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Enhanced R&D Efficiency in an ATP-funded Joint Venture

Albert N. Link

University of North Carolina at Greensboro

ABSTRACT

This study focuses on the impact of an Advanced Technology Program (ATP) joint-venture project on costs and timing of developing a suite of “leap-frog” technologies for the U.S. printed wiring board industry. To a lesser extent, it also looks at early-stage benefits of adopting the new technologies. It examines developments from mid-1991 through mid-1996 when the project was underway, and at its end.

A printed wiring board (PWB) provides electrical interconnections and a surface for mounting electrical components. PWBs are the backbone of electronic devices common in most industry sectors. Most of the hundreds of small U.S. companies producing PWBs lack the capability to mount advanced research efforts, and users of the boards pointed to a growing need to switch to overseas suppliers unless U.S. producers could achieve dramatic improvements by the mid-1990s. With encouragement and administrative leadership from the National Center of Manufacturing Science (NCMS), a group of seven research-capable companies within the industry plus Sandia National Laboratories proposed a far-reaching research program to the ATP to increase competitiveness of U.S. producers.

The study finds that the participants' collaborative activities had a dramatic effect on R&D efficiency, resulting in a cost savings of at least $35.5 million. The increased research efficiency led in turn to reduced cycle times for both new project development and new process development. Collectively, the result has meant productivity improvements for member companies, diffusion of the technology to other producers, and improved competitive positions for participating companies in the world market.



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Page 223 Enhanced R&D Efficiency in an ATP-funded Joint Venture Albert N. Link University of North Carolina at Greensboro ABSTRACT This study focuses on the impact of an Advanced Technology Program (ATP) joint-venture project on costs and timing of developing a suite of “leap-frog” technologies for the U.S. printed wiring board industry. To a lesser extent, it also looks at early-stage benefits of adopting the new technologies. It examines developments from mid-1991 through mid-1996 when the project was underway, and at its end. A printed wiring board (PWB) provides electrical interconnections and a surface for mounting electrical components. PWBs are the backbone of electronic devices common in most industry sectors. Most of the hundreds of small U.S. companies producing PWBs lack the capability to mount advanced research efforts, and users of the boards pointed to a growing need to switch to overseas suppliers unless U.S. producers could achieve dramatic improvements by the mid-1990s. With encouragement and administrative leadership from the National Center of Manufacturing Science (NCMS), a group of seven research-capable companies within the industry plus Sandia National Laboratories proposed a far-reaching research program to the ATP to increase competitiveness of U.S. producers. The study finds that the participants' collaborative activities had a dramatic effect on R&D efficiency, resulting in a cost savings of at least $35.5 million. The increased research efficiency led in turn to reduced cycle times for both new project development and new process development. Collectively, the result has meant productivity improvements for member companies, diffusion of the technology to other producers, and improved competitive positions for participating companies in the world market.

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Page 224 DECLINE IN U.S. SHARE OF GLOBAL PWB MARKET The United States dominated the world PWB market in the early 1980s, as shown by Table 1, but lost that dominance by the late 1980s. While no single event explains the decline in U.S. market share, according to one company spokes-person a very important factor has been “budget cut backs for R&D by original equipment manufacturers (OEMs) because owners demanded higher short-term profits,” which led to deterioration of the industry's technology base. In 1991, the Council on Competitiveness issued a report on American technological leadership. 1 Motivated by evidence that technology has been the driving force for economic growth throughout American history, the report documented that as a result of intense international competition, America's technological leadership had eroded. In the report, U.S. technologies were characterized in one of four ways: Strong: meaning that U.S. industry is in a leading world position and is not in danger of losing that lead over the next five years. Competitive: meaning that U.S. industry is leading, but this position is not likely to be sustained over the next five years. Weak: meaning that U.S. industry is behind or likely to fall behind over the next five years. Losing Badly or Lost: meaning that U.S. industry is no longer a factor or is unlikely to have a presence in the world market over the next five years. The 1991 Council on Competitiveness report characterized the U.S. PWB industry as “Losing Badly or Lost.” ATP AWARD TO THE PWB JOINT VENTURE In 1990-91, the Advanced Technology Program conducted its first competition. A joint venture proposal, by the National Center for Manufacturing Science (NCMS), proposes to research and develop a suite of advanced PWB technologies that would enable U.S. wire board suppliers to meet the needs of customers, making it unnecessary for them to rely on foreign suppliers. The ATP selection board found that the proposed project met technical and economic criteria, and it announced the PWB joint venture in the first group of 11 ATP award winners. The project ran through April 1996. ATP contributions amounted to $12.87 million over the five-year (statutory limit) funding period. Industry matching contributions amounted to $13.78 million. During the project, the U.S. Department of Energy added an additional $5.2 million, bringing total project research costs to $31.85 million. Early Evaluation As part of its evaluation effort, the ATP wanted to gain an early understanding of the workings of the joint ventures it funded. It commissioned two studies 1 Council on Competitiveness, Gaining New Ground: Technology Priorities for America's Future, Washington, D.C.: 1991.

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Page 225 TABLE 1 World Market Share for Printed Wiring Boards Year U.S. (%) Japan (%) Others (%) 1980 41 20 39 1981 40 22 38 1982 39 23 38 1983 40 21 39 1984 42 24 34 1985 36 25 39 1986 34 32 34 1987 29 30 41 1988 28 27 45 1989 28 31 41 1990 26 35 39 1991 27 34 39 1992 29 31 40 1993 26 28 46 1994 26 26 48 of the Printed Wiring Board Joint Venture, the first in 1993, two years after it began; and a second in 1996, soon after it ended. This paper reports the results of those studies. 2 ROLES AND RELATIONSHIPS AMONG MEMBERS OF THE JOINT VENTURE Participants in the PWB Joint Venture, in addition to NCMS, plus changes over the course of the project are summarized in Table 2. Although Digital Equipment (DEC) was one of the companies involved in the original NCMS proposal to ATP, it participated in the project for only 18 months. Its decision to withdraw was, according to NCMS, due strictly to financial conditions at the corporation at that time. DEC's financial condition did not improve, ultimately leading to the closing and sale of its PWB facilities. After DEC dropped out, three other companies joined the joint venture to assume its research responsibilities. These were AlliedSignal in 1993, Hughes Electronics in 1994, and IBM also in 1994. In addition, Sandia National Laboratories became involved in the joint venture during 1992, as anticipated in the proposal for funding. Sandia subsequently obtained an additional $5.2 million from the Department of Energy and applied it towards the research effort of the joint venture. 2 A. N. Link, Advanced Technology Program: Economic Study of the Printed Wiring Board Joint Venture After Two Years, report prepared for the Advanced Technology Program, April 1993; and A. N. Link, Advanced Technology Program Case Study: Early Stage Impacts of the Printed Wiring Board Joint Venture, Assessed at Project End, NIST GCR 97-722, November 1997.

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Page 226 TABLE 2 Membership Changes in the PWB Research Joint Venture Original Members, April 1991 1992 1993 1994 April 1996 AT&T AT&T AT&T AT&T AT&T Digital Equipment — — — — Hamilton Standard Hamilton Standard Hamilton Standard Hamilton Standard Hamilton Standard Texas Instruments Texas Instruments Texas Instruments Texas Instruments Texas Instruments — — AlliedSignal AlliedSignal AlliedSignal — Sandia Sandia Sandia Sandia — — — Hughes Electronics Hughes Electronics — — — IBM IBM A Horizontal Collaboration The PWB research joint venture can be described in economic terminology as a horizontal collaborative research arrangement. Economic theory and empirical studies suggest that research efficiencies will be realized when horizontally related companies form a joint venture, due to the reduction of duplicative research and the sharing of research results. 3 This conclusion is supported in this case study's quantitative estimates of cost savings. Less Competition, More Cooperation Characteristics of the joint venture member companies are summarized in Table 3. An important point to note is that AT&T, Hughes, IBM, and Texas Instruments, although in the same broadly defined industry, are not head-to-head competitors. These companies were four of the leading domestic captive producers of PWBs when the project began; they were also members of NCMS, the joint venture administrator. However, AT&T and IBM were not direct competitors in PWBs because their PWBs were produced for internal use in different applications. AT&T produced PWBs primarily for telecommunications applications while IBM's application areas ranged from laptop to mainframe computers. Similarly, Hughes and Texas Instruments produced for different niche markets (although they did compete with each other in some Department of Defense areas). Hamilton Standard, no longer a producer, purchased boards to use in its production of engines and flight control electronics. AT&T and Texas Instruments were not involved in these latter two product areas. In contrast to all of the other companies, AlliedSignal was a major supplier of materials (e.g., glass cloth, laminates, resins, copper foil) to the PWB industry. In addition, it was a small-scale captive producer of multilayered PWBs. The absence of an intensely competitive situation among the joint-venture participants is noteworthy because it is likely more conducive to their sharing results. 3 A. N. Link and Laura L. Bauer, Cooperative Research in U.S. Manufacturing: Assessing Policy Initiatives and Corporate Strategies, Lexington, MA: D. C. Heath, 1989.

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Page 227 TABLE 3 Characteristics of Members of the Joint Venture Member Company Type of Producer Primary Market Niche AT&T captive telecommunications Hamilton Standard n.p. aerospace Texas Instruments captive computers AlliedSignal captive defense Sandia n.p. n.p. Hughes Electronics captive computers IBM captive computers Note: PWB producers are divided into two general groups: manufacturers that produce PWBs for their own end-product use and manufacturers that produce boards for sale to others. Those in the first group are referred to as original equipment manufacturers (OEMs) or captives, and those in the second group are referred to as independents or merchants. Organizational Structure of the Joint Venture NCMS provided the program management, coordination, facilitation, and interface with ATP for the PWB project. NCMS coordinated and interfaced the administrative functions of accounting, contracts, and legal functions related to intellectual property agreements. A Steering Committee, with a senior technical representative from each participating organization, directed and controlled four research teams to ensure that each met the project's technical goals. Maintaining Accountability The joint venture was organized to “mimic a company with a chain of command,” according to one member of the Steering Committee. According to this member: “If it was not organized this way then no one would be accountable. Most of the people had this project built into their performance review. If they failed on the project then they failed at work. The structure also allowed ease of reporting. The information flowed up to the team leader as the focal point for information distribution. The team leader would then report to the Steering Committee made up of senior managers who were paying the bills.”

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Page 228 FOUR FOCUS AREAS Prior to proposing to ATP's 1990 General Competition, the members of the research joint venture conducted a systems analysis of the PWB manufacturing process and concluded that fundamental generic technology development was needed in four components of the process to develop the capabilities needed for global competitiveness. Accordingly, the joint venture's research activities addressed four areas: Materials; Surface Finishes; Imaging; and Product (research; not product development). Each component consisted of a combination of research areas which (1) provided significant improvements to existing processes, and (2) explored new technology to develop breakthrough advances in process capabilities. A multi-company team of researchers was assigned to each of the four research teams. They were involved in 62 separate tasks, and had specific research goals as noted in the following team descriptions: Materials Team : The majority of PWBs used today is made of epoxy glass combinations. The goal of the Materials Team was to develop a more consistent epoxy glass material with improved properties. The team was also to develop non-reinforced materials that exceeded the performance of epoxy materials at lower costs. Better performance included improved mechanical, thermal, and electronic properties (e.g., higher frequency) to meet improved electrical performance standards. Surface Finishes Team : Soldering defects that occur during assembly require repair. The goal of the Surface Finishes Team was to develop test methods to use during fabrication to determine the effectiveness of various materials used during the soldering process and to develop alternative surface finishes. Imaging Team : The goal of the Imaging Team was to investigate and extend the limits of the imaging process to improve conductor yield, resolution, and dimensional uniformity. Product Team : Originally, this team was known as the chemical processing team. Its goal was to investigate the feasibility of additive copper plating and adhesion of copper to polymer layers. When input from the industry revealed this was not the best research path to take, its focus changed—as did its name. The revised goal of the Product Team was to develop high density interconnect structures. Given the generic research agenda at the beginning of the project, the organizational structure seemed conceptually appropriate for the successful completion of all research activities. At the close of the project, this continued to be the opinion of the members. As a member of the Steering Committee noted: “There is better synergy when a management team directs the research rather than one company taking the lead. Members of the Steering Committee vote on

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Page 229membership changes, capital expenditures, licensing issues, patent disclosures and the like. As a result of this type of involvement, there are high-level champions in all member companies rather than in only one.” TECHNICAL ACCOMPLISHMENTS The PWB Research Joint Venture Project accomplished the originally proposed goals, and the project exceeded the original expectations of the members. The joint venture entailed 62 distinct research tasks carried out by the project's four research teams. Technical accomplishments included the following, among many others: (1) The Materials Team developed the technology for making single-ply laminates and a new, dimensionally stable thin film material superior to any other used by the industry. (2) The Surface Finishes Team improved test methods that determine the effectiveness of various materials during the soldering process. (3) The Imaging Team developed and demonstrated the process required to obtain a yield of greater than 98 percent for 3 mil line and space features. (4) The Product Team (also a research team) developed a revolutionary new interconnect structure and demonstrated its feasibility in production. CONCEPTUAL APPROACH TO THE ANALYSIS OF RESEARCH COST SAVINGS, EARLY PRODUCTIVITY GAINS, AND OTHER EFFECTS In a survey conducted during this study, participants in the joint venture were asked to quantify a number of related metrics comparing the end-of-project technological state to the technological state that would have existed at this time in the absence of ATP's financial support of the venture. Additional questions were also posed to team leaders in an effort to obtain insights about broader effects of the joint venture on the industry as a whole. In the earlier (1993) study of the joint venture, it was estimated that only 6.5 of the 29 then ongoing tasks in the venture would have been started without the ATP award. The number of research tasks increased to 62 as the companies collaborated to identify and solve new problems. At project's end, team leaders estimated that about half of the 62 projects would not have been started in the absence of ATP funding. A counter-factual survey also examined the subset of tasks participants thought would have been started even in the absence of ATP support. The survey focused on only one dimension of economic impact, namely cost savings attributable to formation of the joint venture, in terms of only those projects that the member companies would have pursued individually in the absence of the ATP supported joint venture.

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Page 230 The limited focus had both positive and negative aspects. On the positive side, it ensured participation in the economic analysis by all members of the joint venture. It also ensured that estimates of quantified impacts would represent a lower bound estimate of the project's actual economic value. On the negative side, while a number of technical project-generated accomplishments have the potential to generate large economic benefits to the PWB industry and consumers, the study provided no aggregate estimate of their long-term potential value. Looking at developments several years downstream from the end of the project should shed more light on the diffusion of the technologies developed in the project and their benefits. MEASURING IMPACT The methodology used to collect information for this study was defined, in large part, by the members of the joint venture. In particular, members requested that the information collected first be screened by NCMS to ensure anonymity and confidentiality, and only be provided for the study in aggregate form through NCMS. Under this condition, all members of the PWB research joint venture were willing to participate in the study by completing a limited survey instrument and returning it directly to NCMS. The survey instrument considered these related categories of direct impact: Scale, Scope, and Coordination Efficiencies: Estimated Work Years Saved by Carrying Out the Research as a Joint Venture; Testing Materials and Machine Time Savings; Other Research Cost Savings; Cycle-Time Efficiencies: Shortened Time to Put into Practice New Procedures and Processes; and Productivity Increases in Production. The survey also considered two broad categories of indirect impact: Early Technology Transfer to Firms Outside the Joint Venture; International Competitiveness Issues; and a third category, Other Company Impacts. Focused survey findings were supplemented with selected open-ended comments offered by respondents; personal discussions with team leaders and company representatives during the April 1996, Steering Committee meeting; and by followup telephone and e-mail discussions with available members. ATP FundsCritical to Cooperation All members concurred that the joint venture would not have formed in the absence of ATP funds to leverage the overall research program. Members were

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Page 231asked which relevant research tasks their company would have started in the absence of the ATP-funded joint venture. Aggregate responses suggested that only one-half of the tasks would have begun in the absence of ATP funding. The other one-half would not have been started because of the cost and related risk. Tasks that would not have been started without ATP funding included: development of alternative surface finishes, projection imaging evaluations, revolutionary test vehicle designs, plasma process monitoring equipment, PTH modeling software, and approximately 25 others. Of those tasks that would have been started without ATP funding, qualitative responses indicated that the majority would have been delayed by one year or more for financial reasons. Direct Impact on Member Companies Regarding the five categories of direct impacts: 1. Scale, Scope, and Coordination Efficiencies: Estimated Work Years Saved by Carrying Out the Research as a Joint Venture Two years into the project, the members estimated a total of 79 work years had been saved from avoiding redundant research, valued at more than $10 million. 4 At the end of the project, the members estimated a total of 156 work years had been saved. The total value of these work years saved was estimated at $24.7 million. The estimated $24.7 million in savings was based on an estimate of additional labor costs member companies would have incurred if the designated half of the research tasks were in fact actually carried out individually and without collaboration. 5 A member of the Steering Committee provided an example of work years saved by avoiding redundant research: “The universal test vehicle developed by the imaging team was the foundation for the co-development and sharing of research results. Two examples of this relate to the evaluation of etchers and the evaluation of photoresists. Regarding etchers, one of the member companies did the initial evaluation, Sandia did the validation, and other member companies implemented the findings. Similarly, individual companies evaluated selected photoresists and then shared their results with the others. All members benefited from the joint development and sharing by avoiding redundant research time and expenses.” 4 Link, Advanced Technology Program: Economic Study of the Printed Wiring Board Joint Venture After Two Years, op. cit. 5 A. N. Link, David J. Teece, and William F. Finan, “Estimating the Benefits from Collaboration: The Case of SEMATECH,” Review of Industrial Organization, 11(5):737-751.

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Page 232 2. Testing Materials and Machine Time Savings Two years into the project, the members estimated cost savings to be over $2 million from avoiding redundancies in research testing materials and research machine time. At the end of the project, the members estimated the total value of savings in those areas to be over $3.3 million. Relating to research testing materials savings, a member of the Steering Committee noted: “Before the consortium, there was no central catalogue of all base materials used to produce printed wiring boards. Now, the Materials Component of the PWB research joint venture has produced a complete database of PWB materials that includes data on composition, qualifications, properties, and processing information for the domestic rigid and microwave materials. The information in this catalogue has saved research testing materials and will make it easier for designers and fabricators to select materials without having to search through supplier literature.” This member went on to note: “Considerable problems were encountered in creating the database because: (1) materials suppliers do not provide standardized property test data; (2) all of the data needed to process the material were not readily available; and (3) some of the test data appeared to be exaggerated. The database is presently available within the consortium and there are plans to make the database available to the entire industry over the Internet.” 3. Other Research Cost Savings In the 1993 study, members were asked a catchall question relating to all other research cost savings associated with the research areas that would have been started in the absence of ATP funds, excluding labor and research testing material and machine time. In 1993, these other cost savings totaled $1.5 million. In the 1996 survey, the same catchall question was asked, and members' responses gave cost savings of over $7.5 million. Therefore, quantifiable research cost savings attributable to ATP funds and the formation of the joint venture were $35.5 million at the end of the project—$24.7 million in work years saved, $3.3 million in testing material and machine time saved, and $7.5 million in other research cost savings. In other words, members of the joint venture reported that they would have spent collectively an additional $35.5 million in research costs to complete the identified subset of research tasks that they would have conducted in the absence of the ATP-funded joint venture.

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Page 233 4. Cycle-Time Efficiencies: Shortened Time to Put into Practice New Procedures and Processes Two years into the project, members estimated that about 30 percent of the tasks enjoyed shortened time to put new procedures and processes into research practice, and the average time saved per research task was nearly 13 months. At the end of the project, members estimated that shortened time to practice was realized in about 80 percent of the research tasks that would have been started in the absence of ATP funds, and the average time saved per task was 11 months. Members did not quantify the research cost savings or potential revenue gains associated with shortened time to practice. As an example, a member of the Steering Committee noted: “The use of the AT&T image analysis tool and the improvements made in the tool during the contract has made a significant reduction in the evaluation time needed for photoresist process capability studies. This reduction has occurred due to the improved test methodology and the significant improvements in the speed and accuracy now available in making photoresist analysis.” 5. Productivity Increases in Production Two years into the project, members of the Steering Committee estimated that participants had realized productivity gains in production which could be attributed to research developments in about 20 percent of the 29 research areas. The then-to-date production cost savings totaled about $1 million. At the end of the project, the members estimated they were realizing productivity gains in production which could be traced to research developments in about 40 percent of the 62 research areas. The teams estimated the value of these productivity gains in production, to date, to be just over $5 million. And, given that the PWB research joint venture's research had just completed, future productivity gains will, in the opinion of some team leaders, increase exponentially. One example of productivity improvements in production relates to switching from two sheets of thin B-stage laminate to one sheet of thicker B-stage laminate. One committee member noted: “For a business like ours, the cost saving potential was enormous. The problem was that reducing the ply count in a board carried risk: drill wander, reliability, thickness control, dimensional stability, and supply. The consortium provided the resources to attack and solve each of these problems. The result was that we were able to quickly convert all production to thicker B-stage, saving at least $3 million per year. Without the consortium this conversion might not have occurred at all.” A second committee member's example relates to dimensional stability: “The inability to accurately predict inner layer shrinkage leads to a serious compromise with interconnection density and often leads to costly scrap. At the be

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Page 234ginning of this program, our facility was in the 8 to 10 mil range and misregistration scrap costs were in the range of $1.5 million per year. This problem was an area of special concern to the consortium members. As a result of this project, data exist that lead to an understanding of the problem, and a predictive model has been developed that is now being used to compensate for the art work associated with the circuit image on the boards. Our current capability is 5 to 6 mils and scrap is below $100,000 per year. The work of the consortium made these improvements possible.” A third member of the Steering Committee reported: “Our company has reduced solderability defects by 50 percent due to the efforts of the surface finishes team on the PWB interconnect program. The defect levels decreased from 4 to 2 defects per 1,000 solder joints due to reduced variation in tin alloy and contamination at the solder reflow process (note that there are more than 1,000 solder joints per PWB.)” And a fourth member commented: “The data collected from the NIST ATP program for improved registration and productivity gains were presented to the Defense Electronic Supply Center to convince them to allow single ply prepegs in construction of military PWBs. My company will obtain an ongoing benefit from this due to a 30 percent reduction in materials cost and improved registration of the PWBs which will improve yield.” Indirect Impact on Member Companies and the PWB Industry The study identified two categories of indirect impact already extending beyond the member companies to the entire industry: advanced scientific knowledge important to making PWBs; and improvements in international competitiveness. Descriptive information was collected to illustrate the breadth of the impacts, but no effort was made to estimate aggregate dollar value or to define them as tasks that would or would not have been begun in the absence of ATP funding. This approach was based on advice of the Steering Committee, which felt that dollar valuations at this time would be extremely speculative. 1. Technology Transfer to Firms Outside the JointVenture Two years into the project, the members reported that they had presented 12 research papers to various industry groups, attended 40 professional conferences

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Page 235fundamental to the research of the joint venture, and shared information from the research tasks with about 30 percent of the industry supplying parts and materials to the PWB industry. Additionally, members of the Imaging Team had interacted personally with suppliers of resist materials to the industry. At project's end, participants had presented 214 papers related to the research findings from the PWB project, 96 at professional conferences, and had additional papers scheduled for presentation. Members of the joint venture offered the opinion that such transfers of scientific information benefited the PWB industry as a whole by informing other producers of new production processes. They also benefited the university research community as evidenced by the fact that these papers are being cited in academic manuscripts. Material Team members attended 10 conferences where they interacted with a significant portion of the supplying industry. Specifically, they estimated that they interfaced regarding the PWB project with 100 percent of the glass/resin/ copper suppliers, 100 percent of the flex laminators and microwave laminators, 90 percent of the rigid laminators, and 50 percent of the weavers. Members of the Steering Committee were asked to comment on the usefulness of these technology transfer efforts. While all thought they were important to the industry, one member commented: “One indication of the successfulness of the technology transfer efforts can be reflected in the fact that two of the PWB program papers presented at the IPC conferences were selected as best papers at these conferences. The IPC conferences are recognized worldwide as the premier PWB industry conferences. I think this shows that the industry appreciated the depth of the technology effort. Another indication of the usefulness of the technology transfer process is the fact that new PWB manufacturers are exhibiting interest in joining two proposed follow-on programs to continue certain areas of the current research.” Another member noted that his company relied on an independent PWB shop for dense boards. A measure of the success of the technology transfer is that this supplier, which did not participate in the project, had also increased its yield of these boards. 2. International Competitiveness Issues The health of the domestic PWB industry is fundamental to these companies' ability to be more competitive in the world market. At a recent meeting, NCMS gave its collaborative project excellence award to the ATP-sponsored PWB project. At that meeting the NCMS president credited the project with saving the U.S. PWB industry and its 200,000 jobs. The members of the PWB Research Joint Venture perceived that, as a result of their involvement in the joint venture, their companies have become more

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Page 236competitive in certain segments of the world market such as computing, the fastest growing market for PWBs. Although any one member company is involved in only one or two market segments, all members indicated that their companies' market share either stabilized or increased as a result of being involved in the PWB project. Likewise, members perceived that the domestic PWB industry as a whole has increased its competitive position in selected world markets as a result of the accomplishments of the joint venture. With regard to the venture's impact on the industry share in the different segments of the world market, most respondents indicate that the project increased the industry's share in every market segment, with the strongest positive responses in the computer and military segments. No member believed the joint venture members had increased their share at the expense of nonmembers. This can be attributed to the fact that the results of the PWB project have been widely disseminated. 3.Other Company Impacts Members of the Steering Committee were asked to complete the following statement: “My company has benefited from its involvement in the PWB joint venture in such nontechnical ways as . . . ” Representative responses were: “We have learned to work and be much more open with other industry members.” “We have learned where other companies stand on technology.” “We have learned we in the industry all have the same problems and can work together to solve them.” “We have learned how to work with the Federal Labs, something we have never done before.” “We have an increased awareness of industry trends, needs, and approaches.” “We have learned that our company's intellectual property is not as proprietary as we initially believed—rarely can it be directly applied by our industry colleagues.” “We have gained prestige from being associated with the program.” “The joint NCMS/NIST/ATP research program has a national recognition. Suppliers that would not normally participate in collaborative projects will when a team like this is formed to become a joint customer.” Finally, the members considered the goals of the ATP as stated in its enabling legislation. Albeit qualitative information, the members of the Steering Committee generally agreed that the ATP had indeed fulfilled its stated goals in the case of the PWB Research Joint Venture.

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Page 237 In 1994, the Council on Competitiveness updated its report and upgraded its assessment of the domestic industry to “Weak” due in large part to renewed R&D efforts by the industry. 6 More recently, industry spokespersons have heralded signs of an industry turnaround. SUMMARY AND CONCLUSION ATP's funding of the PWB Research Joint Venture Project has had a number of direct and indirect economic impacts. Of the direct impacts, the largest at the time the study was conducted in 1996 was the increase in R&D efficiency. The project achieved at least a 53 percent reduction in overall research costs. The increase in research efficiency in turn led to reduced cycle times for both new project development and new process development. Collectively, the result has meant productivity improvements for member companies and improved competitive positions in the world market. As a result of knowledge dissemination activities by members of the joint venture, capabilities across the entire industry are expanding. These technology advancements are thus improving the competitive outlook and world market share of the U.S. PWB industry. The survey findings associated with the above direct and indirect economic benefits are summarized in Table 4. In that table, the categories of direct economic impacts to joint-venture participants are separated into those for which dollar values were obtained and those for which dollar values were not obtained, i.e., into “quantified and non-quantified economic impacts.” The results described in this paper and summarized in Table 4 should be interpreted as only partial and preliminary estimates of project impacts. First, although ATP funding of the joint venture led directly to research cost savings and early production cost savings and quality improvements, the bulk of the production cost savings and performance gains would not be expected to occur until more time has passed after the project's end. Implementation of the new process technologies by joint-venture participants and diffusion of the technologies to other companies in the industry take time. As such, the economic impacts to which values are attached in Table 4 provide a conservative lower-bound estimate of the long-run economic benefits associated with ATP's funding of the joint venture research. The study did not include consideration of market-determined economic benefits deriving from the joint venture research. 6 Council on Competitiveness, Critical Technologies Update 1994, Washington, D.C.: 1994.

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Page 238 TABLE 4 Summary of Survey Findings on Partial Early-Stage Economic Impacts Categories of Partial Early-Stage Economic Impacts 2 Yrs After Project Start At End of Project Direct Impacts on Member Companies Quantified Economic Impacts * Research Cost Savings Work years saved $10.0 mil. $24.7 mil. Testing materials and machine time saved $2.0 mil. $3.3 mil. Other research cost savings $1.5 mil. $7.5 mil. Production Cost Savings Productivity improvements $1.0 mil. $5.0 mil. Non-Quantified Economic Impacts * Shortened Time to Practice Average time saved per research task 12.7 months 11.0 months Indirect Impacts on Member Companies Competitive Position in World Markets increased increased Spillover Impacts on PWB Industry Technology Transfer Research papers 12 214 Conferences attended 40 96 Competitive Position in World Markets increased increased * Indicates these impacts are based only on half the research tasks the members thought they would eventually have done without the ATP, and not the new capabilities resulting from those tasks that they would not have done at all without the ATP. REFERENCES Council on Competitiveness. 1994 . Critical Technologies Update 1994 . Washington, DC . Council on Competitiveness. 1991 . Gaining New Ground: Technology Priorities for America's Future . Washington, DC . Link, Albert N. 1997 . Advanced Technology Program Case Study: Early Stage Impacts of the Printed Wiring Board Joint Venture, Assessed at Project End . NIST GCR 97-722. November. Link, Albert N. 1996 . Evaluating Public Sector Research and Development . Westport, CT : Praeger . Link, Albert N. 1996a . Economic Impact Assessments: Guidelines for Conducting and Interpreting Assessment Studies . NIST Planning Report 92-2. May. Link, Albert N. 1993 . Advanced Technology Program: Economic Study of the Printed Wiring Board Joint Venture After Two Years . Report prepared for the Advanced Technology Program. April. Link, Albert N. and Laura L. Bauer. 1989 . Cooperative Research in U.S. Manufacturing: Assessing Policy Initiatives and Corporate Strategies . Lexington, MA : D. C. Heath . Link, Albert N., David J. Teece, and William F. Finan. 1996 . “Estimating the Benefits from Collaboration: The Case of SEMATECH.” Review of Industrial Organization . 11(5): 737-751 .