Strategic Long-Term Participation by DoD in Its Manufacturing USA Institutes (2019) / Chapter Skim
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7 Afterword - Rationale for Continued Engagement with the Institutes
7 Afterword - Rationale for Continued Engagement with the Institutes
Pages 74-82
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From page 74... ...
Department of Defense (DoD) , 2018, Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States, Office of the Undersecretary of Defense for Acquisition and Sustainment and Office of the Deputy Assistant Secretary of Defense for Industrial Policy, September 19, 24-31.
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From page 75... ...
While most Americans believe the United States is losing manufacturing to low-cost producers in Asia, Germany's manufacturing experience tells a differ ent story. Its manufacturing wages are much higher than in the United States, yet manufacturing accounts for almost twice as large a share of gross domestic product (GDP)
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From page 76... ...
economy rely on entrepreneurial start-ups with venture capital financing for innovation, venture capital has focused on returns from software, services, and biotechs.14 "Hardtech" firms that plan to manufacture received only 5 percent of venture funding investments in 2015; the lack of an alternative financing method is a significant obstacle to scaling their innovations.15 • It has delinked innovation and production. R&D, not manufacturing, is seen in the United States as "the" innova tion system.
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From page 77... ...
Although the United States lost 5.8 million manufacturing jobs between 2000 and 2010, 17 percent of those jobs have come back. Other countries are facing increasing production costs (especially China)
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From page 78... ...
Although the United States has R&D-led innovation, other countries -- notably Germany, Japan, Korea, Taiwan, and now China -- have manufacturing-led innova tion. Because the United States led world production output after World War II with its remarkable mass production capability -- no other nation was close -- the United States simply assumed that its production leadership would be ongoing, and it ocused on the R&D stage.20 Japan's leadership of the quality production paradigm f led the United States to try to catch up in the 1970s and 1980s but not to adopt a manufacturing-led innovation capability along with its R&D-led innovation.
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From page 79... ...
We fail to understand the impor tance of manufacturing if we focus only on the production moment; it is core to a much larger system. The report found that value chains that rely on manufactured goods as either a part or as a delivery mechanism "account for 25 percent of employ ment, over 40 percent of gross domestic product, and almost 80 percent of R&D spending" in the United States.23 Manufacturing, then, is indeed a critical area for national economic strength.
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From page 80... ...
. will tend to render the United States independent of foreign nations for military and other essential supplies."25 This point on the relation be tween manufacturing strength and independence is arguably an enduring lesson.
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From page 81... ...
The public–private institute partnership model, because it addresses current structural problems in the U.S. innovation system, is a critical route for DoD to continue to embrace in order to preserve our national security.
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