the pre-competitive sharing of facilities is a great
asset.
Mr. Collins. So in that situation because it is shared,
could you envision that, you know, after the seven year
timeframe industry would say they are almost like a trade
association? We are going to assess a certain amount of dues to
keep this going after year seven. It is working great. We see
the value of it. Is that----
Mr. Davis. Absolutely, Congressman. I think that is one
example of a sustaining model that could very well work wherein
an established facility then becomes essentially rented out for
people that want to----
Mr. Collins. Okay.
Mr. Davis. --test processes.
Mr. Collins. I can see that. My time is expired. Thank you
very much.
Chairman Buschon. You are welcome. In fact, at--in my
district there is a battery innovation center outside of Great
Naval Surface Warfare Center in Westgate, which is doing
exactly what you are talking about where multiple people from
different areas are talking about trying to innovate on the
next generation of energy storage so to speak and batteries.
And it is, I think it is going to be successful.
With that I recognize Ms. Esty for five minutes.
Ms. Esty. Thank you, Mr. Chairman. I want to thank you for
holding this hearing and to my colleagues, Mr. Kennedy and Mr.
Reed for introducing this legislation which I am looking
forward to being a cosponsor of.
I am from Connecticut, one of the homes of manufacturing,
and these issues are of critical importance. I have companies
such as Click Bond and Industrial Heater Corporation, who are
engaged in this effort. These are small manufacturing
companies, frequently family owned, who have held on through
the recession by investing their family money to keep going. So
this issue about workforce development is critically important.
You have touched on and sort of referred to the importance
on colocation, whether it is for innovation for small companies
but also being near your customer, which seems to me is a very
important issue of why if we are going to get the benefit of
innovation in manufacturing, it needs to be done in the United
States. That has important elements that not captured by flying
our engineers to the plants in China because I have heard that
from companies and why, in part, not just the energy dynamic
changing but also the importance of having that close
innovation happening right there on the plant floor.
So, Dr. Biller, I would like you if you could expand a
little bit more on the apprenticeship programs. I have
introduced a piece of legislation, the First Step Act, to try
to support apprenticeship and training programs, that critical
piece between not quite ready workforce and the workforce I
know we need on the plant floor that I hear from manufacturers
that have openings right now even with the high unemployment
rate in Connecticut.
So can you talk about how these apprenticeship programs are
working and what we could do at the Federal level to help scale
those up and disseminate those?
Dr. Biller. Yeah. So GE has partnered with about 190
companies to establish the Get Skills to Work Program basically
trying to get about 100,000 veterans into the workforce, and
then we are working with community colleges and trying to
define the skills we need within our, that applies to our GE,
energy business, it applies to our business in Massachusetts on
aviation. We have to define those skills specifically for these
people that they can use them within the factories.
If we want to scale this, and I think I read your
legislation, I think it is a very good idea. We want to make
sure that we get certification that is truly certification. So
if I look at a piece of paper that says I am certified in X, Y,
Z, I know what that means, and so it appears to me that a
national institute could certify that and thereby giving
employers the assurance that a person who has such a
certificate can really do a certain job.
So I think that will be the way to scale it, provide
community colleges with a level of certification that they then
implement.
Ms. Esty. Thank you, because in part we have been
approaching this as you probably know in Connecticut looking at
veterans as well, trying to get certification on the military
side that translates to civilian.
Dr. Biller. Yes.
Ms. Esty. And nationalized certification that allows
transporting those skills from company to company and around
the country and we'd love to follow up with any of you on that
point because I do think that is a critical missing component
that in our Federal system if you compare with say Germany or
other countries that are nationalized, that that has hampered
us in our mobility, in our ability to make sure our community
colleges and other training facilities have, if it is welding,
level one, everyone knows exactly what that means, so you as an
employer know what that means. You know where your employee is
starting because I think this is a critical component.
Are there other pieces--something I would like some of you
to mention, we had an earlier hearing this year where we talked
about the basic importance of R&D and frankly, a consistent
funding stream and really looking at these innovation corridors
in Silicon Valley and 128 and Boston, which were really fueled
by the Department of Defense, which had very large sums of
money for a very long period of time that allowed the sort of
free-flowing R&D from which other things could spin out but
also had specific tasks assigned. And I know we are trying to
do this around batteries right now, around energy storage. If
any of you would like to comment on the importance of that,
sort of consistency of funding streams on the basic level but
then task specific to try to go from there.
Dr. Biller. I think it is really critical that we look at
consistent funding. Starting and stopping wastes at least a
year every time you do it, and so, you know, in a five year
program it wastes 20 percent of U.S. taxpayers' money if that
is how you want to do it. So consistency is really critical.
I want to come back to the previous question of Mr.
Collins, who talked about how do we sustain this. I have been a
member of the Center of Intelligent Maintenance for about 13
years where we started with very little government funding and
over time we have recruited many, many members, I think 50 or
60 companies, each putting in $40,000 a year, and that became a
very--so the government funding was maybe 1 or two percent of
the total funding, and it was, again, a pre-competitive
situation. We developed algorithms for maintenance, for
machines, and for vehicles, and then we took that inside the
companies and implemented that. It is the implementation in
this case where really the competitiveness starts, not in the
development of the actual algorithms and TRL one, two, three.
Ms. Esty. Thank you very much.
Chairman Buschon. I now recognize Mr. Hultgren for his line
of questioning.
Mr. Hultgren. Thank you, Mr. Chairman. Thank you all for
being here. This is a very important conversation and
discussion that we need to be having where we are talking about
competitiveness for the United States, specifically in
manufacturing and especially in high tech manufacturing, and we
need to do everything we can here in Congress to be working
with you to be helping with that.
So I know in my home state, Illinois, we have got
statistics say 578,200 manufacturing jobs and 1.8 million jobs
are tied in directly to manufacturing. A little over 12 percent
of Illinois GDP is attributable to manufacturing, making it the
largest share, and yet significant challenges manufacturing is
facing right now. I know we have discussed in this Subcommittee
over the last months the disconnect between many academic
institutions and industry that often makes it more difficult to
train our next generation's workforce.
There are also obvious tax and regulatory issues U.S.
industries face. I know I have heard excluding labor costs it
is still 20 percent more expensive to manufacture in the United
States compared to other trading partners.
So my question, first, would address to all of you if you
could make a comment. I know the goal of the proposed network
is to aid high-tech manufacturing in the U.S., and I absolutely
agree that we need to encourage this. Some might say, though,
if any amount of Federal spending on science and technology,
they question whether that would help manufacturing as much as
significant regulatory and tax reform potentially would help
manufacturing. I wonder if you could provide us with your
thoughts on this, as well as how to create the optimal
environment to support high tech manufacturing and job creation
here in the U.S.
I throw that out to any of you if you have thoughts. I know
it is a big question.
Mr. Davis. That is a big question, Congressman. Thank you
for that. A month ago or so Speaker Boehner visited one of our
member company facilities in Ohio, not in Silicon Valley. It
was a subsidiary of a Silicon Valley company that made very
highly-specialized components, which sort of speaks to the
complex nature of supply chains. And it was very interesting
when Speaker Boehner asked about how he sees priorities,
mentioned that the application of research and development,
that he understood that particularly from some of the
enterprises in his district, and I think that is an essential
point from an industry perspective is being able to harness the
synergies of research and development, get over the Valley of
Death, and commercialize. And that can happen in synergistic
ways in Centers such as the ones defined by this legislation.
Mr. Hultgren. Any other thoughts?
Again, just boiling the question down. I mean, I absolutely
agree and want, you know, basic talk all the time of
encouraging research and developments and want to make sure we
have got that commitment, but also what I hear from my
manufacturers is they want to do that, but the biggest weight
they feel is regulatory burden and tax burden. So--sorry for
the feedback. Hopefully we will get that taken care of. But any
thoughts on that? You know, again, we would like both, but to
me what I am hearing is a prioritization on regulatory reform
and tax reform. Would you agree, disagree?
Dr. Biller. We would certainly agree that regulation
reforms would greatly help in any state, Illinois, Michigan,
New York. I think any state we--that would be certainly
beneficial, but I also want to point out, you know, you make
the point between research and development. So we are doing--we
are the best country in the world in research. I don't think
anybody would doubt that. We are not the best country in
development, and so we are researching for the world and giving
it away in TRL four to seven, and, you know, from an investment
perspective we really need to go longer and maybe more focused
and thereby we would reap for the Nation the benefits of the
research we are doing in one to three. I am not for cutting
research. I am just for let's think about how we prioritize
that in a way that we are not doing research only. We also move
through that Valley of Death and get to the development.
Mr. Hultgren. Yeah. I think we all want that. Another thing
I talk about all the time on the Committee is what, when times
are tough and certainly they are right now, what can only
federal government do, and that is where I think basic
scientific research is something, and it is very difficult to
put together a business plan that makes sense for basic
scientific research. It is still tough for development, but it
is a little easier if you have kind of the understanding of why
something works to apply it and make our lives better for it.
So that is--I would love to do both, I would love to have
the resources we need for both, but I think that is the
challenge, making sure we still are strong on the research side
while also pushing as opportunity comes and resources come to
find ways to work with industry to continue development. So I
totally agree.
My time is winding down. Real quick question, may I,
Chairman? Mr. Davis, just quickly, you touched on some other
foreign government subsidies for your industry that lure away
American companies. I wonder if you can expound on what these
incentives are but more importantly what impact they might have
on the U.S. economy and if there is any national security
implications of these supply chains moving overseas?
Mr. Davis. Well, speaking primarily for the commercial
aspect, I think what we see increasingly in foreign governments
is a choice to compete and a decision to move from making stuff
to designing stuff, to move up the value chain. China's five
year plan is very specific in identifying, unambiguous in
identifying key technology areas to make substantial
investment. So I think some of the ways in which foreign
governments appear to provide great clarity is being specific
about the kinds of industries that they want to develop and
cultivate. Certainly as industry migrates overseas and the
research and development and the capacity to manufacture moves
with it, there are certainly national security implications.
Mr. Hultgren. Again, my time has expired. Thank you,
Chairman. You wouldn't mind if we could follow up with
questions we might have just to get a little bit more detail. I
know our time is limited here today, but thank you so much. I
appreciate you being here and all the information you have
shared.
Thank you, Chairman, for your generosity.
Chairman Buschon. I now recognize Ms. Kelly for her
questioning.
Ms. Kelly. Thank you, Mr. Chair, and thank you for being
here today. I am also from Illinois and represent the south
side of Chicago and further south, and manufacturing is one of
my biggest employers, but we are suffering in my area from
unemployment higher than even the State of Illinois' average.
You talk about in your testimony, Dr. Biller, the
importance of small and medium-sized manufacturers and indicate
that the Centers for Manufacturing Innovation proposed by the
legislation can help small and medium enterprises introduce
novel manufacturing technology into the U.S. supply chain more
rapidly.
What do you think are some of the specific challenges faced
by some of the smaller manufacturers?
Dr. Biller. Well, let's try and take the idea of creating a
new product and a new product line in the virtual space,
because that is really where the development is going, that
people are creating something in a computer-aided design. Then
they are moving through computer-aided manufacturing, computer-
aided engineering. Everything happens essentially in the
computer. It is all digital.
And so now our suppliers, especially the smaller ones,
might lack, A, access to such tools because they are expensive,
and B, access to engineers who can operate those tools, even if
they had those tools. So for us it is really critical that
those SMEs get trained in these skills and that they have
access maybe on a, you know, buy-by-the-drink way through an
institute way so that they can actually continue to be our
suppliers or become our supplier. What we want at General
Electric, we want to have as competitive a supply base as
possible. It helps us, it helps the nation, helps the
suppliers, it helps everybody. And so we think that is really
critical that we get to such an environment where people have
access to that, and if we don't allow SMEs to acquire such
skills, then we will see what we have seen before, that
companies will leave because they have such skills in other
countries and let's make no mistake about it. You know, China,
Germany, Japan, they are all helping the SMEs to get such
suppliers. Fraunhofer have been in existence for, you know, 60
or 70 years, continuously, basically serving as a transfer
mechanism from one SME to the next by developing the
technologies in these Federal institutes.
So we think this is really required to continue to have an
SME and maybe even to expand the SME base and hopefully help
your district to get to a better employment level.
Ms. Kelly. Right, because it is more of the small and
medium-sized manufacturers that really hire the area residents
and that, like has been said already, that people have a great
concern about not being able to replace people when they retire
because people don't have the skills.
Dr. Biller. Yes.
Ms. Kelly. Thank you.
Chairman Buschon. Thank you. I now ask unanimous consent
for Mr. Kennedy to participate.
Without objection the Chair now recognizes Mr. Kennedy for
five minutes.
Mr. Kennedy. Mr. Chairman, thank you. I appreciate that. I
appreciate the time today and your patience and generosity to
add me on. I also want to thank you for holding this hearing
and for--a big round of thanks to the Ranking Member as well,
Mr. Lipinski, for all of his support, not just for the bill but
for advanced manufacturing and the concept behind this bill for
quite some time, sir, so thank you very, very much.
Mr. Collins, thank you for your questions for making the
time, and for your support of the legislation as well, and I
saw Mr. Reed pop in. I know he is going to be here, back
momentarily.
To the witnesses, thank you very, very much for your time.
Thank you for your testimony. I have, Mr. Chairman, with me a
number of letters of support from some outside organizations
that I wanted to submit for the record if I could, so I ask
with unanimous consent----
Chairman Buschon. Without objection.
[The information appears in Appendix I]
Mr. Kennedy. --to the record. Thank you very much, and they
are from the Motor and Equipment Manufacturers' Association,
the National Association of Manufacturers, the Information
Technology and Innovation Foundation, which includes Alcoa,
Ansys, Applied Materials, Autodesk, DuPont, National Modeling
and Simulation Coalition, Owens Illinois, Rockwell Automation,
TechSolve, Cal Berkeley, Cal Irvine, University of Southern
California, One Voice representing the National Tooling and
Machining Association, and the Precision Metal Forming
Association, Precision Machine Products Association, DOW, and
the Semiconductor Equipment and Materials International,
otherwise known as SEMI. Mr. Davis, thank you very, very much.
I wanted to speak briefly, you will be hearing from me in
another couple of minutes, so I will try to keep it brief. A
number of comments from I think the witnesses and from my
colleagues here I think took the holistic view of the
challenges facing the U.S. manufacturing industry from
regulation taxes uncertainty, overall global, or excuse me,
economic uncertainty here in the United States and globally,
the training issue that has come up time and, again, sir, as
well as energy costs and the potential innovation surrounding
energy costs that could lead to at least a support for bringing
some of the manufacturing processes back home.
I wholeheartedly agree with all of those observations and
critiques. This bill obviously attempts to try to get at a
small part of this but I think a critical part nonetheless, and
Mr. Biller, I was hoping to get you to elaborate a little bit
seeing as GE is involved in one of these pilot programs in
Youngstown, Ohio, that you already mentioned already the Ohio
National Additive Manufacturing Innovation Institute focused on
additive manufacturing otherwise known as perhaps more
colloquially 3D printing.
I just was hoping that you could discuss a little bit more
about how big companies like GE can work effectively with
smaller and medium-sized enterprises to fill that gap that you
I think so eloquently described that Valley of Death that
exists for so many companies out there. If you could just give
us a little bit of an overview from your experience.
Dr. Biller. Sure. So GE has been a founding member of the
NAMII, the National Institute for Additive Manufacturing,
Youngstown, Ohio. The great thing about this institute is I
think we have close to 100 companies participating in this
program and so this allows us to work closely with the
suppliers. We can understand better what their capability is.
We can help them understand what capability we are looking for
when we are looking for a supplier. It allows us to grow our
own capability, additive manufacturing for production is a
fairly new field, so it will allow us to have access to people
who are being trained in additive manufacturing as well as our
suppliers who have access to people who are coming out of
school or who have been employees at that center and typically
the employees at these centers, they cycle through the center,
they stay for two years and then they move on to go work in
industry typically or in academia.
And so creating that kind of environment where people can
get together and say, here, this is as a Nation where we want
to go in terms of additive manufacturing. We all agree that
this pre-competitive, and here is where we can move the needle
from it being, you know, very new technology and unestablished
technology, technology where we don't understand the pure
properties, where we don't understand how to produce this at a
lower cost and so forth to a level where it becomes competitive
and where we get a supply base and in fact, establish a supply
base in additive manufacturing. It is a very new field, and so
I think was really an ideal first CMI.
Mr. Kennedy. Thank you, sir, and Mr. Davis, if I could, and
I realize the time is brief, but you mentioned a little bit
before some of the unique challenges I think in your comments
about the speaker, about that SEMI--comes to grips with as you
are trying to develop new products without being burdened by
high costs and the high risks associated with that type of
innovation and the costs associated with it.
Could you discuss a little bit on how the semiconductor
industry is impacted by these issues and some of the ways that
hopefully a model like this will address it even though I am 10
seconds overtime?
Mr. Davis. Thank you for your leadership on this bill,
Congressman, and thank you for the question.
I think the essential thing facing manufacturers such as
those in our association is how you maintain a pace of
innovation, and innovation isn't something you fund once, buy,
and then you have got it. It is an ongoing process that needs
to be sustained within this country.
By way of example, when I think about innovative products,
things that have changed our economy and our competitiveness,
you look at this thing, which I believe probably every person
in this room has one of in their pockets. Every single element
of this smart phone that makes it smart is a product of
industry collaboration and public/private partnerships.
Touchscreen displays, global positioning system, the internet,
wireless connectivity, microchips. All those things were
products of public/private partnership.
So the vision and leadership that this country can take
through acts such as this lay a foundation for future
prosperity in this country in innovation, and I am not sure if
that answered your question specifically but----
Mr. Kennedy. Beautifully, sir. Thank you, and Mr. Chairman,
thank you for your generosity. I am sorry to cut it short.
Thank you very much.
Chairman Buschon. The gentleman is welcome.
At this point I would like to thank the witnesses for their
interesting and valuable testimony. The witnesses are excused,
and we will take a short break while we set up our second
panel. Thank you, gentlemen, for your testimony. Appreciate it.
[Recess.]
Chairman Buschon. All right. We will reconvene for our
second panel of very distinguished witnesses. Our first witness
is the Honorable Tom Reed, the Representative from the 23rd
District of New York and a Member of the Ways and Means
Committee, and our second witness is the Honorable Joseph P.
Kennedy III, Representative from Massachusetts, 4th
Congressional District, and a Member of the Science Committee.
As you know witnesses' testimony is limited to five
minutes, and I will recognize Mr. Reed for his testimony.
TESTIMONY OF THE HONORABLE TOM REED,
MEMBER, U.S. HOUSE OF REPRESENTATIVES
Hon. Reed. Thank you very much, Mr. Chairman, and Ranking
Member Lipinski and Members of the Committee for the
opportunity to weigh in and testify on this important
legislation before you, and I do not anticipate taking the
entire five minutes as I have submitted written testimony to
the Committee.
Again, I sincerely would like to thank you for bringing
this legislation before the Committee today. I am proud to have
introduced this legislation, the Revitalize America
Manufacturing and Innovation Act with my good friend and good
colleague, Congressman Joe Kennedy, from Massachusetts, a
Member of this Committee, as well as working in a bicameral
fashion with Senator Sherrod Brown of Ohio and Roy Blunt of
Missouri on companion legislation in the Senate.
I think this is an exciting piece of legislation that is
going to advance manufacturing in America. As a co-chair of the
House Manufacturing Caucus here in Congress, I am a firm
believer that this legislation will take a step in the right
direction to enhancing American manufacturing and partnering
manufacturers together with academia, businesses and
institutions across America and in a public/private manner to
bring products from the lab into a commercialized setting. The
bill also addresses the clear workforce development issues we
face in America in regards to matching up the skill sets of
advanced manufacturing. This bill in my opinion brings that
public/private partnership mentality together for purposes of
innovation, workforce development, and a firm commitment to a
philosophy that I believe in, and that we are going to make it
here to sell it there.
I serve on the Ways and Means Committee and do a lot of
work on the trade front. One statistic that really jumps out to
me on this issue, and that is people need to realize that on
the world economic stage, 95 percent of the world's consumers
live outside of U.S. borders. That means we have to build it
here, sell it there, and having this type of legislation will
bring together those public/private partnerships that will
encourage and empower U.S. manufacturing to be competitive and
to really achieve that goal of making it here to sell it there.
I come from a district of western New York as the Chairman
knows. It is an exciting area of the world in the sense that
Corning Incorporated is headquartered in my home town of
Corning, New York, Corning Incorporated, and the makers of the
glass many of us have in our iPads and our iPhones, and
companies like Dresser-Rand, Cummins, and Lufkin. They are all
posed to gain from this legislation and the concepts that we
have here put forth.
I was proud to work with the constituent company of G. W.
List and the Finger Lakes Community College to partner those
two institutions up on a pilot demonstration project where the
community college was using the resources of that manufacturer
and that manufacturer was using the resources of the community
college to create a work training program that brought kids and
young adults from a situation where they didn't have the skills
to participate in that U.S. manufacturing setting, and at the
end of that program were certified and moved right into an
employment situation.
That is what this legislation is trying to do in part on a
national level, and we are proud to be partnering with that.
With that I ask the Committee to weigh in favorably on this
legislation, and I appreciate the effort that you have done in
highlighting RAMI and the exciting opportunity that it
represents working with a true good friend Joe Kennedy, on this
legislation. It has been a joy, and it is been something that I
think we can be proud of in a bipartisan, bicameral manner to
advance U.S. manufacturing here in Congress.
And with that I yield back.
[The prepared statement of Mr. Reed follows:]
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Chairman Buschon. Thank you. Now recognize Mr. Kennedy.
TESTIMONY OF THE HONORABLE JOSEPH P. KENNEDY, III,
MEMBER, U.S. HOUSE OF REPRESENTATIVES
Mr. Kennedy. Thank you, Mr. Chairman. Thank you, again, to
Ranking Member Lipinski, to Members of the Committee that are
here. Thank you for the invitation to come and testify about
the Revitalize American Manufacturing Innovation Act, otherwise
known as RAMI, H.R. 2996, a bill that we have been working on
very hard with my colleague, Mr. Reed, from New York, and I
also want to thank, as I said a moment ago, Mr.--the Ranking
Member, Mr. Lipinski, for his leadership on this issue for a
long time, for his co-sponsorship as well as the Ranking Member
of the full Committee, Ms. Johnson, and Mr. Collins as well for
his co-sponsorship. I also wanted to recognize Senators Sherrod
Brown and Roy Blunt for their introduction of companion
legislation in the Senate.
Back home in the Commonwealth machines are buzzing today.
At Thermo Fisher Scientific in Franklin they are lacing
together complex engineering processes to build air quality
monitors that help keep our air clean around the country. At
Johnson & Johnson in Raynham 3-D manufacturing models are
becoming wax structures that ultimately give doctors the
ability to conduct intricate spinal surgeries and create custom
titanium joints for knee and hip replacements among many
others. At General Dynamics in Taunton, cutting-edge
technologies are being utilized to create lifesaving
battlefield communication systems for our men and women in
uniform.
From the Berkshires to the Blackstone Valley, Massachusetts
manufacturers are innovating at a breakthrough pace or excuse
me, breathtaking pace and are carefully rebuilding what our
sluggish economy needs most, stronger, more sustainable
pathways to middle class jobs. In doing so they are promoting a
model of economic development that is locally sourced and
regionally driven. The Massachusetts story is not unique.
Across the country innovation industries are transforming the
American economy and giving our once-fading manufacturing
industry new legs of innovation like advanced manufacturing,
life sciences, information technology, and defense.
For the past six months manufacturing activity has steadily
expanded. In November it hit its fastest pace in two and a half
years, and that growth is expected to continue. U.S. high tech
manufacturing is the largest in the world, accounting for $390
billion of global value added and high tech manufacturing in
2010.
However, the share of U.S. manufacturing in the--the U.S.
share in the world market has declined from 34 percent in 1998,
to 28 percent in 2010, and in 2011, the trade deficit of
advanced products was up equal to 17 percent of total U.S.
trade deficit.
There is no doubt that manufacturing has suffered mightily
in the past few decades, but the slow and steady improvement
that we see today is positive. In a time of growing income
inequality and a time of still-evaporating middle class jobs
and decreased economic mobility, manufacturing can and must
remain the cornerstone of the American economy.
As policymakers if we want the success that we have seen in
recent months to continue, then we must focus our efforts on
better linking innovation and manufacturing sectors,
understanding that the latter is critical as a vehicle for
bringing the former to market.
I am proud to be here to testify in support of this bill
which Congressman Reed and I believe will help accomplish these
important goals. The Revitalize American Manufacturing and
Innovation Act focuses on building as MIT puts it, ``industrial
ecosystems that bring together businesses, educators,
innovators under one roof to pursue manufacturing processes
that are relevant to the local economy.''
Currently very few of these coordinated regional support
systems exist for manufacturers, innovators, and entrepreneurs
outside of places like Cambridge, Silicon Valley, parts of New
York and Ohio, leaving independent businesses to fend for
themselves. RAMI aims to fix that as Congressman Reed pointed
out in his testimony.
This bill uses some public funds to fuel the creation of
these regional institutes, mandating that any partnership be
wholly self-sufficient within seven years. Most importantly,
RAMI sets a strong framework and then lets local stakeholders
take the reins. This is locally-driven, public/private
partnership that should be a model that is fueled so much
success back home in Massachusetts where Governor Deval Patrick
has created regional networks around science, technology,
engineering, and mathematics, otherwise known as STEM
education, and advanced a statewide manufacturing
collaborative.
These efforts have allowed Massachusetts to focus on the
specific needs and strengths of different parts of our state
and avoid a top-down, one-size-fits-all approach to economic
development and job creation. As a result, precision
manufacturing and advanced manufacturing businesses are
steadily growing, bringing with them solid middle-class jobs
that hold enormous promise for industrial communities that have
long been the backbone of our economy.
Advanced manufacturing jobs in Massachusetts have an
average annual salary of $75,000, and economists forecast over
100,000 jobs in this sector opening up over the next decade as
older workers retire, not to mention the brand new ones that
will come from any additional economic growth.
Mr. Chairman, thank you very much for the opportunity to
testify today. Thank you to the Committee for their
consideration of this important piece of legislation, and I ask
for all of you to look on it favorably as well.
Thanks very much.
[The prepared statement of Mr. Kennedy follows:]
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Chairman Buschon. Thank you very much, gentlemen, for your
testimony, and we heard today on the first panel a lot of great
ideas going along with your bill, and as a Member of the
Education and Workforce Committee, from that angle also about
the future of American manufacturing and about workforce
development and how that really is going to start, needs to be
started in K-12 education and increase our pipeline so to
speak, development into highly-technically trained people that
are filling the 21st century jobs. As both of you know when you
go into our factories today, the high-tech computer work is
needed. Almost everything is robotic, even in small
manufacturing facilities, and if we are going to continue to be
competitive internationally, workforce development is very
important, as well as also I think some of the larger issues
that we also discussed related to regulation, taxation, and
everything else that we can do.
But I have a lot of confidence in America to compete. We
always have, and we always will, and this is a critical area
that we need to work on. So thank you again.
With that, the record will remain open for two weeks for
additional comments and written questions, and the witnesses
are excused, and the hearing is adjourned. Thank you very much.
Mr. Kennedy. Thank you, Mr. Chairman.
[Whereupon, at 11:51 a.m., the Subcommittee was adjourned.]
Appendix I
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Additional Material for the Record
Submitted letters for the record by The Honorable Joseph P. Kennedy,
III, Member, U.S. House of Representatives
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