With his jobs bill stuck in Congressional mire and muck, President Barack Obama this year decided to kick start at least part of his plan on his own. Pivoting off a pilot program in Youngstown, Ohio, the White House launched a competition for $200 million in federal money that would help create three “manufacturing innovation institutes.”
The administration is banking that success at these three — plus continued success in Youngstown — will jolt Congress into funding his plan, announced in the State of the Union, to create a network of 15 such hubs. Each would be a regional center connecting research and development centers with companies, universities and community colleges and federal agencies and providing a platform to grow certain subsectors.
“This type of innovation infrastructure provides a unique ‘teaching factory’ that allows for education and training of students and workers at all levels, while providing the shared assets to help companies, most importantly small manufacturers, access the cutting-edge capabilities and equipment to design, test, and pilot new products and manufacturing processes,” according to a White House statement.
Brookings Institution senior fellow Mark Muro wrote that the hubs marry the strengths of the private sector, government and academia.
“Basically, the manufacturing hubs idea reflects an emerging consensus among a large number of industry leaders, technology analysts, and economic development professionals that regions are the place to work on technology-based development and that regions need to be anchored by hubs of collaborative R&D where industry can work with academia and government to solve tough problems and foment technology gains,” he wrote in a paper with Brookings analyst Kenan Fikri published after the State of the Union.
These first three institutes are narrowly defined — “Digital Manufacturing and Design Innovation” and “Lightweight and Modern Metals Manufacturing” for the Department of Defense and “Next Generation Power Electronics Manufacturing” for the Department of Energy.
The next dozen hubs are open-ended and likely will be much more defined by the give-and-take of legislative sausage-making.
Wherever they land, the hubs will be a boon to their homes. The Brookings Institution has been advocating for such agglomerations for years and predicts that competition for the program will be fierce.
Which begs the question: Why not us?
A Palmetto model
The hubs present an interesting chicken-and-egg problem. Will they go to places where the infrastructure exists, simply coalescing around existing public-private-education partnerships? Or will the government pump the energy and capital into areas without existing relationships, potentially creating a bigger jobs impact?
Robert Sartin, an automotive industry attorney at Frost Brown Todd, who relocated from that firm’s Lexington office to Nashville in part because of Middle Tennessee’s growing reputation as a car-making center, says if the feds are looking to give a boost to an already-in-place industry, Middle Tennessee could be a top candidate.
Anchored by massive plants cranking out General Motors, Nissan and Volkswagen cars, Tennessee’s automotive sector is home to more than 900 manufacturers and suppliers. Collectively, those companies employ more than 100,000 people in the state, with a good number of them concentrated in and around Nashville.
Also in our favor: The tremendous track record of the former Nashville Auto-Diesel College — which now goes by Lincoln College of Technology — as well as one of the less than 20 U.S. networks of electric-car chargers and the largest lithium-ion auto battery factory in North America in Smyrna.
“Since Toyota opened in Georgetown, Ky., all of the automotive has been built south of there and the supply base has chased them south and southeast. So Tennessee, and especially Middle Tennessee, sits in the middle of Automotive Alley,” Sartin (right) says. “If you could have the various state and educational institutions focused on the manufacturing, I think Tennessee could go somewhere with that.”
Sartin points to Clemson University’s International Center for Automotive Research as an example of what could be the endgame. Sitting on 250 acres in Greenville, S.C., CU-ICAR consists of five clusters focusing on the development of next-wave car technology — power trains, electronics, materials, and so on. The center also provides an economic development office with real estate, marketing and management experts to link companies with Clemson faculty and the state government. Manufacturers — BMW and Michelin, specifically — endow chairs.
Plus, the center grants advanced degrees in automotive engineering, ensuring a fresh supply of researchers. In the 10 years since CU-ICAR opened, 91 percent of its students are employed in the automotive industry and 44 percent of them have remained in South Carolina. In all, Clemson, state and local government and private industry have invested $250 million in the project.
“If Vanderbilt made its students available and the city and statute contribute and if you have companies like Bridgestone and Volkswagen and these various smaller companies, that idea has a lot of potential here,” Sartin says.
But, Sartin adds, someone has to take a lead. And it appears one important person has at least been thinking about this topic from a high altitude.
This spring, Gov. Bill Haslam — whose youngest daughter, coincidentally, graduated from Clemson — has shown an increased focus on selling Tennessee manufacturing. He spoke at an event sponsored by The Washington Post, emphasizing that Tennessee was in the top five in the country in 2012 in manufacturing jobs created, a remarkable statistic given the size of the state and the lack of long-term history with manufacturing.
In a speech at the Post event, he outlined some advantages Tennessee has in the future of manufacturing.
“[C]arbon fiber technology is one of the things that is going to be where the automotive industry is pushing. It all makes sense. ... [O]nce you start talking about cars, now you’re talking about fuel efficiency and that lower weight with added strength makes a big deal,” Haslam told attendees. “So the technology already works. The question is: Can they make it work in a $25,000 family sedan? And due to some work at Oak Ridge National Lab in partnership with some of our automotive manufacturers, we think we can be on the leading edge of that carbon-fiber-technology manufacturing.”
He also hinted that the state could pivot education dollars — through the state’s large research universities as well as at the more vocationally-aimed Tennessee Technology Centers — toward the jobs manufacturers want.
“In a business, the most important thing that you do is you decide how you’re going to allocate capital. We can do the same thing in state government,” he said. “So we’re looking and saying: What is the market telling us they need? Well, they’re telling us they need more engineers, more welders and more truck drivers, among other things. I’ll pick those three out. So are we putting the physical capacity in place to train enough?”
Nearshoring is one of the buzzword in manufacturing these days. Those proclaiming or advocating for a U.S. manufacturing renaissance say jobs that deal with creating things need to return to here to help give the economy a better balance between goods and service-based work. But to do that, the U.S. has to exploit advantages in efficiency and technology, because nearshoring increases the price of labor. Innovation is key to making our factory recovery stick.
“You have to at least be reasonably competitive from a quality perspective and a competency perspective,” Sartin says. “We’ve got to find a way to keep what we’ve got and increase what we have.”
New federal dollars seeding partnerships that create jobs developed from next-generation technology may be what will keep the U.S. — and Middle Tennessee — competitive in the global manufacturing market over the long term. And these partnerships could end up playing a crucial role in cultivating and funneling the right manufacturing-oriented talent to this region.
But somebody has to take the big first step.
“The devil is in the details and it’s about who is going to get focused to lead it. Is it someone at Vanderbilt? Is it a state or local politician? These things need leadership,” Sartin says. “That’s the real challenge.”
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