Advanced manufacturing: Center stage in the innovation economy

By: Jim Jay - President and CEO, TechPoint

It's obvious that we live in an innovation-driven economy. In the past, economic success was often defined by access to physical advantages (raw materials, transportation infrastructure); today the most precious resources are educated workers and new ideas. Most economic analysis shows that the educational attainment of the workforce and its level of innovation (often measured by patents-per-employee) have the most reliable connection to rising incomes, low employment and economic output.

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Innovation is the driving catalyst for growth in every sector of our economy � including manufacturing. The popular image of manufacturing (assembly lines winding through dark, loud factories, with workers focused on menial tasks) is of an industry stuck in the past and resistant to change. In fact, nothing could be further from the truth.

U.S. manufacturers actually invest more than any other industry in research and development, the process of bringing new innovations to market. Every high-tech, cutting-edge product � from electric cars to lifesaving medical instruments to your i-Pod � represents a manufacturing challenge: How do you engineer a process that turns vision into reality, and do it better and faster than the competitor?

And far from being resistant to change, the churn of manufacturing is unrelenting as new business opportunities rise to replace the old. According to Deloitte Research, products that represent more than 70% of current manufacturing sales will be obsolete in the next five years. That means that the manufacturing sector will have to become even more focused on product development and speed to market.

This emphasis on innovation also creates a strong connection between manufacturing and technology.

It's fair to say that if you work in manufacturing today, you're just as likely to sit in front of a computer than to stand on an assembly line. Manufacturing has evolved into a high-tech industry because companies have invested heavily to stay competitive in the global economy � in information technology, robotics, supply chain technologies like RFID and enterprise management systems.

This technology investment has helped drive the manufacturing productivity boom. Between 1995 and 2004, the economic output per worker in the U.S. manufacturing sector rose 34%. Estimates by Federal Reserve economists credit fully half of this increase to the benefits of information technology integration into manufacturing processes. A recent study by the Association for Manufacturing Technology further asserts that 'advanced manufacturing' technologies (like robotics and other automation) contributed nearly $1 trillion in economic benefit to the manufacturing sector.

Advanced technology has also helped reduce manufacturing costs, in areas like energy efficiency. According to the American Council for an Energy-Efficient Economy, two-thirds of the energy savings achieved by manufacturers over the last twenty years can be attributed to the rise of technologies like application sensors and controls. The continued integration of these 'smart technologies' into manufacturing operations and their supply chains has the potential to make manufacturers even more competitive and 'green' in the coming decade.

Indiana has a huge stake in forging a strong bond between manufacturing and high-tech innovation. More than one of every five Hoosiers works in manufacturing. Maintaining these jobs and adding new opportunities relies on a relentless drive to develop new products and use cutting-edge technologies to become even more productive.

That's why we're excited about the inclusion of an advanced manufacturing emphasis in TechPoint's annual Innovation Summit (being held on September 29th at the Indiana Convention Center). We've expanded our agenda to focus on encouraging and capitalizing on innovation not just in information technology, but across all of Indiana's high-tech industry clusters � advanced manufacturing, the life sciences, energy and logistics.

As the Central Indiana Corporate Partnership was preparing to launch TechPoint's sister initiative, Conexus Indiana, I recall asking for a definition of 'advanced' manufacturing. The answer I received was, "Any manufacturer that's survived in this economy is advanced."

I'd refine that answer to say that any manufacturer that's thriving today, or poised to grow as the economy starts to bounce back, must be high-tech and focused on innovation. We hope that this connection comes through in our Summit, and invite you to join us. Please visit www.techpoint.org/summit for more.

Jim Jay is President & CEO of TechPoint, Indiana's technology & entrepreneurship initiative.

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