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NEW DIRECTIONS IN MANUFACTURING

Report of a Workshop

Committee on New Directions in Manufacturing

Board on Manufacturing and Engineering Design

Division on Engineering and Physical Sciences

NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS
Washington, D.C. www.nap.edu



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New Directions in Manufacturing: Report of a Workshop NEW DIRECTIONS IN MANUFACTURING Report of a Workshop Committee on New Directions in Manufacturing Board on Manufacturing and Engineering Design Division on Engineering and Physical Sciences NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES THE NATIONAL ACADEMIES PRESS Washington, D.C. www.nap.edu

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New Directions in Manufacturing: Report of a Workshop THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was supported by Contract No. SB1341-02-C-0048 between the National Academy of Sciences and the Department of Commerce. Any opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the organizations or agencies that provided support for the project. ISBN: 0-309-09227-2 (POD) ISBN: 0-309-53257-4 (PDF) Copies of this report are available from the Board on Manufacturing and Engineering Design at http://www.nationalacademies.org/bmed, or at 202/334-3505. Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313; Internet, http://www.nap.edu Copyright 2004 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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New Directions in Manufacturing: Report of a Workshop THE NATIONAL ACADEMIES Advisers to the Nation on Science, Engineering, and Medicine The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Wm. A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Wm. A. Wulf are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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New Directions in Manufacturing: Report of a Workshop COMMITTEE ON NEW DIRECTIONS IN MANUFACTURING ROBERT J. HERMANN, Global Technology Partners, LLC, Hartford, Connecticut, Chair WILLIAM BAESLACK, Rensselaer Polytechnic Institute, Troy, New York EDWARD C. DOWLING, Cleveland Cliffs, Inc., Cleveland, Ohio THOMAS W. EAGAR, Massachusetts Institute of Technology, Cambridge JOSEPH A. HEIM, Genie Industries, Redmond, Washington KARL KEMPF, Intel Corporation, Chandler, Arizona MAX LAGALLY, University of Wisconsin–Madison JAMES MATTICE, Universal Technologies Corporation, Dayton, Ohio ANTHONY C. MULLIGAN, Advanced Ceramics Research, Inc., Tucson, Arizona JACK SOLOMON, Praxair, Inc., Danbury, Connecticut JOEL YUDKEN, AFL-CIO, Washington, D.C. Staff TONI MARECHAUX, Staff Director BONNIE SCARBOROUGH, Staff Officer EMILY ANN MEYER, Research Associate LAURA TOTH, Senior Project Assistant

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New Directions in Manufacturing: Report of a Workshop BOARD ON MANUFACTURING AND ENGINEERING DESIGN PAMELA A. DREW, The Boeing Company, Seattle, Washington, Chair CAROL ADKINS, Sandia National Laboratories, Albuquerque, New Mexico GREGORY AUNER, Wayne State University, Detroit, Michigan THOMAS W. EAGAR, Massachusetts Institute of Technology, Cambridge ROBERT FONTANA, JR., Hitachi Global Storage Technologies, Alameda, California PAUL B. GERMERAAD, Intellectual Assets, Inc., Saratoga, California ROBERT HATHAWAY, Oshkosh Truck Corporation, Oshkosh, Wisconsin RICHARD L. KEGG, Milacron, Inc. (retired), Cincinnati, Ohio PRADEEP KHOSLA, Carnegie Mellon University, Pittsburgh, Pennsylvania JAY LEE, University of Wisconsin, Milwaukee DIANA L. LONG, Robert C. Byrd Institute for Flexible Manufacturing, South Charleston, West Virginia JAMES MATTICE, Universal Technology Corporation, Dayton, Ohio MANISH MEHTA, National Center for Manufacturing Sciences, Ann Arbor, Michigan ANGELO M. NINIVAGGI, JR., Plexus, Nampa, Idaho JAMES. B. O’DWYER, PPG Industries, Allison Park, Pennsylvania HERSCHEL REESE, Dow Corning Corporation, Midland, Michigan H.M. REININGA, Rockwell Collins, Cedar Rapids, Iowa LAWRENCE RHOADES, Extrude Hone, Irwin, Pennsylvania JAMES B. RICE, JR., Massachusetts Institute of Technology, Cambridge ALFONSO VELOSA III, Gartner, Inc., Portland, Oregon JACK WHITE, Altarum, Ann Arbor, Michigan JOEL YUDKEN, AFL-CIO, Washington, D.C. Staff TONI MARECHAUX, Director

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New Directions in Manufacturing: Report of a Workshop Preface Since the Industrial Revolution, when we exchanged handmade manufactured goods for machine-made, the changing nature of manufacturing has been apparent, and its evolution continues today. Such new developments as micro- and nanomanufacturing, computer-aided manufacturing, and innovative supply chain management are only a few of the current advances in a long history of manufacturing innovations. To highlight synergies, emphasize partnerships, facilitate discussion, and raise awareness of the far-reaching impacts that these changes in manufacturing will have on other spheres, the Board on Manufacturing and Engineering Design (BMED) of the National Research Council (NRC) established the Committee on New Directions in Manufacturing to organize a workshop and prepare a report of the results. The committee was asked to design a workshop program that would address issues central to the evolving world of manufacturing, such as robust manufacturing; micro- and nanomanufacturing; workforce and education; lean manufacturing; contract manufacturing; surge manufacturing; new strategies for product design and realization; globalization; and regulatory considerations. “New Directions in Manufacturing,” a workshop held March 27 and 28, 2003, at the National Academies headquarters in Washington, D.C., brought together government policy makers, visionary leaders in the manufacturing industry, members of the manufacturing research community, developers of manufacturing systems, manufacturing workforce representatives and advocates, and end users of manufactured products to give presentations and participate in discussions on the current state of the manufacturing enterprise in the United States and the challenges to be faced in the coming years. To focus discussion, sessions were convened that addressed the following major drivers for manufacturing: the human element, globalization, challenges and opportunities arising from new technologies, energy and the environment, and national security. Each session consisted of brief presentations by invited speakers, followed by extended panel discussions. The workshop began with a session on the importance of manufacturing and its economic value and ended with a session highlighting the dilemmas faced by manufacturers today. Part I of this report summarizes the workshop discussion and draws on some of the material in the written presentations to develop a basis for the committee’s deliberations. Parts II through VII contain the individual papers authored by those making presentations. Biographies of the committee members and the workshop agenda are given in the appendixes. While the committee is responsible for the overall quality and accuracy of the report as a record of what transpired at the workshop, the views contained in Part I of the workshop report are not necessarily those of the committee. This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity,

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New Directions in Manufacturing: Report of a Workshop evidence, and responsiveness to the study charge. The contents of the review comments and the draft manuscript remain confidential to protect the integrity of the deliberative process. The committee wishes to thank the following individuals for their participation in the review of this report: Thomas C. Mahoney, West Virginia-Manufacturing Extension Partnership; Rito A. Martinez, Intel Workforce Development; Deborah Seifert Nightingale, Massachusetts Institute of Technology; and Philip P. Shapira, Georgia Institute of Technology. Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the report, nor did they see the final draft of the report before its release. The review of this report was overseen by R. Stephen Berry, University of Chicago. Appointed by the NRC, he was responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution. The committee also thanks the speakers, session chairs, panelists, and others who helped to make the workshop a success, and it acknowledges the work of the NRC staff, including Emily Ann Meyer, Teri Thorowgood, Laura Tóth, and Toni Maréchaux. Workshop participants made uniformly positive comments on the selection of topics and the quality of the talks and discussion sessions. They were particularly pleased that the NRC brought together the diverse segments of the manufacturing community in a single, unifying event. Robert J. Hermann, Chair Committee on New Directions in Manufacturing

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New Directions in Manufacturing: Report of a Workshop Contents Executive Summary   1 Part I  Summary of the Workshop Sessions   5 1   Manufacturing in the United States   6 2   Challenges Facing U.S. Manufacturing Today   11 3   New Directions   21 Part II   Presented Papers: Manufacturing in the U.S. Economy   23 4   Keynote Address: The Administration’s Manufacturing Policy   24 5   U.S. Manufacturing at the Crossroads   28 6   Innovation and U.S. Manufacturing   34 Part III   Presented Papers: View from Three Manufacturing Sectors   39 7   Trends in Rural Manufacturing   40 8   Issues for Small Manufacturing Enterprises   46 9   Drivers and Challenges for U.S. Aerospace Manufacturing   49 Part IV   Presented Papers: Manufacturing Globalization   55 10   Manufacturing Globalization: Is the Glass Half Full or Half Empty?   56 11   Manufacturing Globalization at United Technologies Corporation   61 12   Insights on Outsourcing   65 Part V   Presented Papers: The Human Element in Manufacturing   73 13   Keeping America Competitive   74 14   Economic Challenges to American Manufacturing   82 15   The Crisis in U.S. Manufacturing: A Union View   88 16   The Human Component in Manufacturing   91 Part VI   Presented Papers: The Way Forward   95 17   Standards and Infrastructure   96 18   Collaborating to Meet Manufacturing Challenges   100 19   Manufacturing, Energy, and the Future of New Technology   105 20   Army Manufacturing Technology Program Responds to 21st Century Challenges   108 21   Turning New Technologies into Products at Sandia National Laboratories   112 Part VII   Presented Papers: New Manufacturing Paradigm   115 22   Manufacturing in a Digital Era   116 23   Manufacturing Knowledge and the Arrow of Time   130 Appendixes   135 Appendix A   Biographical Sketches of Committee Members   137 Appendix B   Workshop Agenda   141 Appendix C   Acronyms and Abbreviations   144

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New Directions in Manufacturing: Report of a Workshop Figures and Tables FIGURES 7-1   Local and regional economic dependence on manufacturing, 2000,   41 7-2   Decline in U.S. manufacturing employment in rural and metropolitan areas between September 2000 and December 2002,   42 7-3   Survey responses indicating concerns for small manufacturers, 2001 and 2003,   45 9-1   Aerospace manufacturing industry employment in the United States, 1988 to 2002,   50 9-2   Total imports and exports of the U.S. aerospace industry, 1984 to 2002,   51 9-3   Funding for manufacturing industry research and development in the United States, 1985 to 1999,   53 11-1   Average annual percentage growth in manufacturing for five countries in the periods 1980 to 1990 and 1990 to 2000,   62 11-2   Millions of square feet of manufacturing area in the United States and abroad,   63 11-3   Manufacturing direct labor cost (in billions of U.S. dollars) in different parts of the world identified as having a large market, low labor cost, or both,   63 12-1   The global market for electronic manufacturing services,   66 12-2   The outsourcing cycle,   68 13-1   Manufacturing’s contribution to the U.S. gross domestic product in 2000,   78 14-1   Number of production workers employed by the U.S. manufacturing sector, 1947 to 2002,   83 14-2   Manufacturing productivity and real-wage indices, 1949 to 2000,   84 14-3   Change in employment of production workers across difference industrial sectors, 1989 to 2000,   85 14-4   U.S. manufacturing capacity utilization, January 1986 to May 2002,   86 21-1   Three different business models at Sandia National Laboratories,   113 23-1   Illustration of real and virtual manufacturing transformations,   131 23-2   Information management issues related to creating an integrated architecture for improving manufacturing performance,   133 TABLES 6-1   Percent Average Annual Productivity Gains in the United States,   34 12-1   Common Outsourcing Mistakes and Their Potential Impact,   67 12-2   Key Drivers and Obstacles to Outsourcing of Aerospace/Defense Electronics,   69 12-3   EMS Companies Reporting Significant Defense/Aerospace Business,   71 13-1   Student Respondents’ Perceptions of Manufacturing Careers Versus Their Aspirations,   76 20-1   Proposed Manufacturing Descriptors to Be Added to Technology Readiness Levels,   109