Session III: Integration of Science, Engineering, and Societal Needs in Materials

National Laboratories: Their Role in U.S. Economic Security, Al Narath, President, Sandia National Laboratories

The multiprogram DOE laboratories face a paradoxical situation. On the one hand they can take pride in an impressive history of accomplishments, have annual budgets that constitute a large fraction of the federal S&T resource, support world-class science, and still have important tasks to carry out in the areas of nuclear weapons, energy, and environment. Yet questions are being raised about the laboratories' mission focus. Basic research is still producing world-class science, but, as the mission focus has become more diffuse, much of the research effort has become decoupled from real products, and its societal impact has consequently diminished. This loss of focus comes at a time when we are suddenly developing concerns about the competitiveness of our manufacturing enterprises.

It might be concluded that our institutions (industrial, university and federal laboratories) have failed to deliver on their promise of assured prosperity through S&T. The simple truth is that scientific and technological activities do not automatically enhance prosperity in direct proportion to investment. Our global competitors have demonstrated all too convincingly that economic success increasingly requires a more purposeful, focused national R&D strategy. We are beginning to understand that the spontaneous creation of national wealth from the fruits of scientific inquiry and technological exploration is simply too slow and inefficient a process in today's fast-paced, ruthlessly competitive global economy. Such an approach is still well geared to stimulate revolutionary discoveries but does not provide by itself the power for sustained commercial exploitation of new breakthroughs. At some point we must ask ourselves how fundamental research can benefit our domestic economy to a degree that will sustain our own prosperity and, hence, our ability to foot the bill.

Dr. Narath believes that a window of opportunity is open now to the national laboratories. If they are to realize their full potential they must move closer to the mainstream of industrial development. Advances in fundamental scientific understanding and technological innovations must be reconnected to the marketplace of global competition.

The laboratories have taken up the challenge and are pursuing the task of building bridges to industry, a process called technology transfer. Various mechanisms are possible. Already a large number of CRADAs are in place. However, small CRADAs will fail to make a measurable difference in the economic battle. Federal R&D investments in support of economic competitiveness will attain their full potential only if at least two critical requirements are met: (1) the investments target major national technology goals that are market-driven, industry-defined, and precompetitive in nature; and (2) the investments lead to a high degree of collaboration among industry, university, and federally supported laboratories utilizing government-industry cost-sharing arrangements to the maximum extent possible. Satisfying these requirements has become more feasible by rapid expansion in the scope of cooperation in high-technology industries and the attendant growth in joint industrial R&D activities. This trend is evidenced by the emergence of large-scale industrial alliances and their support of precompetitive technology strategies or road maps. Dr. Narath cited several examples: SEMATECH, SIA, the clean car initiative USCAR, the agreement linking the textile industry and DOE (AMTEX), and the



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The Advanced Materials and Processing Program and the Restructuring of Materials Science and Technology in the United States: From Research to Manufacturing: Proceedings of the 1993 Solid State Sciences Committee Forum Session III: Integration of Science, Engineering, and Societal Needs in Materials National Laboratories: Their Role in U.S. Economic Security, Al Narath, President, Sandia National Laboratories The multiprogram DOE laboratories face a paradoxical situation. On the one hand they can take pride in an impressive history of accomplishments, have annual budgets that constitute a large fraction of the federal S&T resource, support world-class science, and still have important tasks to carry out in the areas of nuclear weapons, energy, and environment. Yet questions are being raised about the laboratories' mission focus. Basic research is still producing world-class science, but, as the mission focus has become more diffuse, much of the research effort has become decoupled from real products, and its societal impact has consequently diminished. This loss of focus comes at a time when we are suddenly developing concerns about the competitiveness of our manufacturing enterprises. It might be concluded that our institutions (industrial, university and federal laboratories) have failed to deliver on their promise of assured prosperity through S&T. The simple truth is that scientific and technological activities do not automatically enhance prosperity in direct proportion to investment. Our global competitors have demonstrated all too convincingly that economic success increasingly requires a more purposeful, focused national R&D strategy. We are beginning to understand that the spontaneous creation of national wealth from the fruits of scientific inquiry and technological exploration is simply too slow and inefficient a process in today's fast-paced, ruthlessly competitive global economy. Such an approach is still well geared to stimulate revolutionary discoveries but does not provide by itself the power for sustained commercial exploitation of new breakthroughs. At some point we must ask ourselves how fundamental research can benefit our domestic economy to a degree that will sustain our own prosperity and, hence, our ability to foot the bill. Dr. Narath believes that a window of opportunity is open now to the national laboratories. If they are to realize their full potential they must move closer to the mainstream of industrial development. Advances in fundamental scientific understanding and technological innovations must be reconnected to the marketplace of global competition. The laboratories have taken up the challenge and are pursuing the task of building bridges to industry, a process called technology transfer. Various mechanisms are possible. Already a large number of CRADAs are in place. However, small CRADAs will fail to make a measurable difference in the economic battle. Federal R&D investments in support of economic competitiveness will attain their full potential only if at least two critical requirements are met: (1) the investments target major national technology goals that are market-driven, industry-defined, and precompetitive in nature; and (2) the investments lead to a high degree of collaboration among industry, university, and federally supported laboratories utilizing government-industry cost-sharing arrangements to the maximum extent possible. Satisfying these requirements has become more feasible by rapid expansion in the scope of cooperation in high-technology industries and the attendant growth in joint industrial R&D activities. This trend is evidenced by the emergence of large-scale industrial alliances and their support of precompetitive technology strategies or road maps. Dr. Narath cited several examples: SEMATECH, SIA, the clean car initiative USCAR, the agreement linking the textile industry and DOE (AMTEX), and the

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The Advanced Materials and Processing Program and the Restructuring of Materials Science and Technology in the United States: From Research to Manufacturing: Proceedings of the 1993 Solid State Sciences Committee Forum High-Performance Computing and Communications (HPCC) initiative. The speaker expressed concern about competition between universities and the national laboratories for the same federal dollars. Perhaps the two communities should consider addressing jointly the critical issues that stand in the way of progress. How do we organize and direct larger, more focused efforts involving more extensive teaming arrangements among industry, university, and national laboratory participants? How do we assure politically acceptable fairness of access to publicly supported resources and avoidance of conflicts of interest? How do we adjust priorities? How do we establish objective measures of performance for the laboratories and universities as a guide to government and industry investment decisions? Dr. Narath concluded by noting that during these times of rapidly changing national priorities, it is encouraging to see the national laboratories taking steps to address these issues constructively. We have a long way to go, but progress has been made, and the prognosis is encouraging. Government Technology Policy: What Should It Do?, Don E. Kash, George Mason University After years as a pariah concept, technology policy is now in vogue. Growing numbers of people have come to believe that U.S. companies require support from and cooperation with the government if they are to innovate commercial technologies that are competitive in the international marketplace. There remains substantial disagreement on what its content should be. Should the government have a microfocus —i.e., should it pick winners in terms of the auto industry, airplane industry, computer industry, and others? The reality is that one cannot have a commercial technology policy without picking winners, and there is much historical precedence for doing this. A second issue concerns the policy instruments government should use in its cooperation with and support of industry. That is, will it only train people and fund R&D through the generic precompetitive stage of technologies, or will government seek to assist in the manufacture, marketing, and servicing of technologies? There is a general distaste for government involvement that goes beyond R&D. Unfortunately, in many areas of technology, the U.S. competitiveness problem appears to be located much more heavily in the marketing, manufacturing, and design components of the system than in the R&D component. We have a long history of government support that goes beyond using R&D as an instrument, for example, through the use of tax breaks, land grants, or mail contracts. If commercial technology policy is to be meaningful, that is, if it is to contribute to an improvement in the U.S. trade position with regard to technologies, it must provide for cooperation and support where the cooperation and support are needed. First, Dr. Kash described the key functions government needs to serve with a technology policy. He then discussed picking winners and picking the appropriate policy instruments for supporting winners. Successful commercial technological innovation requires cooperation and interdependent efforts among industry, government, universities, and nonprofit institutions. Most complex technologies are the products of networks of expertise and capability, and the components of those networks are located in all four of the institutional settings. Government needs to carry out four key functions in order to assist these interdependent systems in delivering competitive technologies: (1) climate setting, (2) surveying, (3) coordinating, and (4) gap filling. Climate setting refers to government creating an environment conducive to commercial innovation, e.g., providing appropriately trained and educated personnel, adequate quantities of appropriately priced capital, a tax system that encourages innovation, the ability for organizations to work together without being accused of collusion, and the assurance of equal treatment in other countries'

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The Advanced Materials and Processing Program and the Restructuring of Materials Science and Technology in the United States: From Research to Manufacturing: Proceedings of the 1993 Solid State Sciences Committee Forum markets. Surveying refers to the need for continuous monitoring of what is going on worldwide with regard to commercial technologies. Surveying provides a country with intelligence. The need for coordination flows from two characteristics of much of contemporary technology. This technology is complex and is the product of networks that carry out complex synthesis. Minimally, a government coordination role is designed to assure that organizations that can contribute to a technological innovation know about each other's capabilities and find it possible to interact with relative ease. Gap filling is the most controversial of the technology policy functions. Gap filling implies that government will actively intervene to fill gaps if none of the other organizational components is willing or able to serve that function. Gap filling has been common in the United States in defense, medicine, and agriculture, and less common in the commercial sector. Gap filling remains highly controversial, because it is where the picking-winners issue arises. A starting point to a successful technology policy is the identification of its goals. Here it is posited that the goal of U.S. technology policy should be that the United States run a manufactured goods trade surplus by the year 2000. If the nation were to accept this goal, it would focus on those technology sectors involved in international trade that produce both the largest dollar volume and the highest profits. An examination of the top technology sectors shows a variation in their complexity. Simple technologies provide about 25% of the value derived from the 10 most highly valued technology sectors. This percentage is dropping. The routes to economic success for simple and complex technologies are different. The simple technologies often enjoy, for some period of time, legal monopoly protection. It is possible to gain effective patent and copyright protection for many simple technologies. Such technologies for which there is a market and a legal monopoly generally deliver a high profit. In the case of complex technologies, it is generally harder to gain monopoly protection. The route to success for many complex technologies is to deliver incremental innovations on a continuing basis, which have some combination of superior performance, higher quality, and lower cost. For many complex technologies, the link between research and development and commercially successful technological innovations is limited and indirect. Design, manufacturing, and marketing in a number of these sectors are more important than R&D. The Role of Consortia in U.S. Industrial Competitiveness, Craig Fields, Microelectronics and Computer Technology Corporation The Microelectronics and Computer Technology Corporation (MCC) has some 60 to 70 members, mostly information technology-selling companies and some information technology-using companies. It was one of the first and oldest, of the large-scale consortia. The original premises behind consortia were that companies would cooperate for their mutual business advantage and for the development of far-out, risky technology. These premises are legitimate in principle but other factors are important. R&D is not unimportant, indeed is essential, but is not in practice a determiner of business success. How do consortia make significant business impacts? The first way is by setting standards. The second is by foreign technology assessment and outreach. MCC, for example, collects documents from all around the world on technology and industry and business and distributes these to its members. It also buys on the open market in foreign countries products that are not exported, ships them home, and extracts all possible data from them. Another purpose of consortia is to fund universities. While this helps to develop technology, a major reason for the university support is the creation of a skilled work force that can be hired by the participating companies. Consortia are of value in the public policy arena. The federal government prefers to deal with a technology on an industry-wide basis

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The Advanced Materials and Processing Program and the Restructuring of Materials Science and Technology in the United States: From Research to Manufacturing: Proceedings of the 1993 Solid State Sciences Committee Forum rather than have to pick winners and losers among individual companies. The federal government also likes dealing with consortia because, in many cases, they bias utilization toward the United States. In the case of MCC, the intellectual property is owned by the consortium, which gives royalty-free licenses to participants who are deemed to be “American.” Almost all large U.S. companies have standing cross-licensing agreements with foreign companies. Ownership of the intellectual property by the consortium (rather than the companies) prevents it from going to foreign companies through cross licensing. Consortia can also provide supplier infrastructure for their members. MCC is supporting start-up companies as a supplier base for its members. These venture capital-funded firms become preferential suppliers to the MCC members, which thus get time and price advantages although no exclusivity in purchasing. In practice, running a consortium is extremely difficult, with many pitfalls. It is essential, when starting a consortium, to give it an agreed-upon lifetime. Technology transfer can be another important pitfall area. Most technology that's developed inside companies never gets transferred into production and used, and it's even harder from the outside. Unless it's figured out in advance how technology transfer will happen, it won't happen, and in fact mostly it doesn't happen. A technology transfer plan must be worked out in advance.