Manufacturing, Design, and Innovation

Welcoming Remarks

Making Value for America National Conference
February 27, 2014

At the risk of sounding trite, I would say that we are at an important juncture as a nation. Thanks to so many technological advances—additive manufacturing, autonomous vehicles, smart products, and so forth—there are steadily expanding opportunities to create products, services, and processes that will be enormously valuable and accessible for serving people and society everywhere.

Capabilities, consumer markets, and opportunities are all fueling their self-expansion. It is a feedback system that is growing rapidly. But there are deep concerns that these innovations will not create the number and quality of jobs needed for the American workforce, at least not jobs associated with, or in, manufacturing.

Two hundred years ago, 1811 to 1813, the Luddites revolted against textile looms in England because of the loss of jobs created by technological advancement. The British Parliament actually made “machine breaking” a capital crime—a discouragement for some no doubt, at least those that were caught, but more British soldiers were fighting Luddites than the French in the Iberian Peninsula.

Today, however, it is vital for everyone to understand the global realities of the 21st century, what I call the context of our time, and the need to chart a path forward to prosper in it rather than fight against it. It is so much easier to swim downstream than upstream. You can only swim upstream for a while before, eventually, it sweeps you away, dead or alive.

The context of our time calls for accelerating innovation and creating products and services of value to people. By doing so, our economy will grow and create high-quality, high-paying jobs across the workforce, though not necessarily in the manufacturing of old. After all, we are not trying to recreate the past. Are we? Has that ever worked? Try to think of some examples.

In 1950, 42 percent of US employment was in services and 29 percent was in manufacturing. In 2011, 69 percent of US employment was in services and 9 percent in manufacturing. Moreover, the percentage of employment in both of these sectors changed in a monotonically linear manner for 60 years, leading to an increase of 27 percent in services and a decrease of 20 percent in manufacturing. They both changed linearly—straight as an arrow—for 60 years.

This 60-year linear transition frames the context of our time. No changes in their second derivatives are yet apparent. These transitions are not caused by politics or climate change or immigration policy or the Internet or recessions. There is no simple or single trigger that anyone can pull to change this reality. Think of all the disruptive changes that have occurred since 1950. None has caused a blip in these linear transitions. I expect you agree that there is a message in these data.

If we look at agriculture, we see much the same thing until agricultural employment hit an asymptote of about 2–3 percent of the workforce where it is flopping around for the moment. That asymptote has not yet appeared on either of these other transitions. Basically, seven of ten US jobs are in services, and just one in ten is in manufacturing.

The path forward now is to innovate and produce services and products that have high value to people at home and abroad. Building enterprises to innovate and produce and deliver these products and services will create jobs, industries, economic activity, and opportunities for Americans. It is the only way forward.

In August of 2013 the Academy formed a committee to examine the condition of the innovation-design-manufacturing-services value chain in the United States and identify best practices for value creation for people and society. The fundamental goal of engineering is creating solutions serving the welfare of people and needs of society.

The committee has held meetings and examined business case studies across diverse industries and economics research on workforce trends and business practices of the United States and other countries. This conference, today, is truly critical. It will inform the committee’s recommendations to be published later this year. Our hope is that the committee’s counsel will inspire, guide, and enable more people and companies in the United States to think broadly about making value through successfully creating and delivering products and services in a supply chain that is an economically viable attractor of people at home and abroad. I hope that this will also help us move away from the long-dead past of manufacturing that is not coming back.

The focus of making value is a holistic view of the true worth obtained by creating solutions, which is what engineering does. Making value requires thinking beyond the things that most of us speak about when we say what engineers do. Making value is at the core of the value proposition for engineering—creating solutions, serving the welfare of humanity and the needs of society.

Think of it this way. Let’s say that a making things solution is to grow trees. If your making value proposition is to grow trees, then your making things solution has succeeded, QED. However, if your making value proposition includes other valued outcomes—like, for instance, creating jobs for foresters, suppliers, sales, construction, and so forth—then the solution may require more than growing trees, such as ensuring an integrated forest products enterprise. No enterprise, no value solution. Making value often requires an engineering system solution, not an engineering device solution.

This NAE study on making value is the only National Academies study that I can recall that aligns the value proposition of engineering with the study. National Academies' studies normally address an aspect of the value proposition, like growing trees, where the greater economic viability may actually be the core interest. I am hoping that this study uses this opportunity to highlight creating solutions for humanity and society that are of high value to them – the value proposition of engineering.

The public needs to see that the nexus between engineering and serving people and society is what engineering is all about. There is a tendency to think that engineers do engineering and scientists do science, but that is far from correct. The subjects are sharply defined, but the people are self-identified. For instance, members are elected to the NAE for what they have done, not for what they call themselves. At least 25 percent of NAE members have no degrees in engineering. Some of them have no degrees at all. Many do not describe themselves as engineers either. The NAE is an academy of engineering, not an academy of engineers.

We need to ensure that more people in the United States want to, and are able to, make value and appreciate it. We need visionaries to create new processes for novel products. Engineering is close to art, as a matter of fact. Both are creative enterprises. Both create solutions for people and society. Engineering has more tools to work with—analytical, technological, scientific, informational, and so forth—but great engineers and great artists are both extraordinary creators and visionaries, and both use their tools with great skill.

Where the essence of engineering is in creation and solutions, the essence of science is in discovery and understanding. These essences are not similar. Their intersection is actually a null set. As a thought to ponder, 200 years ago Jacob Bigelow pointed out that engineering is closer to art as a creative enterprise than it is to science in his (the first) course on technology, taught at Harvard. His words about knowledge being science and arts are very close to those of President Lincoln when he founded the National Academy of Sciences. It is not a new idea.

Value creation goals have implications for education. STEM education is an important ingredient. A lifelong education plan adapts continuously to the changing technological landscape. We need to inspire, and impart innovative skills and then celebrate the creations delivered by the workforce—from production workers, technicians, designers, managers, and others. Everyone should be welcomed into the tent – on the team. Ensuring this outcome is talked about often but remains largely unaddressed and, in my view, is a serious national problem. How can we continuously reeducate people for the current circumstance?

Value creation goals have, of course, very important implications for business as well. What practices are manufacturers and other businesses using to adapt to the accelerating changes in technologies, partnerships, and the nature of work in their industries globally? What employer practices could better enable, even facilitate, value creation in their workforces? What are the win-win opportunities for businesses and employers to encourage more entrepreneurship in their workforce and their units?

Value creation goals have implications for the infrastructure enablers of a more effective environment for value creation, which has been long supported by government. As the United States was transitioning from an agricultural economy to an industrialized economy, many states instituted mandatory high school education, which was a novel and elite idea at the time. Congress invested in land-grant colleges with the Morrill Act in 1862. Both were created to support economic development of the states as their primary goal. Education was a pathway to the solution of economic development. The Bayh-Dole Act of 1980 allowed universities, small businesses, and nonprofits to pursue ownership of their inventions created under federal grants. It was intended to be an infrastructure enabler following the economic malaise of the 1970s. I don’t know if it is more of an enabler now than a hindrance, by the way. That is also a question for consideration.

What might be the infrastructure, education, and business practice enablers at this time that would promote value creation in today’s context? That could be an important topic for this committee to consider.

I thank you all for your efforts. I look forward to your advice and counsel for the nation. As I said, this is a critical and most timely matter for our country to consider. Thank you very much in advance for your work.