Image: Christine Daniloff |
Not long ago, Massachusetts
Institute of Technology (MIT) political scientist Suzanne Berger was visiting a
factory in western Massachusetts,
a place that produces the plastic jugs you find in grocery stores. As she saw
on the factory floor, the company has developed an innovative automation system
that has increased its business: Between 2004 and 2008, its revenues doubled,
and its workforce did, too. Moreover, the firm has found a logical niche: Since
plastic jugs are both bulky and inexpensive, it’s not economical to produce
them overseas and ship them to the United States, simply to fill them with,
say, milk or syrup.
“Is this just an odd
little story?” Berger asks. “Actually, no.” While the decline of American
manufacturing has been widely trumpeted—manufacturing jobs in the U.S. have
dropped from 20 million in 1979 to about 12 million today—conglomerates such as
Procter & Gamble and high-tech firms such as Dow Corning have kept
significant amounts of manufacturing in the country. Moreover, 3,500
manufacturing companies across the U.S.—not
just the jug-making firm in Massachusetts—doubled
their revenues between 2004 and 2008. With that in mind, Berger asks, “How can
we imagine enabling these firms to branch out into more innovative activities
as well?”
That is the kind of
problem Berger and 19 of her faculty colleagues at MIT are now studying as part
of a two-year Institute-wide research project called Production in the
Innovation Economy (PIE), which is focused on renewing American manufacturing.
The guiding premise of PIE is that the U.S. still produces a great deal of
promising basic research and technological innovation; what is needed is a
better sense of how to translate those advances into economic growth and new
jobs.
As Berger puts it, “The single most important question in the study is: What kind of manufacturing
do we need in order to get full value out of our innovation strengths?”
That question is
currently at the forefront of MIT’s concerns as well. Institute President Susan
Hockfield is serving as a co-chair of the steering committee of President
Barack Obama’s Advanced Manufacturing Partnership (AMP), which in June will
give policy recommendations to the White House about renewing American
manufacturing. PIE is not a subset of AMP, but arises from similar concerns
about applying technology in the national interest.
Made in America in the 21st century
In the course of conducting its research, PIE will issue an interim report
later this spring; publish a final report in 2013; create a film on
manufacturing; host a lecture series; and issue a working-paper series of
research findings from the professors on the team.
The co-chairs of the
PIE Commission are Berger, the Raphael Dorman-Helen Starbuck Professor of
Political Science, and biologist and Institute Professor Phillip Sharp. Olivier
de Weck, who has served as the associate head of the Engineering Systems
Division and also holds a dual appointment with the Department of Aeronautics
and Astronautics, is serving as PIE’s executive director.
To a significant
extent, PIE is modeled on the MIT Commission on Industrial Productivity, a
1980s group that conducted a similarly long-term study on the American economy
and wrote the highly influential book Made in America. Published in
1989, Made in America has sold more than 300,000 copies and influenced
public discussion about changes needed to improve America’s industrial productivity,
such as greater flexibility in production processes and policies to help firms
make capital investments.
However, PIE’s
research interests differ from those of the Made in America group in substantial ways.
The 1980s research project was organized around the performance of U.S. firms in
several major industries then experiencing intensified competition, from
automakers to consumer electronics companies. PIE focuses on specific questions
that may cut across a multitude of industrial sectors, and has organized its
work into eight distinct “modules” that cover a diverse set of issues, ranging
from the challenges of scaling up small startups to the problems of training
workers.
Like IT or not?
In so doing, PIE is also broadly scrutinizing a common assumption of the last
quarter-century: that the information technology industry is the basic paradigm
for innovation-based manufacturing in the United States. “Some people think
we can just do the innovation, and then license and sell and outsource it,”
Berger notes. By contrast, she says, “those of us in the PIE study think it’s
an open question whether a similar model works elsewhere, particularly in the
new emerging-technology areas.”
Information technology
companies often have low startup costs covered by venture capital, and their
production tasks lend themselves to being handled overseas. But in other areas
with advanced-manufacturing potential, such as energy, advanced materials or
biotechnology, “you’re going to need far heavier capital investment,” Berger says.
It’s not obvious how such companies can best finance the development and commercialization
of their products.
One of the PIE modules
will also examine the effects of manufacturing—and the loss of manufacturing
jobs—on other industries. Manufacturing is widely viewed as an industry that
creates additional jobs besides those on the production lines; factories create
a need for additional service-industry workers. Additionally, the income earned
by manufacturing workers creates demand for still more goods and services.
The factory visits
that Berger and her colleagues have been making for PIE underscore that point.
On a recent visit to a company that makes equipment pipes and tanks for
biotechnology companies, she found that a quarter of the company’s revenue
comes from repairing and servicing the equipment. “What we’re discovering is
that this connection between manufacturing and services is an integral one,”
Berger says. “A set of capabilities is gained in making products that then get
redeployed in the service part of a business.”
Ultimately, the PIE
researchers may have many more such discoveries ahead of them—and may need
them, to help chart the possible paths for new success in manufacturing.
