17
International Experience

Unit processes are an important element in the R&D strategy of most of the nations who compete with the United States in manufacturing. For example, Japanese manufacturers devote about two-thirds of their R&D funding to process technologies, while United States manufacturers use one-third of their R&D funds for manufacturing process improvement (Hudson Institute, 1992). This chapter will discuss the R&D strategies of major competitor nations, the mechanism used to implement those strategies, and the corresponding influences on the status of unit process understanding.

The R&D strategies employed by major competitor nations are very different from those of the United States (Nelson, 1993). Japan and Germany,1 in particular, foster industrial global competitiveness in their domestic industries with direct involvement of the government in the R&D process. This approach creates partnerships between government and industry, often coupled with a university relationship, that lead to the development of systematic product and process advancements and improved industrial competitiveness. In contrast, United States policy has been to fund generic, precompetitive R&D or program-specific R&D, as in a Department of Defense weapon system or a National Aeronautics and Space Administration program.

The problem has been compounded by a decline in R&D funding in recent years and a lack of culture that encourages university-industry cooperation. Most Japanese engineering faculty, like their American counterparts, do not have extensive industry experience. However, Japanese faculty participate in the activities of industry-sponsored meetings of professional societies, where engineers from industry and universities have a forum for communication and exchange of views. In Germany, nearly all engineering professors have ten to

1  

Germany is treated separately from the other European Community nations because of its large amount of unit process research.



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--> 17 International Experience Unit processes are an important element in the R&D strategy of most of the nations who compete with the United States in manufacturing. For example, Japanese manufacturers devote about two-thirds of their R&D funding to process technologies, while United States manufacturers use one-third of their R&D funds for manufacturing process improvement (Hudson Institute, 1992). This chapter will discuss the R&D strategies of major competitor nations, the mechanism used to implement those strategies, and the corresponding influences on the status of unit process understanding. The R&D strategies employed by major competitor nations are very different from those of the United States (Nelson, 1993). Japan and Germany,1 in particular, foster industrial global competitiveness in their domestic industries with direct involvement of the government in the R&D process. This approach creates partnerships between government and industry, often coupled with a university relationship, that lead to the development of systematic product and process advancements and improved industrial competitiveness. In contrast, United States policy has been to fund generic, precompetitive R&D or program-specific R&D, as in a Department of Defense weapon system or a National Aeronautics and Space Administration program. The problem has been compounded by a decline in R&D funding in recent years and a lack of culture that encourages university-industry cooperation. Most Japanese engineering faculty, like their American counterparts, do not have extensive industry experience. However, Japanese faculty participate in the activities of industry-sponsored meetings of professional societies, where engineers from industry and universities have a forum for communication and exchange of views. In Germany, nearly all engineering professors have ten to 1   Germany is treated separately from the other European Community nations because of its large amount of unit process research.

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--> fifteen years of industrial experience, a fact that greatly facilitates industry university communication and cooperation. The Council on Competitiveness (1991) has noted that the 1989 expenditures for R&D of Japan, Germany, and the United States are comparable—3.0, 2.9, and 2.7 percent of gross domestic product, respectively; however, the nondefense portion of these expenditures is very different. Japanese R&D spending remains at 3.0 percent of gross domestic product, German R&D funding is reduced to 2.8 percent of gross domestic product, and U.S. expenditure drops to 1.9 percent of gross domestic product. These measures of nondefense R&D better reflect the amount of R&D investment with the greatest potential to impact commercial markets and suggest that both the Japanese and German programs are more likely to improve their commercial competitiveness than the U.S. R&D program. These data on total and nondefense R&D since 1970 are depicted in Figure 17-1. The government-funded portion of each country's R&D budget varies from a low of 20 percent for Japan to 35 percent for Germany and nearly 50 percent for the United States. The portion of the R&D program funded by the government reflects the direction of technology policy of that government. Examination of the R&D agendas for the United States, Japan, and Germany reveals different priorities for each country. Figure 17-2 illustrates the distribution of government funding in several major application areas: defense, civil space, advancement of research (basic research); health; industrial Figure 17-1 International comparison of percentage of gross domestic product.

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--> Figure 17-2 International comparison of governmental R&D budget priorities. Source: Manufacturing Subcouncil, 1993. development; energy; the combined group of agriculture, forestry, and fishing; and other.2 Following the dominant defense-related R&D category, the U.S. agenda emphasizes the health area. Japan focuses on energy and advancement of research (nondirected fundamental R&D), while Germany has an equal emphasis on defense, advancement of research, and industrial development technologies. The emphasis of the general university funding for the United States, Japan, and Germany is shown in Figure 17-3. All of the countries emphasize the life sciences in general university funding. The Japanese also have strong support in engineering R&D, while Germany supports academic R&D in the physical sciences. 2   General university funding by the individual governments is excluded from these data and will be discussed later.

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--> Figure 17-3 International comparison of university R&D priorities. R&D In German Manufacturing Industrial success is a specific goal of German R&D policy. Industrial R&D is conducted through a network of R&D institutions and industry-based organizations that is designed to ensure the relevance of the results and rapid dissemination to industrial users. The system is structured to accommodate changes in industry needs, while providing in-depth technology for near-term solutions. The system of innovation focuses on incremental improvements to existing manufacturing processes of existing established markets such that products of higher quality result along with improved efficiency in the processes. The target markets and processes are usually related to traditional German industries and produce a short-term return on investment in the R&D project. Input from industry on technological needs defines the direction of the innovation system and the individual projects.

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--> German engineering faculty is selected from industry. German engineering education emphasizes conducting individual projects prior to completing the Diplomingenieur degree (which corresponds to the Master of Science degree) and the associated Diplom project. In addition, every German engineering student must complete a six-month internship in industry. These traditions contribute to German universities' interest in conducting industrially relevant production engineering research. The German technical innovation system is aided by a network of cooperative research groups who conduct projects and diffuse the research results. This network is especially important to small and medium-sized businesses, which benefit from the efficiency of the combined resources of the cooperative groups. These industry groups and trade associations directly influence the R&D agenda of the German government. This interaction is a specific requirement of the German technological policy and ensures that the R&D program addresses commercially relevant projects that will bolster German industrial competitiveness. The key element of the German manufacturing R&D network is the Fraünhofer Society, a network of applied research institutes located throughout Germany. As a rule, a Fraünhofer institute is established near a major technical university. The institute's director is a professor who holds a chair at the university on the same topic as the institute, thereby avoiding major managerial problems and potential competition between the Fraünhofer institute and the university. The institutes conduct applied industrial contract research with facilities and personnel of the technical universities. The university locations stimulate interaction between industry and universities while introducing the industrial technological agenda to the students. The research is required to be industrially relevant, and there must be stated interest by industry groups. Research projects are performed under contract to industry, with the government providing some percentage of matching funds; additional funding is provided by local governments for institute infrastructure and long-term projects. The Fraünhofer institutes have full-time employees and also employ students half-time to work on industrial contract R&D. This scheme allows engineering students to work on industrially significant problems while they are still in college. It also allows German students, who do not have to pay any tuition and fees, to earn additional money toward their living expenses. The Fraünhofer Society currently has more than 50 institutes throughout unified Germany that address the following manufacturing technologies: applied materials research (Bremen); automation and robotics (Stuttgart); computer integrated manufacturing ( Stuttgart);

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--> computer simulation and graphics (Darmstadt); information technology (Karlsruhe); laser technology (Aachen); material handling (Dortmund); measurement and sensor technology (Freiburg); production equipment and design technology (Berlin); production technology (Aachen); and production technology transfer (Stuttgart). It was of interest to the committee that these institutes address all of the enabling technology requirements of unit processes. This comprehensive group offers research results that can provide continuous incremental improvements to manufacturing processes. R&D In Japanese Manufacturing As with the R&D strategy of Germany, the Japanese R&D strategy involves government funding leveraged with industrial resources to improve commercial manufacturing technologies. Industry is a key contributor in the development of government policies and programs and ensures that the programs are designed to benefit practical commercial applications. Several mechanisms are used to promote newly developed technology into the private sector, including R&D at the national research institutes, cooperative research projects, and economic incentives. Japanese policy is predicated on the fact that technology development will be conducted by the private sector and that the government role will be to facilitate and support the industrial R&D agenda. Some government funding is used for long-range precompetitive R&D, as in the Exploratory Research for Advanced Technology program. The national research institutes typically conduct programs funded by both the private sector and government, with the prime goals of transferring R&D results to industry and promoting economic competitiveness. The programs often include several institutes, consortia, and corporations, with open communication of the research findings. These cooperative research programs involve approximately one-third of corporate R&D programs. While the government agencies do not directly participate or provide funding, they do serve as facilitators and help develop consensus within industry groups and consortia. This involvement helps focus the industrial R&D agenda on critical technology areas.

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--> The technical rationale for these R&D programs consists of incremental problem solving that leads to product and process development gains for the targeted technology area. Since these targets are tied to specific commercial applications, the incremental benefits can be realized in short order, leading to continuous improvements in process and product. For example, in the development of advanced materials (e.g., high-performance ceramics and composites), integrated teams of material suppliers, fabricators, and users investigate innovative processes (e.g., combustion synthesis, gas pressure combustion sintering) and consider the development of advanced manufacturing equipment needed to produce these high-performance materials (Rogers, 1991). Most of the process development in Japan is empirical, with limited use of process modeling. Additional process-related areas in the Japanese R&D agenda include metallic and inorganic process technologies, design and simulation technologies, photoreactive process technology, and processing technologies for extreme environments (Dertosis, 1988; Council on Competitiveness, 1991). R&D In European Manufacturing Since 1984 the evolution of the European Community has included several R&D programs known as ''frameworks.'' The most recent framework is scheduled for the 1990-1994 period and consists of several major programs that address manufacturing technologies. The Basic Research in Industrial Technology for Europe (BRITE) efforts and their supporting European Research on Advanced Materials (EURAM) have the objective to make European manufacturing industries more competitive in world markets. This BRITE/EURAM program promotes collaboration between industrial firms, universities, and other research centers. Small and medium-sized enterprises are prime participants in the program. The technical objectives of the program are to improve both manufactured products and manufacturing processes and transfer the resulting technology to the European industrial base. The specific technical areas of the BRITE/EURAM program are development of advanced materials and the processes for commercial production; creation of design methodology and assurance procedures for products and processes; identification and improvement of the technology needs of the manufacturing industry; and development and application of advanced technologies and processes for manufacturing.

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--> The program teams consist of industrial, university, and research institute partners. The industry is expected to have a related manufacturing need and means to apply and demonstrate the R&D results. Full funding is provided for the university and institute partners, and the European Community provides 50 percent of the funds of the industrial partners. Each project is funded at a minimum effort of 10 person-years for a period of two to four years. The current program contains efforts that address emerging materials and the process for their production; a wide variety of unique unit processes, including modeling and simulation; and methodology and instrumentation for process and product quality. All of the enabling technologies described in Part III are being developed in the BRITE/EURAM program. A second program, European Advanced Technology Programme (EUREKA), also is intended to strengthen the European competitive position by developing products and processes with near-term commercial value. The program involves partners from both industry and the R&D community (i.e., universities and institutes) and includes financial commitments from team members. Several manufacturing technology areas are covered: laser processing, new materials, robotics, and production automation. Conclusions Several observations relevant to manufacturing R&D and unit process R&D are gathered from the preceding overview of international R&D trends: The U.S. nondefense R&D funding is a lower fraction of gross domestic product than that of Japan or Germany; The U.S. government portion of this funding provides little support to manufacturing R&D, while the Japanese R&D plan stresses engineering and the German R&D strategy targets industrial development projects, both addressing the technologies of manufacturing. For example, in the past the National Science Foundation has spent approximately 12 to 15 percent of its budget on engineering and approximately 4 percent on manufacturing or production research. The corresponding numbers in Germany, for example, were estimated to be 30 percent for engineering and 15 percent for production engineering.3 3   The estimates are from a private communication with Professor Hans Toenshoff, in 1992, when he was the assistant director of Germany's DFG-Duetsche Forschungsgemeinschaft, which is equivalent to our National Science Foundation.

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--> The committee concludes the following from the review of the R&D agenda of the major industrial competitors to the United States: Industry and industry groups are very involved in establishing the R&D agenda and providing technical direction for respective federal agencies. R&D projects are conducted by teams consisting of industry, universities, independent R&D institutes, and government laboratories. R&D projects are established with clear application to commercial products. Long-term, precompetitive R&D projects are conducted by government research facilities to benefit the industrial base. In addition, a portion of the R&D projects are devoted to incremental improvements for near-term implementations. Industrial funding is leveraged with federal funding.

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--> References Costello, R., and M. Ernst. 1992. Regaining United States Manufacturing Leadership. Indianapolis, Indiana: Hudson Institute. Council on Competitiveness. 1991. Gaining New Ground: Technology Priorities for America's Future. Washington, D.C.: Council on Competitiveness. Detrosis, M. 1988. Made in America. Cambridge, Massachusetts: Massachusetts Institute of Technology Press. Manufacturing Subcouncil. 1993. Forging the Future: Policy for American Manufacturing. Washington, D.C.: Council on Competitiveness Nelson, R.R. 1993. National Innovation Systems: A Comparative Analysis. New York: Oxford University Press. Roger, P.N., ed. 1991. Japan Technical Evaluation Center Program Summary. Baltimore, Maryland: Loyola College.