Gardner Carrick Senior Director The Manufacturing Institute March 28, 2012 HPCC Conference.

Gardner CarrickSenior Director

The Manufacturing InstituteMarch 28, 2012

HPCC Conference

Manufacturing’s Multiplier Effect

2

Wholesale trade

Retail trade

Finance, insurance, real estate, rental, and leasing

Educational services, health care, and social assistance

Professional and business services

Transportation and warehousing

Construction

Agriculture, forestry, fishing, and hunting

Information

Manufacturing

$0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6

Economic Activity Generated by $1 of Sector GDP

Source: U.S. Bureau of Economic Analysis, 2007 Annual Input-Output Tables

The Public Supports Manufacturing

3The Manufacturing Institute & Deloitte - September 2011

A Renaissance in Manufacturing?

Over 400,000 jobs added in the last two years.

Major consulting firms issue reports predicting a return of manufacturing from Asia.

4

Manufacturing Jobs in U.S. (000s)

Jan-1

0M

ar-1

0M

ay-1

0Ju

l-10

Sep-1

0Nov-1

0Jan

-11

Mar

-11

May

-11

Jul-1

1Se

p-11

Nov-11

Jan-1

2

11400

11500

11600

11700

11800

11900

12000

Structural Cost of Manufacturing

U.S. Manufacturers face a 20% cost burden over competitors from our largest trading partners.

Corporate tax rates make up over half that burden as other countries have reduced rates.

2003 2006 2008 20110%5%

10%15%20%25%30%35%

22.4%

31.6%

17.6% 20.0%

Structural Cost Burden For U.S. Manufacturers

5

U.S. Canada Mexico Japan China Germany U.K. Korea Taiwan France

1997 40% 44% 34% 51% 33% 57% 31% 30% 25% 36%

2010 40% 31% 30% 40% 25% 29% 28% 24% 17% 33%

The Manufacturing Institute & MAPI - October 2011

Global Competitiveness Challenge: Disturbing Trends

The 2010 trade deficit for all manufactured goods was $565B; and for advanced technology products was $81B

Source: The Manufacturing Mandate, Unleashing a Dynamic Innovation Economy, Aug. 2010 The Association For Manufacturing Technology

Manufactured Goods U.S. Trade

Balance

0% 20% 40% 60%

Influence government policy & fundingpriorties

Greater collaboration

Improve workforce competitiveness

Increase technical innovationIncrease technical

innovation

Improve workforce competitiveness

Greater collaboration

Influence government policy & funding priorities

Challenges

Opportunities

Percentage of votes for an option

Priorities to Improve Manufacturing Competitiveness

0%

10%

20%

30%

40%

50%

60%

70%

0 1 2 3 4 5

How important will having world-class manufacturing technologies be to your company's overall competitiveness in the next 5 years?

Extremely important

Not at all important

Importance of Innovation

June 2010 Global Manufacturing Competitiveness Index; Primary driver of competitiveness is “talent-driven innovation”

June 2011 PCAST Report to the President on Ensuring American Leadership in Advanced Manufacturing: “The United States is lagging behind in innovation in its manufacturing

sector relative to high-wage nations such as Germany and Japan”

October 2011 Economist Intelligence Unit survey of senior executives from U.S. manufacturing firms 90% identify innovation as the key to long-term success

January 2012 Dept. of Commerce report “The Competitiveness and Innovative Capacity of the United States” “Innovation is the key driver of competitiveness, wage and job growth, and

long-term economic growth.”

Importance of Innovation Widely Recognized

Structural problem requires a structural solution Universities,

NSF Centers,Federal Labs

• High-risk research• Long time horizon• Not focused on

shop floor implementation

Industry, NIST MEP

• Incremental improvement

• Off the shelf technology

• Short time horizon

Time to deployment

Tech

nica

l Inn

ovati

on Best Practices

Basic Research/Education

Manufacturing Technology Innovation

Missing Middle• Manufacturing technology

innovation, maturation, commercialization,

insertion• Medium time horizon

• High impact

Insufficient Emphasis on Maturing New Manufacturing Technology

Fraunhofer Institutes (Germany) A*STAR (Singapore) SEMATECH NCMS NIST MEPs University Centers EWI Edison Center DoD MANTECH EPRI Federal laboratories One-off federal solicitations

None of these models alone is

sufficient to bridge the U.S.

“Manufacturing Innovation Gap”

A new American model is needed

Many Innovation Models

25 industry participants─ Large, medium, and small companies ─ Range of sectors

Confirmed need for an infrastructure to mature manufacturing technology

Reviewed innovation models

Consensus behind a proposed innovation model to develop, mature and implement advanced manufacturing technology

Industry Driven Model

Industry Consortia Component

Sector specific and organized around industry clusters;

Member based collaborations; financial support to demonstrate relevance;

Government/industry cost share pre-competitive technology development;

Engages universities and national labs to address “grand challenges;”

Workforce development through educational institutions;

IP framework that reduces barriers to collaboration.

Application Center Component

Manufacturing technology specific; capabilities that are world-beating;

Facilities and expertise to support all sectors and business sizes;

501(c)(3) not-for-profit corporations focused on industry clients;

Primarily industry funded to implement technology for proprietary applications;

Modest government funding to build core capabilities;

IP framework that reduces barriers to implementation;

14

Agi

le a

utom

atio

nA

dditi

ve m

anuf

actu

ring

Cas

ting

Coa

ting

Ele

ctro

nic

asse

mbl

y

Form

ing

Insp

ectio

nJo

inin

gM

achi

ning

Pol

ymer

pro

cess

ing

Battery high-speed assembly X X X X X X

Flexible electronics X X X X X

Large component fabrication X X X X X X X X

Net-shape manufacturing X X X X X X X X X

Next-generation optoelectronics X X X X X

Vehicle lightweighting X X X X X X X X X

Manufacturing Applications Centers

Industry Consortia

Industry support drives entries and exits

Consortia/Center Examples

Engage industry leaders to identify and solve common challenges

Leverage industry and government funding to develop pre-competitive technologies

Access wide range of technical organizations for innovative technology development

Advance industry codes and standards

Support workforce training and education programs

Program management to ensure timely and efficient execution

Royalty-free licenses to IP created by the consortium

Benefits of the Industry Consortia

Practical application of the technologies leveraging proven solutions from a wide range of industry sectors

Access to world-beating manufacturing technology expertise and high-value capital equipment

Robust network to rapidly connect small, medium, and large manufacturers with the best technical assets

Network collaboration to advance cross-cutting technologies, e.g., modeling and design methodologies

Client ownership of IP developed on client projects

Leverage Application Centers background IP

Benefits of the Application Centers

Universities,NSF Centers,Federal Labs

• High-risk research• Long time horizon• Not focused on

shop floor implementation

Industry, NIST MEP

• Incremental improvement

• Off the shelf technology

• Short time horizon

Time to deployment

Tech

nica

l Inn

ovati

onBridging the Innovation Gap

Application Centers

• Mature and commercialize

technology• Implement for

industrial applications

Industry Consortia

• Precompetitive technology

development• Workforce

Training

National network of industry-focused application centers and consortia linked to

existing assets

Innovation Concept Gaining Support

DARPA Open Manufacturing

National Network for Manufacturing Innovation

• $1B budget request

• $45 million in existing funds for pilot program

DOE Manufacturing Demonstration Facilities

EWI, CCAM and Others

19

HPC in Manufacturing – Discussion and Attempted Action

Council on Competitiveness

National Lab Partnerships

University Outreach

Manufacturing Institute

Ohio Supercomputing Center

National Center for Manufacturing Sciences

20

Is the Divide Too Wide?

280,000 manufacturers in the U.S. How many are equipped to use HPC assets?• Possess the expertise• Understand the application• Have access to a location• Have the budget

How many HPC locations are prepared to address the challenges to make it possible?• Licensing• Security• Consulting• IP

21

Application of Digital Assets

Virtualize product lifecycle;

Prototype and refine innovations;

Simulation-based education and training;

For smaller OEMs or suppliers, is there a model to capitalize on digital assets short of Top 500?

If HPCC, other groups, or individual centers discover a successful method, the Manufacturing Institute is prepared to assist.

22