“I don’t want the next job creating discovery to come from Germany, or China, or Japan, I want it to be made here in America.”
–President Barack Obama, during the official announcement of the Digital Manufacturing and Design Innovation Institute on February 25th, 2014.
Digital manufacturing, a development research concept since at least the 1980s, is now in the forefront of manufacturing strategies in Chicago through the Digital Manufacturing and Design Innovation Institute (DMDII) announced on February 25th. A new development in the Obama administration’s economic recovery strategy, DMDII is one of 4 planned hubs to launch this year. The DMII aims to increase development research that improves the commercialization speed of new products and facilitates the work between university research and manufacturing.
The initiative is led by UI Labs who was awarded $70 million dollars by the U.S. Department of Defense to launch the program. UI Labs has constructed a consortium of 41 private companies, 23 universities and labs, and 9 other various organizations and think tanks. Project funds raised so far amount to $320 million, with $86 million in public funds from the United States Department of Defense (DOD) and the State of Illinois, with the remainder coming from private financing. UIC approved a $5 million matching grant for the Illinois Manufacturing Lab, one of the first programs within UI Labs. General Electric led private sector support for the DMDII, which also included Lockheed Martin, Rolls Royce, and Siemens. This large initial investment and robust coalition of public and private stakeholders are clear signs that Chicago is working to position itself as the digital manufacturing center of the US, while details on the actual process are limited and coordination of this public-private partnership will be a tremendous task.
Chicago, known as a manufacturing hub over most of the city’s history, stands to benefit from this initiative, but there could always be significant challenges to implementing it in the current manufacturing and economic context of the region. A 2013 report by executive director for the Center for Urban Economic Development, Howard Wial, wrote that since the beginning of 2010, the number of manufacturing jobs in metropolitan Chicago has been rising, and the sector remains important despite the net job losses that occurred since 2001. He cites the growth was due partly to “bounce-back” from the Great Recession and long-term factors such as rising wages in competing countries. Wial argues that there is a paradox where the manufacturing sector is more important now to the region, regardless of the net job losses. This is shown by the nearly 185,000 manufacturing jobs lost in the region since 2001, while the proportion of manufacturing jobs, when compared to nation, increased from 1.08 times the national percentage in 2001 to 1.11 times that in 2011. Wial’s report suggests that a public-private partnership to accelerate the growth of the manufacturing sector in the region is an appropriate and strategic response. But as Wial’s report explains, not all manufacturing is created equal and neither are manufacturing policies. In fact, based on his analysis of the types of manufacturing activities and the region’s location quotients, Wial recommended that policy should focus on moderately high technology industries, because they are currently in higher concentration than very high technology industries. Moderately high industries include electrical equipment and appliances, chemicals, and machinery whereas very high technology in the Chicago region includes pharmaceutical and bio-tech manufacturing. Wial also recommended an approach to favor “high road” firms that usually target high skilled workers, as they are more likely to innovate than “low road” firms that compete mainly on low wages and low cost geographic areas. Digital manufacturing processes and innovations influence both moderately high and high technology industries.
Given the state of manufacturing in the region as illustrated through Wial’s report, I view the DMDII program as having two potential strategies: (1) target very high technology industries to pull in new advanced manufacturing in the area; or (2) focus on improving development research to benefit the moderately high technology industries that already exist here. A hint towards the latter strategy comes from the City of Chicago press release that states:
“(T)he Digital Lab will address remaining barriers to digital manufacturing through applied research projects that will solve real industry challenges, developing software platforms that facilitate access and reduce costs, and building products and services – like tools for advanced modeling and simulation – that help improve the manufacturing process [emphasis mine].”
The DMDII no doubt seeks to accelerate the “bounce-back” of manufacturing jobs in the region as stated in Wial’s report and also repositioning the U.S, in particular Chicago, in the global manufacturing arena as evidenced by the President’s goal of bringing the next job creating discovery in the U.S. In general, new development research can potentially push current “low road” manufacturing industries to adopt a “high road” approach in which they rely on high skilled and well-paid workers to incentivize innovation. But the potential challenge is addressing how to increase very high tech industry spin offs given the existing manufacturing base. That will be one of the main tasks for UI labs to coordinate, and to see if the DMDII can really produce $320 million worth of revolutionary advances in digital manufacturing.
About the Author:
Alexander Linares, GCI Research Assistant: is a second-year MUPP, which a focus on Economic Development.