Volume 22, Number 1 January 1993


Symposium on the Role of the National Labs in Fostering Competitiveness

Physics and Society presents here articles based on two of the five talks given at an invited session sponsored by the Forum on Physics and Society at the March 1992 APS meeting in Indianapolis. The session was chaired by Ruth Howes, Past Chair of the Forum.

Teaming for National Competitiveness

Don Runkle and Rich Marczewski

I'm here today to tell you why I think it's absolutely critical to the economic well-being of our nation for American industry, our federal laboratories, and our universities to team together to improve our national competitiveness.

Ladies and gentlemen, we are facing a very real crisis in this country. It's a turbulent crisis, but not in the classic sense. Instead of a military conflict, it's an industrial contest. Instead of arsenals or armament factories being blown up, commercial manufacturing plants are being shut down. Instead of battleships being sunk, companies are going under. Instead of a theater of operation being lost, industries are being surrendered. And instead of lives being lost, the casualties are measured in the high-wage jobs upon which we built and sustained a large and prosperous middle class.

Make no mistake about it. Manufacturing is critical to the nation's well-being. Manufacturing is the primary driver of jobs and wealth in our economy and the simple fact is that to live well, a nation must produce well.

The economic challenges we face today are partly the result of the national priorities set during the forty years it took to win the Cold War. During that time, this nation's competitors operated under a blanket of security that we provided. They took advantage of this opportunity and invested their time and resources well. If you think about it, virtually all of this was paid for by industry, either thorough corporate taxes, or taxes on personal income derived from wages paid by companies.

Automobile competitiveness

During the Cold War, it was as if we were asleep with regard to preserving our industrial strength. We didn't make a stand on consumer electronics, or steel, or machine tools. Will we make a stand on cars? Is this industry expendable? Or will we let yet another industry go and then make a stand on computers? Or wait to make the stand on commercial aircraft? Or biotechnology?

You might ask, is the domestic auto industry important? Well, it's the largest segment in our manufacturing sector, accounting for one out of every seven jobs. It uses 40% of the machine tools, 20% of the semiconductors, 20% of the aluminum, 20% of the glass, 12% of the steel, and represents 10% of all consumer spending. So yes, it's important.

Second, you might ask if it's in trouble. Well, the Big Three lost over $7.5 billion in 1991 alone. A US parts supplier goes out of business in this country every 16 hours. And nearly 2/3 of our $66 billion merchandise trade deficit is due to the auto industry. So yes, it's in trouble.

Will we make a stand on cars? Is this industry expendable? Or will we let yet another industry go and then make a stand on computers?

Some say that it doesn't really matter if US car companies are replaced by foreign-owned companies. According to this line of thinking, we'll still have cars to buy, and they'll probably even be built by Americans right here in America, so no big deal, right?

Wrong. If foreign companies own the American car business, the higher-wage production jobs, the design, engineering and research jobs and high-technology materials jobs will end up overseas while Americans are allocated the low-wage jobs.

If you doubt this, just take a look at the tier structure in the Japanese auto industry in Japan and see where the high wage jobs are. They are at Toyota, Honda, and Nissan. Japanese automakers and their suppliers in the US economy support about 150,000 jobs in this country. Yet the total number of people actually involved in going from concept to customer for the volume of cars they produce here is roughly seven times that number. Where do you think those other million jobs are? Also, isn't it interesting that Japan employs twice as many people per vehicle produced in Japan as it does per vehicle produced in the US, even though the hours per car are about the same? It's clear to me that we can't afford to concede our domestic car industry to anybody.

Now that we won the Cold War, and it's behind us, we need to turn our attention to this new contest and win it as well. We have all the resources we need. We just need to reach a consensus that our top post-Cold War priority must be to reinvigorate our industrial base to assure the future economic security of our nation, for our sake and for our children's sake. Like previous national crises, we must now pull together the best minds in industry and government, this time to develop the manufacturing processes and product technologies that will allow American industry to take on all comers and win.

What if industry and government teamed together?

A year and a half ago, Don Runkle, GM Vice President of Advanced Engineering, posed a ``what if'' question to the Automotive News World Congress in Detroit. What if the auto industry could team together with our government labs and tackle the key high-risk technological challenges confronting us, challenges that have a broad societal impact? What he envisioned was a grand challenge along the lines of John F. Kennedy's call to put a man on the moon, a high-risk proposition requiring extraordinary cooperation between government and industry. Neither could have done it alone.

There were a lot of skeptics who thought Kennedy's vision was an impossible dream, yet on 20 July 1969 we not only put men on the moon, but they got out and took a stroll on it! And two years later, the first vehicle to roll across the moon's surface had a GM powertrain in it. I don't know about you, but I'm still in awe of what we managed to accomplish together, and I'm damn proud that it's an American flag up there and not someone else's. This time around, however, our goal is a lot closer to home. The next ``moonshot'' Don envisioned would not be to explore outer space, but to ensure our nation's future prosperity, right down here on terra firma.

Let's look back for a moment. America's manufacturing leadership and economic growth during the first half of the 20th Century was built mainly as a result of our educational system and our Yankee ingenuity and ability to implement and improve a chain of produce and process technologies that in some cases were originated by someone else. The automobile industry is a good example. Detroit didn't invent the early automobile; the Europeans did. What the US did was invent a mass production system that shattered the old ``craftsman'' paradigm. Through mass production, the US dominated the world economically, and provided over half of the world's manufactured goods and abundant high paying jobs for Americans.

However, in the past few decades, we've lost that focus while other countries have continued to apply innovative technologies and methods that move manufacturing beyond the mass production paradigm. To reinforce the point, Dr. Lester Thurow, Dean of the MIT Sloan School of Management, points to perhaps the three most successful new consumer products marketed during last decade and a half: the VCR and FAX invented by Americans, and the CD player invented by the Dutch. He reminds us that the main beneficiary of the billions of dollars in sales and the hundreds of thousands of jobs these products provide is neither the US nor the Dutch, but the Japanese.

What if the auto industry could team together with our government labs and tackle the key high-risk technological challenges confronting us?

The lesson is that today, people won't beat a path to your door just because you invented a better mousetrap. They beat a path to the door of the country that makes the mousetrap. Products can be copied and patents expire. Only by refocusing our efforts on process innovation will we be able to put our products on a higher technological plane that our competitors and keep them there. That's why I think President Bush's recently announced Manufacturing Technology Initiative is important. It's a welcome boost to the development of the manufacturing technologies required to move use beyond the mass production paradigm. American industry was beaten to the punch by "lean manufacturing." The MTI can help insure our leadership in the next paradigm.

I'm also an enthusiastic supporter of the National Technology Initiative. As I emphasized earlier, I think it's essential to the economic health of America for US industry, our federal labs, government agencies, and our universities to cooperate to improve our national competitiveness. Within the auto industry, we're already working with the government and each other to solve some critical technological issues that face our industry as a whole. GM is currently a partner in nine horizontal consortia, with more in the discussion stage.

Among these, the US Advanced Battery Consortium is perhaps the best model of how to put a consortium together. In forming the USABC, industry got its act together first. GM, Ford, and Chrysler defined the objectives, needs and philosophy for the proposed consortium, and discussed other potential partners. Then asked the government to join us and support the effort. As a result, the USABC was formed in four months as opposed to the 18 months it took us to put the Automotive Composites Consortium together, and the list of partners now includes the Department of Energy, the Electric Power Research Institute, and the electric utility industry, all of us working together to develop a key enabler for expanding the viability of electric vehicles, the battery. And by the way, for the skeptics of the USABC, the first contract lent by this consortium will be to a small business.

But consortia alone are not the complete answer. This is where the federal labs come in.

Taken as a whole, the federal labs are home to some of the brightest and most talented scientists, engineers and technicians in the world; people who like to work on challenging technical problems for the benefit of society. I know. I've met a lot of them, and I have the utmost respect for their capabilities and deep admiration of their accomplishments. The federal labs are also home to some of the most advanced equipment and facilities on Earth, including many unique instruments that no single company could afford.

By teaming together with industry to improve our national competitiveness and productivity, the federal labs can help end the days when a company went head-to-head alone against an entire country. By forming partnerships with federal labs and university research centers we can tackle the really tough problems that affect all Americans, problems that are too risky and expensive for any one company, or even an industry, to take on. Cooperation between industry and government can put American products on a higher plane.

To win at manufacturing in the 21st Century, US industry will have to be the best. The best at R&D, design and engineering, production, distribution, and recycling. To be the best, industry will need the aggressive help of the federal labs. Together we can set new standards of excellence and expand the envelope of technology.

The Warren conference

This past January, GM hosted a three-day conference at our technical center in Warren, Michigan entitled ``Teaming for National Competitiveness.'' I was told that it was one of the largest gatherings ever of national lab personnel, and if you've ever been to Warren in January you know these people weren't there on vacation. We sponsored the conference to bring together the best minds in industry, government, and our universities to explore how we could develop the manufacturing processes and technologies that will give US manufacturers a world-wide competitive edge. The conference was remarkable.

The labs had been largely unaware of the impact of market considerations on the development of commercial products and processes. ``Teaming'' helped make them more aware of the challenges confronting not only our industry, but practically every other US manufacturing industry. At the same time, we gained a much better appreciation for the labs' capabilities and priorities. It was fascinating to see the learning that took place on both sides.

We kicked off the conference by outlining the research hurdles facing American automakers in the context of six ``buckets'': energy, environment, safety, agile manufacturing, manufacturing validation, and ultrareliability -- categories that are vital for practically any manufacturing industry. The first three are product-related, and the latter three are generally process-related. American industry has to excel in all six if it's going to thrive in a global marketplace. About twenty of our top engineers and scientists then outlined the motivations and research hurdles in each area.

The first bucket, energy, encompasses a range of issues from energy-efficient manufacturing to fuel-efficient transportation and alternate fuels. The US auto industry is committed to making efficient cars and trucks. And to prove the point, it already has the most efficient vehicles in the world. GM alone has increased the fuel economy of its products by more than 130% since the mid-70s and now leads in 8 of 18 EPA vehicle classifications -- better than any manufacturer in the world, and better than Honda, Toyota and Nissan combined. But we can do better. Achieving higher efficiencies at affordable prices in this decade will require teamwork between industry, government, and our university R&D system to work in areas like lean-burn enabling technologies, light-weight materials, fuel cells, alternate fuels research, batteries, and turbines.

The environmental ``bucket'' serves as a focus on clean processes, products and practices. We at GM pioneered the catalytic emission control system that everyone in the world uses, even the Japanese. We led in getting the lead out of fuels and in using electronic engine management. We have the cleanest-running engines in the world, but we can always do better. Here we should be working together in areas like combustion modeling, emission reduction, CFC elimination, environmentally conscious manufacturing, recycling, waste stream separation, and environmental clean-up.

Safety is a big issue in any industry. The American auto industry is firmly committed to making safe cars and trucks. At GM we've developed energy-absorbing steering columns and instrument panels, safety belts, air bags, side-guard door beams, plastic laminated windows, and low-cost anti-lock brake systems. But we can't let up until there are no injuries. Here again, the federal labs and our universities can help us develop affordable technology that will permit American products to avoid accidents and prevent injuries; things like intelligent control for vehicles, accident sensors, and computer modeling to study safety and crash-worthiness, new materials characteristics, and trauma and toxicity on tissue.

Agile manufacturing is the next manufacturing paradigm. There are no facts about the future, and so this bucket covers those technologies essential to a flexible manufacturing process capable of producing a lot size of one. As a nation, we need to get off the mass-production paradigm because it doesn't produce wide varieties of products well. Flexibility is the key to competitiveness -- bringing a quality product forward quicker and for less cost. Specifically, we need to develop the knowledge, the rules and the enablers that allow our industrial base to be agile. There are about a dozen or so initiatives that make lean manufacturing work. The question is: what are the comparable initiatives for the agile enterprise? I think we need to being right now to work together on intelligent manufacturing; rapid prototyping, process modeling, simulation, control, and fixtureless manufacturing, for starters.

The US auto industry is committed to making efficient cars and trucks. -- it already has the most efficient vehicles in the world.

The fifth bucket involves the technologies necessary to validate manufacturing processes before going into production. In our business we have proving grounds to validate products before we put them into the hands of customers. However, we have no such thing to validate our processes. We go ahead and build a plant, then turn it on and see if it works, all in real time, with real money. We need the federal labs and our universities to help American industry develop the knowledge required to validate and optimize our plants and processes before we build them. This will involve things like plant floor simulations run on supercomputers, the development of decision analysis tools for validation systems at the machine level, and intelligent database support for machine and machine tool suppliers.

The final category is ultrareliability. This again is not just an auto industry issue. American industry has to utilize manufacturing processes that are capable of building competitive, reliable products. The national labs have a remarkable track record of success when it comes to ultrareliability. Given the kinds of weapons and nuclear devices they work with, their expertise in this category is a great personal comfort to me, I assure you. I can't quite remember the last time an atom bomb went off accidentally. Here we can work together on things like high temperature electronics packaging, advanced lubricants and coatings, ultra-precision manufacturing, intelligent laser weld processing, on-line nondestructive evaluation, inspection and testing, new materials characterization, and advanced ion implantation.

As you can see, these buckets apply to most industries. Every company wants efficient products, environmentally sensitive products, and safe products. The same companies want to manufacture these products in an agile environment, from validated plants that run reliably, producing products which have been validated prior to going to market.

Our conference also provided a forum for industry to discover the range of research capabilities in the federal labs. Over 2000 GM, Hughes and EDS employees, including our senior GM management, visited lab displays highlighting their areas of expertise. From GM's point of view, our technical people saw real hardware that could have real applicability to the auto industry. This was not a bunch of ivory tower scientists, but live engineers working on problems that use the same equations and formulas that we do. I think that both sides recognized terrific opportunities, and I also found a great respect on US industry, eager to weave their technological expertise into non-defense applications that will make a difference.

In my opinion, it would be a tragic mistake for our nation not to utilize the greatest force of scientific and technical talent ever assembled, people who provided our military with its dazzling edge, people who can help promote our economic security now that the Cold War is over. Our country used this arsenal to win the Cold War. Let's now use it to win the next contest: industrial competitiveness.

Accomplishments in technological transfer

What have we accomplished through our tech-transfer efforts so far, including the ``Teaming'' conference and the year-and-a-half of visits between GM engineers and federal lab scientists which led up to it? We how have nine horizontal consortia in place, with more in the discussion stage. We have ATP funding for R&D partnerships on two potentially very important projects that could benefit not only GM, but a broad base of other US manufacturers as well. We have half-a-dozen cooperative research and development agreements, with hundreds more in the discussion state. And we have established critical working relationships with many of the nation's top labs. We have pointed out the need and the opportunity for the federal labs to join with industry in ``moonshots'' to put American products and process on a higher plane. And we have demonstrated our commitment to the teaming process.

The good news is that we have formed some successful partnerships within the federal lab system, partnerships that will help make us more competitive and productive, partnerships that will help us create more higher-wage US jobs. And we're going to continue exploring opportunities for this kind of partnering.

The bad news is that the partnering process doesn't work as smoothly as it should, and that improving it will involve a reassessment of our national R&D priorities. For example, in the US about 80% of all R&D is focused on products and only 20% on processes, while other countries have placed a much greater emphasis on the science of manufacturing. As a result, they have become masters of reverse engineering and potent global competitors. We need to place more emphasis on process R&D.


Our national spending priorities must also change now that the Cold War is over. The 1991 federal R&D budget of $71 billion devoted little to manufacturing. 54% was allocated to national defense, 12% for space, and less than 1% for Department of Commerce manufacturing programs. The 1992 budget is only slightly better. We should devote at least 10-20% of federal R&D to manufacturing if we expect US industry to be a player in the 21st Century. Likewise, industry must dramatically increase its process R&D spending.

If we're serious about enabling US industry to compete in a global marketplace, our government should consider the following suggestions:

  • Make the R&D tax credit permanent.
  • Set aside more funds for tech transfer activities at the federal labs.
  • Require federal labs to work with US industry as a condition of funding.
  • Provide greater flexibility, funding, and autonomy to the federal labs to deal with specific industrial partners on joint projects.
  • Simplify, speed up, and standardize the cooperative research and development agreement process for all labs.
  • Develop new cooperative R&D mechanisms for ``megaprojects.''
  • Review lab information classification procedures to promote easier access by US industry where possible.
  • Agencies such as DOE, EPA and DOT should actively facilitate national ``moonshots'' in areas such as energy efficiency, vehicle safety, and the environment. We're in it together, so let's work on it together.
  • Support the Department of Commerce Strategic Partners Initiative encouraging the formation of domestic vertical consortia.
  • Bolster financial support for university R&D to free our universities from dependence on foreign funding.

And finally, we should consider revisiting our anti-trust laws. They were written in a different time and are probably now out of date. We need to make it easier for competitors to work together on cooperative R&D, as is done by our offshore competitors. It's about time we listened to people like Dr. Edward Deming, who advises us that: "When the focus of cooperation between competitors is to provide better service to customers, everyone comes out ahead," and that "competition based on the premise of a zero-sum game will destroy a healthy system."

The global challenges our industries face are huge, bigger than any one organization, and even any one institution. It's clear that a ``business as usual'' approach will continue producing losing results. Is it really in the best US interests to require each auto manufacturer to allocate scarce R&D dollars and talent to scramble independently to address some of the common hurdles facing us, instead of working together cooperatively to surmount them? I don't think so. What's important here is answering the question: What share of the global automotive market does the US want to get?

Don Runkel is General Motors Vice President for Advanced Engineering; Rich Marczewski is GM Manager. Rich Marczewski presented this paper to the APS session.