[Senate Hearing 117-901]
[From the U.S. Government Publishing Office]
S. Hrg. 117-901
PROMOTING AND INVESTING IN SMALL
AMERICAN MANUFACTURERS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON OCEANS, FISHERIES, CLIMATE
CHANGE, AND MANUFACTURING
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
DECEMBER 13, 2022
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available online: http://www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
57-051 PDF WASHINGTON : 2024
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
MARIA CANTWELL, Washington, Chair
AMY KLOBUCHAR, Minnesota ROGER WICKER, Mississippi, Ranking
RICHARD BLUMENTHAL, Connecticut JOHN THUNE, South Dakota
BRIAN SCHATZ, Hawaii ROY BLUNT, Missouri
EDWARD MARKEY, Massachusetts TED CRUZ, Texas
GARY PETERS, Michigan DEB FISCHER, Nebraska
TAMMY BALDWIN, Wisconsin JERRY MORAN, Kansas
TAMMY DUCKWORTH, Illinois DAN SULLIVAN, Alaska
JON TESTER, Montana MARSHA BLACKBURN, Tennessee
KYRSTEN SINEMA, Arizona TODD YOUNG, Indiana
JACKY ROSEN, Nevada MIKE LEE, Utah
BEN RAY LUJAN, New Mexico RON JOHNSON, Wisconsin
JOHN HICKENLOOPER, Colorado SHELLEY MOORE CAPITO, West
RAPHAEL WARNOCK, Georgia Virginia
RICK SCOTT, Florida
CYNTHIA LUMMIS, Wyoming
Lila Helms, Staff Director
Melissa Porter, Deputy Staff Director
George Greenwell, Policy Coordinator and Security Manager
John Keast, Republican Staff Director
Crystal Tully, Republican Deputy Staff Director
Steven Wall, General Counsel
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SUBCOMMITTEE ON OCEANS, FISHERIES, CLIMATE CHANGE,
AND MANUFACTURING
TAMMY BALDWIN, Wisconsin, Chair DAN SULLIVAN, Alaska, Ranking
RICHARD BLUMENTHAL, Connecticut TED CRUZ, Texas
BRIAN SCHATZ, Hawaii DEB FISCHER, Nebraska
EDWARD MARKEY, Massachusetts MARSHA BLACKBURN, Tennessee
GARY PETERS, Michigan RON JOHNSON, Wisconsin
BEN RAY LUJAN, New Mexico TODD YOUNG, Indiana
C O N T E N T S
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Page
Hearing held on December 13, 2022................................ 1
Statement of Senator Baldwin..................................... 1
Statement of Senator Sullivan.................................... 2
Statement of Senator Blumenthal.................................. 34
Statement of Senator Young....................................... 36
Statement of Senator Blackburn................................... 39
Witnesses
Carrie Hines, President and CEO, American Small Manufacturers
Coalition...................................................... 4
Prepared statement........................................... 5
Dr. Kelvin H. Lee, Ph.D., Institute Director, National Institute
for Innovation in Manufacturing Biopharmaceuticals, Gore
Professor of Chemical and Biomolecular Engineering, University
of Delaware.................................................... 9
Prepared statement........................................... 11
C. Todd Zakreski, President, Husco Automotive LLC and Board
Chair, Wisconsin Manufacturing Extension Partnership (WMEP).... 18
Prepared statement........................................... 20
Sujai Shivakumar, Ph.D., Director and Senior Fellow, Renewing
American Innovation Project, Center for Strategic and
International Studies.......................................... 21
Prepared statement........................................... 24
David Vasko, Senior Director, Advanced Technology, Rockwell
Automation..................................................... 26
Prepared statement........................................... 28
PROMOTING AND INVESTING IN SMALL
AMERICAN MANUFACTURERS
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TUESDAY, DECEMBER 13, 2022
U.S. Senate,
Subcommittee on Oceans, Fisheries, Climate Change,
and Manufacturing,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2 p.m., in
room SR-253, Russell Senate Office Building, Hon. Tammy
Baldwin, Chairman of the Subcommittee, presiding.
Present: Senators Baldwin [presiding], Blumenthal, Peters,
Sullivan, Fischer, Blackburn, and Young.
OPENING STATEMENT OF HON. TAMMY BALDWIN,
U.S. SENATOR FROM WISCONSIN
Senator Baldwin. The Subcommittee on Oceans, Fisheries,
Climate Change and Manufacturing will come to order. Good
afternoon. Today's hearing is on ``Promoting and Investing in
Small American Manufacturers.'' And I could not be more excited
to discuss this topic with our expert panel of witnesses and my
colleagues on the Subcommittee who will be coming in and out
throughout the afternoon.
I want to extend a warm welcome to all of our witnesses and
thank you all for traveling to Washington to discuss this very
important topic. I also want to thank the Chair of the Full
Committee, Maria Cantwell, and Ranking Member of the Full
Committee, Roger Wicker, and my Ranking Member on this
Subcommittee, Dan Sullivan, and their staffs for their ideas,
support, and encouragement during the development of this
hearing.
This hearing will highlight investments authorized in the
CHIPS and Science Act, intended to help manufacturers better
compete in the global marketplace. As appropriators work on a
deal for the Fiscal Year 2023, I hope that they will keep the
value of these investments in mind.
As an appropriator myself, I know I will. Wisconsin is one
of the top manufacturing states in the Nation in terms of the
percentage of employment in manufacturing. And I have the great
fortune to work with many manufacturers in Wisconsin of all
sizes during my time in Congress.
This hearing's focus on small manufacturers is of
particular interest to me, not just because of how many there
are in my state, but also because of the crucial role small
manufacturers play in making our supply chains more robust.
Department of Commerce programs like the Manufacturing
Extension Partnership provide incredible value to small and
medium sized manufacturers by helping them become more
productive, defend against cyber-attacks, or upskill their
workforces, which in turn makes our economy more resilient.
I am also very interested in hearing from our witnesses
about how we can encourage domestic production of technologies
developed at Federal agencies and in particular our
Manufacturing USA institutes.
I recently introduced legislation with Senator Portman
called the ``Invent Here, Make Here Act'' that tightens the
waiver process for foreign manufacturers to license federally
funded inventions at the Department of Homeland Security.
The legislation was inspired by media reports of
breakthrough battery technology invented in a Federal lab being
licensed to a Chinese manufacturer. I hope to introduce broader
legislation for the Commerce Committee's consideration next
Congress and look forward to working with my colleagues on that
issue.
Finally, I hope to discuss how funding regional innovation
hubs can create virtuous cycles of reshoring, that can shorten
our Nation's supply chains. As we learned during the pandemic,
it only takes a few key inputs to go missing for whole
production lines to grind to a halt.
With that--are you ready? I will turn to Ranking Member Dan
Sullivan for his opening statement.
STATEMENT OF HON. DAN SULLIVAN,
U.S. SENATOR FROM ALASKA
Senator Sullivan. Thank you, Madam Chair. And I am pleased
to welcome our distinguished witnesses today as our
subcommittee focuses on the Department of Commerce's
manufacturing programs that will increase our Nation's
competitiveness. And I think this is an area that we are seeing
increasingly bipartisan agreement on and bipartisan focus on,
certainly here in the U.S. Senate.
And part of the reason is, is because of the supply shocks
that our country has faced over the last several years, but
particularly during the pandemic, and how much manufacturing
resides outside of the United States that could be brought
back, that has been impacted by these supply shocks.
And I think it has been an awakening for our country. It
has been an awakening, certainly when I saw and remember during
the pandemic, senior Chinese Communist Party officials talking
about the stranglehold they had over key pharmaceuticals. And I
still have this quote memorized, we are going to send the
United States into a ``mighty sea of coronavirus.''
One of these great subtle statements by the Chinese
Communist Party officials about how they are going to leverage
key areas of manufacturing to potentially harm our Nation.
There is no American who wants to be in that kind of vulnerable
position, and that is exactly what happened.
And it is something that we need to wake up to, and I am
very pleased with my colleague, Senator Baldwin, to be focusing
on these issues. I think one of the areas that we need to be
focusing on, and I certainly want the witnesses to expound upon
that, is leveraging Manufacturing USA in the manufacturing
extension partnership programs, not just in the traditional
areas of manufacturing in the United States, but in all parts
of our country. Certainly as a Senator from Alaska, I am
interested in that.
We have over 1,000 manufacturers that utilize the
Manufacturing Extension Partnership Center to improve their
businesses, but we want to be able to see how, in what way we
can expand that.
But at the end of the day, what I am really interested in,
particularly hearing from our witnesses, is the ability of the
United States to bring back manufacturing and be less reliant,
particularly on countries that I view as not only competitors,
but in many ways adversaries, China being the number one in
that category.
So I look forward to hearing from the witnesses. I again
want to thank my colleague, Senator Baldwin, the Chair of this
Subcommittee, on calling this hearing. And I really believe
this is a strong area of bipartisan support that we can make a
lot of progress on in the upcoming Congress, that unites
Americans on areas that we all really care about, good paying
jobs, strong economy, strong national security, and we need to
do that.
So thank you again, Madam Chair, and I look forward to the
witnesses' statements.
Senator Baldwin. Well, thank you, Ranking Member Sullivan.
I want to start by introducing today's witnesses. Today's
witness panel brings broad and deep knowledge of manufacturing
and innovation to this hearing. I am so appreciative of all of
you taking the time to come here and attend.
Ms. Carrie Hines is the President and CEO of the American
Small Manufacturers Coalition, an association of the Nation's
manufacturing extension partnership centers.
Dr. Kelvin Lee is an Institute Director for the National
Institute for Innovation in Manufacturing Biopharmaceuticals, a
Manufacturing USA institute. He is also the Gore Professor of
Chemical and Biomolecular Engineering at the University of
Delaware.
Dr. David Vasko is the Senior Director of Advanced
Technology at Rockwell Automation, based in Milwaukee,
Wisconsin. He is also a member of the Commerce Department's
Visiting Committee on Advanced Technology.
Dr. Sujai Shivakumar, am I close? Shivakumar. OK. Is
Director of the Renewing American Innovation Project at the
Center for Strategic and International Studies. The project
aims to restore and maintain the United States' leadership in
science, technology, and innovation.
And last but certainly not least, Mr. Todd Zakreski is the
President of HUSCO Automotive, based in Waukesha, Wisconsin.
Additionally, as the Board Chair of the Wisconsin MEP, Mr.
Zakreski's knowledge and advocacy have been invaluable to me in
my work supporting Wisconsin manufacturers.
Thank you again all for being here. And I am going to turn
it over to Ms. Hines for her testimony, and then we can proceed
along the line, not necessarily in the order that I introduced
all of you. Go ahead, Ms. Hines.
STATEMENT OF CARRIE HINES, PRESIDENT AND CEO,
AMERICAN SMALL MANUFACTURERS COALITION
Ms. Hines. Thank you. Thank you so much for the opportunity
to testify today, and for focusing on the vitally important
issue of promoting and investing in American small
manufacturers.
As you said, my name is Carrie Hines and I am the President
and CEO of the American Small Manufacturers Coalition, the
trade association of the Nation's manufacturing extension, or
MEPs, centers and partners. The NIST MEP program is a Federal
public, private partnership managed by NIST that provides
small, medium sized manufacturers technology based services
through not for profit organizations located in every state and
Puerto Rico.
MEP's role in the manufacturing industry is critical to the
Nation's security and economic prosperity. MEP works with more
than 34,000 manufacturers annually, 79 percent of which have
fewer than 100 employees.
In the most recent surveyed year, MEP helped these clients
create and retain $14.4 billion in sales and more than 125,000
jobs. These incredible impacts result in a 13.6 to 1 return to
the Federal treasury.
The CHIPS and Science Act included new authorities to
expand the MEP program by providing additional expansion awards
above and beyond the center's based funding. These expansion
awards give the centers the flexibility they need to help
rebuild and modernize our industrial capacity.
They allow the MEP centers to provide services to small
manufacturers to benefit the manufacturing industry and the
Nation as a whole, but that are difficult for small
manufacturers to invest in individually--services such as
workforce programs, supply chain intelligence and connections,
and technology applications, including cybersecurity.
The U.S. manufacturing industry faces three primary
workforce challenges, recruiting enough workers, training new
workers, and upskilling current workers so that they can adopt
state-of-the-art capabilities. MEP centers have done this for
decades by leveraging existing state and local resources.
But the new authorities allow centers to combine their
efforts, share best practices and resources, and leverage each
other's investment to scale up workforce programs nationwide.
These programs include raising awareness about manufacturing
careers among K-through-12 students and young adults,
apprenticeships, and even manufacturing training programs for
prisoners, and teaching workers new skills such as using
artificial intelligence, smart manufacturing tools including
robots and cobots, and how to follow new industry safety rules
and regulations.
Small manufacturers are vital to domestic supply chains.
MEP plays a critical role in ensuring they remain resilient and
competitive. During the pandemic, America depended on its
manufacturers more than ever before, and our manufacturers rose
to the occasion, displaying unprecedented agility and
innovation in extremely difficult circumstances.
Nevertheless, the pandemic highlighted two critical supply
chain needs: maximizing the Nation's domestic manufacturing
capabilities and enhancing resilience with risk mitigation. The
pandemic, natural disasters, and recent international conflict
have shown how critical supply chains are in bringing products
to market. MEP centers across the country help maximize small
manufacturers capabilities.
For example, in the pandemic, MEP centers helped
manufacturers retool to provide needed PPE, such as helping
clothing manufacturers shift to make masks, and distilleries
retool to make hand sanitizer, which may be why they said it
smelled like tequila. They also find domestic suppliers.
Recently, in the wake of Hurricane Ian, in just 6 hours,
the MEP National Network helped a Florida-based nonprofit
organization find critical supply--critical ventilator supplies
to stock field hospitals and clinics in just 6 hours.
In addition to the CHIPS and Science Act, the Inflation
Reduction Act and the Infrastructure Investment and Jobs Act
provide tremendous opportunities for small manufacturing supply
chain, particularly in the energy sector.
Each piece of legislation intends to enhance domestic
manufacturing, bring back critical industries, or foster an
environment to enhance and support new industries, which are
essential for homeland security and national defense.
The success of these bills is dependent on a properly
skilled workforce and robust domestic supply chain that
includes small manufacturers. It is critical that Congress
promote and invest in small manufacturers by expanding its
investment in MEP to support it.
An area of increased concern is small manufacturers'
vulnerability to cyber-attacks. Manufacturers of all sizes are
relying more on data, information, and technology. The biggest
challenges that small manufacturers face in implementing
effective cybersecurity are a lack of resources, and awareness,
and time.
MEP centers are ideally suited to address these challenges
by acting as a primary source for cybersecurity information and
best practices for manufacturers. MEPs already work with small
manufacturing clients on a small scale to implement the NIST
cybersecurity framework by leveraging other state and local
programs and incentives.
The CHIPS and Science Act provides financial assistance for
MEP to expand these services for both awareness and
implementation through the Expansion Work Program. The MEP
National Network has made an indelible impact on the small
manufacturing community over its nearly 35 year history.
Thanks to the CHIPS and Science Act, MEP is positioned to
take the U.S. manufacturing industry to the next level. Given
its reach, connectivity, and impact, this cannot be done
without increased Federal funding to implement the new
expansion award authority.
Thank you.
[The prepared statement of Ms. Hines follows:]
Prepared Statement of Carrie Hines, President and CEO,
American Small Manufacturers Coalition
Thank you for the opportunity to testify today, and for focusing on
the vitally important issue of promoting and investing in small
American manufacturers. My name is Carrie Hines, and I am the President
and CEO of the American Small Manufacturers Coalition (ASMC), the trade
association of the Nation's manufacturing extension agents or
Manufacturing Extension Partnership (MEP) centers and partners.
The Manufacturing Extension Partnership Program
The MEP program is a Federal public-private partnership that
provides small-and medium-sized manufacturers (SMMs) technology-based
services they need to thrive in today's global economy and create good-
paying manufacturing jobs. MEP is managed by the National Institute of
Standards and Technology (NIST) and implemented through a network of
industry-led centers located in every state. MEP centers are not-for-
profit corporations that employ industry experts who work directly with
manufacturers. MEP's role in the manufacturing industry is critical to
national security and the Nation's economy. Manufacturing is one of our
country's greatest economic strengths, producing more than 11 percent
of GDP.\1\ Nearly 99 percent of manufacturing firms in America are
considered small, with fewer than 500 employees.\2\
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\1\ See NIST, ``Facts About Manufacturing Infographic,'' available
at https://www.nist.gov/mep/manufacturing-infographics/facts-about-
manufacturing.
\2\ See National Association of Manufacturers, ``Facts About
Manufacturing,'' available at https://www.nam.org/facts-about-
manufacturing/.
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As a public-private partnership, MEP delivers a high return on
investment to taxpayers. The Upjohn Institute for Employment Research
conducted a study of MEP in 2020 and found that the program generates a
13.6:1 return on investment.\3\ According to an annual survey conducted
by an independent firm, in 2021 MEP clients reported $14.4 billion new
and retained sales and the creation or retention of 125,746 jobs.\4\
Considering that the average U.S. manufacturing worker earned $95,990
in wages and benefits in 2021, MEP clients are economic drivers in
their communities.\5\ MEP clients are also increasing their capacity
for the production of goods. Since 1988, ``MEP played a critical role
in supporting the U.S. economy and worked with over 132,400
manufacturers, leading to $138.8 billion in new sales, $26.2 billion in
cost savings and helped create and retain over 1.45 million jobs.'' \6\
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\3\ See ``The National-Level Economic Impact of the Manufacturing
Extension Partnership (MEP): Estimates for Fiscal Year 2020,'' at 2.
\4\ See NIST, ``MEPNN FY21 Impacts Overview,'' available at https:/
/www.nist.gov/system/files/documents/2022/02/15/
MEPNN%20FY21%20Impacts%20Overview_FINAL-508.pdf, at 1.
\5\ See National Association of Manufacturers, ``Facts About
Manufacturing,'' available at https://www.nam.org/facts-about-
manufacturing/.
\6\ NIST, ``National Institute of Standards and Technology:
National Technical Information Service Fiscal Year 2023 Budget
Submission to Congress,'' available at https://www
.commerce.gov/sites/default/files/2022-03/FY2023-NIST-NTIS-
Congressional-Budget-Submission.pdf, at p. NIST-123.
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CHIPS and Science Act Expansion Awards
Growing and expanding the MEP program is essential as a matter of
national security and economic prosperity. The CHIPS and Science Act
included new authorities to expand the MEP program by providing
additional ``expansion awards'' above and beyond a Center's base
funding. These awards would enable Centers to provide expanded services
in critical areas such as workforce, supply chain, advanced
manufacturing, and cybersecurity. The expansion awards give the Centers
the flexibility they need to help rebuild and modernize our industrial
capacity.
The new authorities help MEP provide services to small
manufacturers that benefit the manufacturing industry and the Nation as
a whole, but that are difficult for manufacturers to budget for because
they do not directly impact each individual manufacturer's bottom
line--services such as workforce programs, supply chain intelligence/
connections, and technology application. Because these capabilities are
important for the country to develop, and because manufacturers are not
in a position to invest in them individually, it is appropriate that
the CHIPS and Science Act enabled MEP to invest in these areas and for
that investment to be exempt from MEP's ordinary cost-share
requirements.
Workforce
The U.S. manufacturing industry faces three primary workforce
challenges: recruiting enough workers, training new workers, and
upskilling current workers so that they can adapt to state-of-the-art
capabilities. MEP Centers have been addressing each of these challenges
in their work with small and medium manufacturers across the country
for decades by leveraging existing state and local resources. But the
new authorities allow the Centers to combine their efforts, share best
practices and programmatic resources, and further leverage each other's
investment to scale-up workforce programs nationwide.
According to MEP client survey data, 63 percent of small and medium
manufacturers report that employee recruitment was one of their top
three business challenges in 2021.\7\ MEP Centers address the Nation's
manufacturing industry recruiting challenge in several ways. Centers
educate K-12 students about manufacturing and build awareness among
students and young adults about high-quality careers available in
manufacturing. Centers also help manufacturers develop videos and other
recruiting materials to help them raise their profiles in the local job
market.
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\7\ See ``MEPNN FY21 Impacts Overview,'' https://www.nist.gov/
system/files/documents/2022
/02/15/MEPNN%20FY21%20Impacts%20Overview_FINAL-508.pdf, at 1.
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Training is another key way that MEP Centers address the industry's
workforce challenges. A pre-COVID Deloitte report predicted that ``over
the next decade nearly 3\1/2\ million manufacturing jobs likely need to
be filled. The skills gap is expected to result in 2 million of those
jobs going unfilled.'' \8\ If anything, the situation is worse post-
COVID. Many job seekers lack the basic employability and mechanical
aptitude necessary for manufacturing employment. MEP Centers promote
high school manufacturing apprenticeships, develop curricula with
community colleges for manufacturing credential programs, engage in
virtual reality-based manufacturing training, and provide manufacturing
training in prison to prepare incarcerated individuals to return to
society with valuable skills.
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\8\ ``The Skills Gap In Manufacturing, 2015 and Beyond,'' https://
www.themadeinamericamove
ment.com/wp-content/uploads/2017/04/Deloitte-MFG-Institute.-The-Skills-
Gap-in-the-US-MFG-21015-and-Beyond.pdf, at 2.
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Because the industry evolves rapidly, upskilling current employees
is vitally important. SMMs need new and upskilled workers with training
in ``Industry 4.0'' advanced manufacturing and technology (particularly
as American-made manufacturing grows under recent Federal legislation
and initiatives), while at the same time a new generation of workers
needs better training and skills, particularly individuals most
impacted by industrial and service sector changes, coal community
decline, and post-COVID employment disruptions. MEP Centers help
manufacturers train employees in a wide variety of cutting-edge
technologies, such as: using artificial intelligence to maximize the
value of the data generated by smart manufacturing tools; using machine
learning to baseline equipment performance, identify and alert machine
abnormalities; training employees on new safety rules and regulations;
and operating 3D printers and other advanced tools.
Supply Chain
During the pandemic, America depended on its manufacturers more
than ever before--and our manufacturers rose to the occasion,
displaying unprecedented agility and innovation in extremely difficult
circumstances. Nevertheless, the pandemic highlighted two critical
supply chain needs: first, maximizing the Nation's domestic
manufacturing capabilities, especially for critical products; second,
enhancing resilience by identifying and eliminating single points of
failure. With additional CARES Act funding of $50 million, MEP Centers
were able to serve 5,396 manufacturers with 7,506 projects. Of these
manufacturers, nearly half had never worked with MEP before. The Alaska
MEP Center, for example, helped match those in need of PPE with over 70
local manufacturers producing PPE and helped a number of Alaskan
manufacturers covert their operations to produce PPE.
The pandemic, natural disasters and recent international conflict
also brought to light the criticality of supply chains in bringing
products to market. MEP's unique National Network and reach to the
Nation's small manufacturers puts it in prime position to help mitigate
risk and respond to the industry's needs, sometimes with just hours'
notice. Recently, FloridaMakes (Florida's MEP Center) received an
urgent request for defibrillators and related accessories needed to
stock field clinics and hospitals in the Southwest Florida region in
the wake of Hurricane Ian. FloridaMakes immediately forwarded the
request to MEP Centers nationwide and within hours, MassMEP
(Massachusetts's MEP Center) located a Massachusetts-based supplier who
could provide the parts needed. Within just 6 hours of receiving the
request, a $1.9 million contract was signed and executed between the
Florida non-profit establishing the field clinics and the
Massachusetts-based manufacturer. It is no exaggeration to say that the
MEP National Network played a critical role at a time of great need for
the people of Florida.
The CHIPS and Science Act includes authority for a Supply Chain
Database, funding for which can be provided through Expansion Awards.
The database will help MEP realize its full potential as a nationwide
manufacturing supply chain intelligence network.
Hydraulic.net, a Florida-based manufacturer and distributor of
hydraulic pumps and other components for agriculture equipment, had
been sourcing some cast-iron and steel parts from a supplier in the
Kharkiv region of Ukraine, and was forced to scramble for new sources
once Russia invaded in February 2022. Florida's MEP Center looked for
sources in Florida and was not able to identify any appropriate casting
suppliers that met their needs, but the Center used a national supply
chain platform to link the manufacturer with casting houses in Illinois
and Indiana. As a result, they were able to source their castings
domestically.
To help U.S. manufacturers comply with Buy American requirements,
the MEP National Network connects them to domestic suppliers through
its Supplier Scouting service, which leverages MEP's extensive
nationwide supplier relationships and knowledge of U.S. manufacturing
capabilities. The Wisconsin Center for Manufacturing & Productivity
helped Northstar Medical Radioisotopes work within the structures of
the Buy American policy to bring domestically manufactured,
environmentally sound molybdenum-99 (Molly 99) to the U.S. market.
Molly 99 is critical for medical imaging and diagnosis--and is
traditionally sourced from foreign producers. Northstar Medical
Radioisotopes used a cooperative agreement from the DoE to develop a
new approach to manufacture this critical material. The MEP in
Wisconsin helped the company negotiate the Buy American requirements
and connect it to new medical markets.
Energy
In addition to the CHIPS and Science Act, the Inflation Reduction
Act and the Infrastructure Investment and Jobs Act provide tremendous
opportunities for the small manufacturing supply chain, particularly in
the energy sector. Commitments at every level of American government
plus robust market forces are bringing increasing demand for
manufactured goods and innovative technologies for a ``new energy
economy'' in the sectors of renewable energy, hydrogen power, low-
carbon power, smart grid improvements, green buildings, electric
vehicles, energy efficiency, and other smart energy and reduction
innovations.
While the opportunities for manufacturing, supply chain expansion,
and good jobs are tremendous, the challenge is that most SMMs are based
in traditional industry sectors, far behind the curve on green
manufacturing and smart energy approaches, disconnected from new energy
economy supply chains, unaware about how new Federal stimulus programs
will operate, and lacking a skilled workforce to fulfill these emerging
markets. For example, the Illinois Manufacturing Excellence Center (the
Illinois MEP Center) has 17 U.S. Department of Labor registered
apprenticeships, including four focused on jobs in for the electric
vehicle supply chain. There is a need to rapidly expand these types of
rigorous and industry-relevant training models, which can be
accomplished through the Expansion Award program. Busy manufacturers do
not have the time or capacity to harness these new energy economy
opportunities alone, and need robust technical assistance to get there.
MEP provides that technical assistance through the programs
described above. There is a key opportunity now to ensure that the new
energy economy's technologies and products are manufactured by workers
in America. The MEP Centers across the U.S. will help manufacturers
navigate the new energy economy, enter new supply chains, retool
factories, and make the parts and products needed for a diverse clean
energy economy--all while ensuring that the future of manufacturing is
cleaner and energy smart.
Advanced Manufacturing Services
The MEP program is uniquely positioned to make significant advances
in manufacturers' implementation of advanced technology given the
program's national reach. National labs, manufacturing institutes and
higher education's technology labs do a great job of creating advanced
technology and research but lack the national reach that the MEP
program possesses to get that technology to industry. The expanded
authority in the CHIPS and Science Act would allow MEP Centers to bring
that technology and research to the manufacturer by partnering with
technology demonstration labs to showcase how technology can be applied
to improve manufacturing processes, increasing the industry's
competitiveness on a manufacturer-by-manufacturer level. The MEP
National Network's comprehensive coverage enables this to take place on
a truly national scale.
Cybersecurity
An area of increased concern is small manufacturers' vulnerability
to cybersecurity attacks. Manufacturers of all sizes are relying more
on data, information and technology to operate their business, all of
which can leave them vulnerable to cyber attacks. The biggest
challenges that small manufacturers face in implementing effective
cybersecurity are a lack of awareness, time, and resources. MEP Centers
are ideally suited to address these challenges by acting as the primary
source for cybersecurity information and best practices for
manufacturers. MEP Centers already work with small manufacturing
clients to implement the NIST cybersecurity framework.
For example, since about 80 percent of the work at Michigan-based
Linear Motion is for the Department of Defense (DoD), it was imperative
that the company follow DoD's requirements to achieve Cybersecurity
Maturity Model Certification (CMMC). The Michigan Manufacturing
Technology Center conducted a cybersecurity assessment of its
requirements to comply with the Defense Federal Acquisition Regulation
Supplement (DFARS) and implementation of NIST 800-171. The Center then
conducted several days of mentoring to help Linear Motion satisfy the
necessary requirements to successfully reach CMMC Level 3. As a result,
Linear Motion retained $16,000,000 in sales and 128 retained jobs.
MEP's work in cybersecurity has been recognized in past NDAA
legislation authorizing the DoD to provide financial assistance to
expand that capacity.
The CHIPS and Science Act provides financial assistance for MEP to
expand these services for both awareness and implementation through the
Expansion Award program.
Conclusion
The MEP National Network has made an indelible impact on the small
manufacturing community over its nearly 35-year history. Thanks to the
CHIPS and Science Act, MEP is positioned to take the U.S. manufacturing
industry to the next level given its reach, connectivity and impact.
This cannot be done without increased Federal funding to implement the
new Expansion Award authority.
The CHIPS portion of the bill will challenge the American small
manufacturing community to provide a properly skilled workforce and
robust supply chain in support of increased semiconductor
manufacturing. This challenge can become an opportunity for small
manufacturers, if they are properly prepared. With Expansion Award
authority and funding, the MEP National Network can provide on a
national scale the services that the Nation's small manufacturers need.
Senator Baldwin. Thank you, Ms. Hines. Next, Dr. Lee.
STATEMENT OF DR. KELVIN H. LEE, Ph.D.,
INSTITUTE DIRECTOR, NATIONAL INSTITUTE FOR
INNOVATION IN MANUFACTURING BIOPHARMACEUTICALS,
GORE PROFESSOR OF CHEMICAL AND BIOMOLECULAR
ENGINEERING, UNIVERSITY OF DELAWARE
Dr. Lee. Chair Baldwin, Ranking Member Sullivan,
distinguished members of the Subcommittee, good afternoon. I am
honored to be here. My name is Kelvin Lee, Institute Director
at NIIMBL, the National Institute for Innovation in
Manufacturing Biopharmaceuticals, a Commerce-sponsored
manufacturing innovation institute, and one of 16 current
institutes in the Manufacturing USA network.
Manufacturing is central to America's economic power and
national security, and historically, we have led the world in
the invention of and manufacturing of advanced technologies.
However, we have lost our leadership position in manufacturing
over the past two decades, and this is a threat to our economic
prosperity and national security.
We invent things here, but we make them elsewhere and
import them. Manufacturing USA Program's purpose is to ensure
our global competitiveness and advanced manufacturing
innovation in jobs. It comprises 16 large public, private
partnerships in different technology sectors.
Each is a pre-competitive ecosystem, advancing the
development of technologies and a skilled workforce. Small
companies, who are the heart of innovation for so many
industries, work inside institutes to push technologies across
that valley of death from proof of concept into commercial
products.
Institutes also include State and local governments, MEP
centers, community colleges, universities, companies within the
supply chain, and end user manufacturing companies selling
everything from semiconductors to airplanes to
biopharmaceuticals, just to name a few. Today, more than 2,300
organizations based in all 50 states have joined at least one
of the 16 institutes.
Let's talk about NIIMBL for a minute. Our unique sector
focus is biopharmaceutical manufacturing, the technologies and
workforce needed to leverage the power of biology to make
lifesaving medicines.
Biopharmaceuticals include everything from therapeutic
proteins that treat autoimmune diseases to the latest cell
therapies that some see as a cure for cancer. While the U.S. is
an R&D leader in this space, the U.S. biopharma trade deficit
went from $3.5 billion in 2000 to more than $85 billion in
2020, just two decades later.
We invent biopharmaceuticals here and then we import them
from Ireland, Switzerland, Singapore, and other countries.
NIIMBL is focused on helping small U.S. companies grow and
helping big companies meet their technology needs through
precompetitive MEP collaboration.
We do this by advancing paradigms such as continuous
manufacturing, by developing and deploying workforce training
programs around the country. Speaking of workforce, we cannot
meet our global competitiveness challenges of today by
advancing technology alone.
All Americans should have an opportunity to gain the skills
needed to work in advanced manufacturing careers in factories
near their communities, something that is the heart of a
resilient economy. And workforce development needs aren't only
a concern for large companies.
Small companies need skilled, agile workforce. Even the
U.S. Government would benefit directly and indirectly from
people acquiring industry relevant manufacturing skills.
America's longstanding ability to meet and overcome any crisis
is really rooted in a spirit of innovation, manufacturing
capability, and a people with skills and a commitment to
succeed.
With more technologically advanced competitors, we need a
strategic set of policies that ensure our national security,
economic health, and energy security. And I have four
suggestions, described in more detail in my written testimony,
to offer.
First, Manufacturing USA is an established, effective, and
proven program promoting U.S. competitiveness. It has a 2.8 to
1 private sector co-investment for every Federal dollar and a
substantial untapped potential. I urge this subcommittee to
work with appropriators to ensure that there are resources to
better support all of the institutes, and ensure that new
initiatives build upon successes, maximize coordination, and
minimize duplication.
Second, as technologies mature in an institute, they must
be demonstrated in a production relevant environment, yet there
are few, if any, such facilities available. Scale up
infrastructure would support small companies advancing
technologies and could provide the U.S. with a world leading
workforce training capability.
I recommend the Subcommittee authorize DOC to fund the
creation of specialized research and testing facilities. Third,
any manufacturing innovation strategy without an emphasis on
workforce development is going to fail. Public interest in
manufacturing careers lags because of the perception that
manufacturing is done in dirty, dark, and dangerous
environments when in fact it is really done today in
environments that are clean, cool, and quiet.
The U.S. Government has the resources and the power to
correct this perspective, so I recommend the Subcommittee
explore ways to expand institute workforce development
programs, including a national campaign to promote
manufacturing careers to all Americans.
Finally, I want to urge the Subcommittee to find ways to
more widely implement the use of other--of existing other
transactional authorities to contract with Commerce-sponsored
institutes. Because contracting vehicles such as cooperative
agreements can create some disincentives to companies,
especially small companies, from engaging with institutes. I
want to thank you for the opportunity to share my perspective.
Our country's significant investment in early stage
research, together with an entrepreneurial and innovative
mindset and a skilled workforce, made us the greatest country
in the history of the planet. But the world is changing,
technologies are advancing, and other countries are
implementing policies that have eroded our leadership.
So as Marv Levy, Hall of Fame, NFL Coach of the Buffalo
Bills from the 80s and 90s is attributed to have said, ``if you
don't change with the times, the times are going to change
you.''
[The prepared statement of Dr. Lee follows:]
Prepared Statement of Dr. Kelvin H. Lee, Ph.D., Institute Director,
National Institute for Innovation in Manufacturing Biopharmaceuticals,
Gore Professor of Chemical and Biomolecular Engineering,
University of Delaware
Introduction
Chair Cantwell, Ranking Member Wicker, Chair Baldwin and Ranking
Member Sullivan, and distinguished members of the subcommittee good
afternoon. I am honored, and humbled, to be invited to share a
perspective on the some of the important Department of Commerce
investments and policies that help small and medium sized manufacturers
compete effectively in today's global marketplace. Thank you for the
opportunity to be with you today.
My name is Kelvin Lee. I am the Institute Director at NIIMBL, the
National Institute for Innovation in Manufacturing Biopharmaceuticals,
a Department of Commerce-sponsored manufacturing innovation institute.
NIIMBL is one of 16 current institutes in the Manufacturing USA
Network. NIIMBL's unique sector focus is on biopharmaceutical
manufacturing innovation--the technologies and workforce needed to
leverage the power of biology to make life-improving and life-saving
medicines. Biopharmaceutical medicines include everything from
therapeutic proteins and antibodies that treat autoimmune and
neurodegenerative diseases, as well as the latest cell therapies that
some see as cures for pediatric cancer, in addition to gene therapies
where a single dose of medicine can be the difference between a normal
life or several difficult years for a newborn child ultimately
resulting in death from a motor neuron disease.
American Manufacturing and the Manufacturing USA Program
Manufacturing is central to America's economic power and national
security. It accounts for about 11 percent of the gross domestic
product [1,2] and employs almost 13
million people in good paying jobs [3]. Historically, the
U.S. has led the world both in basic research that leads to new
technologies, as well as in the manufacturing of high-value advanced
technology products such as computer chips, aircraft, and medicines.
However, U.S. leadership in advanced technology industries is not
guaranteed [4] and over the past two decades, our country
has lost its leadership position in manufacturing. I believe this loss
of advanced manufacturing leadership is a threat to our economic
prosperity and national security. We invent things here, but they are
made elsewhere. I think all of us who have experienced the last two
years of limited product availability because of supply chain issues
can appreciate the benefits of inventing things here and making things
here. I want to emphasize how important it is that we make things here.
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\[1]\ https://data.worldbank.org/indicator/NV.IND.MANF.ZS
\[2]\ https://www.brookings.edu/research/global-manufacturing-
scorecard-how-the-us-compares-to-18-other-nations/
\[3]\ https://www.nam.org/facts-about-manufacturing/
\[4]\ https://itif.org/publications/2021/11/22/going-going-gone-
stay-competitive-biopharmaceuticals-america-must-learn-its/
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The Manufacturing USA Program, authorized by the Revitalize
American Manufacturing and Innovation Act of 2014, as
amended,[5] establishes large-scale public-private
partnerships to drive manufacturing innovation for advanced technology
products. The purposes of the program include: improving
competitiveness of U.S. manufacturing; stimulating U.S. leadership in
advanced manufacturing research, innovation, and technology;
facilitating the transition of innovative technologies into scalable,
cost-effective, and high-performing manufacturing capabilities;
facilitating access by manufacturing enterprises to capital-intensive
infrastructure; and accelerating the development of an advanced
manufacturing workforce; among others.
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\[5]\ 15U.S.C.Sec. 278s
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Each of the Manufacturing USA innovation institutes is a large-
scale public-private partnership that creates a precompetitive
ecosystem to advance technologies that have already demonstrated proof
of concept but have not been matured and de-risked enough to be adopted
into commercial manufacturing processes. Many, but not all, of these
innovative technologies are being cultivated by small and medium
enterprises who must navigate the so-called Valley of Death as they
seek financial support to continue to mature their technologies and as
they ultimately look for customers or for opportunities to be acquired
or go public. Manufacturing USA institutes are a proven, efficient, and
effective model for de-risking and demonstrating these innovative
technologies regardless of whether they are being developed by
universities, small companies, or large companies.
The institutes are end-to-end ecosystems for technology and
workforce development in advanced manufacturing. They include state and
local governments, Manufacturing Extension Partnership Centers,
community colleges focused on training the workforce, universities
pursuing applied research and pushing technologies into the
marketplace, small and medium enterprises advancing their technologies,
vendors in the supply chain, and end-user manufacturing companies
selling products such as semiconductors, airplanes, biopharmaceuticals,
automobiles, or robotics systems, just to name a few.
By working inside a Manufacturing USA institute, small companies
can receive non-dilutive funding to collaboratively advance and
demonstrate their technology. Small companies can work with big
companies that may be future customers, they can work with large
suppliers who may be interested to acquire the technology, and they can
work with academic and government scientists to understand and improve
the technology. Academic institutions can ensure that workforce
training programs are aligned with industry needs and that new research
discoveries, often funded by various U.S. Government research agencies,
can be developed into valuable products for society. Large companies
can de-risk new technologies in a shared, precompetitive arena
accelerating their adoption into new products, processes, and services.
And state and local governments pursue their interests for regional
economic development and job creation.
Today more than 2300 organizations, based in all 50 states, have
joined at least one of the 16 Manufacturing USA innovation institutes,
of which 63 percent are manufacturing firms and over 1000 are small to
medium businesses[6]. To give a sense of the scale, in FY
2021 alone, these organizations were actively working on more than 700
technology projects among the institutes and engaged over 90,000 people
in advanced manufacturing workforce skills development.[6]
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\[6]\ https://www.nist.gov/publications/manufacturing-usa-
highlights-report-2022
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The 16 institutes that comprise the Manufacturing USA Network each
have one of three primary sponsoring agencies: the Department of
Commerce, the Department of Defense, or the Department of Energy.
NIIMBL is sponsored by the National Institute of Standards and
Technology (NIST) within the Department of Commerce.
NIIMBL
I realize that my comments have been at a conceptual level, and I
want to share something more specific that speaks to how an institute
can function. NIIMBL is focused on biopharmaceutical manufacturing.
Unlike traditional small molecule generic medicines which are primarily
regulated based on the product itself, biopharmaceuticals are regulated
based on the manufacturing process. The biopharmaceutical manufacturing
industry is extremely risk averse to implement new manufacturing
technologies into their processes because it is difficult to know what
questions health authorities may have about how a new technology works.
Answering those questions can delay speed to market and speed to
patient and as a result, businesses often make decisions to rely on
previously accepted approaches rather than newer approaches.
Moreover, companies must navigate a globally diverse environment of
regulations--each country's health authority maintains its own
expectations and process for approving medicines. Here in the United
States that responsibility rests with the Food and Drug Administration.
In Canada the responsibility rests with HealthCanada, in Switzerland
the responsibility is with SwissMedic, and so on. An approval to use an
updated manufacturing process in one country does not ensure approval
in another country and so relying on older existing approaches is a
better business decision than employing different manufacturing
processes (one conventional and one innovative) to make the same
product for use in different countries. As a result, companies tend to
choose traditional manufacturing technologies and approaches for which
there is broad understanding and experience even if innovative
approaches are available. However, once a new manufacturing technology
is accepted and adopted somewhere within the industry, other companies
are quick to embrace those approaches because they confer improved
efficiency, reliability of supply, and other benefits to companies and
patients. Within our community, we talk about the notion that when it
comes to manufacturing technologies, companies would rather be a fast
second to implement a new technology rather than to be first. By de-
risking technologies, our goal at NIIMBL is to have all companies go
first together.
The NIIMBL mission is to accelerate biopharmaceutical manufacturing
innovation, support the development of standards to enable more
efficient and rapid manufacturing capabilities, and educate and train a
world-leading biopharmaceutical manufacturing workforce, fundamentally
advancing U.S. competitiveness in this industry [7]. While
the U.S. is a global R&D leader in this space, U.S. biopharmaceutical
manufacturing productivity is 40 percent lower in 2020 than it was in
2006--a bigger drop than any other manufacturing sector [5]. The U.S.
biopharmaceutical trade deficit was $3.4 billion in 2000 and an
astonishing $85.7 billion in 2020--only two decades later
[5]. Examples of countries that lead in biopharmaceutical
manufacturing and workforce development include Ireland, United
Kingdom, Germany, Switzerland, and Singapore.
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\[7]\https://www.niimbl.org
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An example of how NIIMBL works. One area in which NIIMBL seeks to
transform biopharmaceutical manufacturing is in the evolution from
batch to continuous processing--an evolution that many other industrial
sectors have gone through such as oil refining, metal smelting, paper,
automobiles, and foods. The benefits of continuous manufacturing relate
to efficiency, flexibility, cost, and speed, among others. The current
state of the art commercial monoclonal antibody manufacturing processes
are batch processes. Bioreactors are used to grow cells that express an
antibody. Those materials are collected, purified, and formulated into
vials, IV bags, or syringes. The resulting antibody treatments are
targeted for patients with various forms of cancer, autoimmune
disorders, metabolic and infectious diseases. It is very likely that
every person in this room has either received an antibody treatment or
knows someone who has had their life improved, or saved, by such a
treatment.
Antibodies can be made by continuous manufacturing. Most of the
companies I talk to have demonstrated that capability in their own
facilities using their proprietary continuous manufacturing processes.
The technology works, yet commercial production is still by batch
processing rather than by continuous processing. To move the field
forward, NIIMBL brings together diverse companies including drug
developers, vendors and suppliers of equipment, small businesses, and
academics, to work on a non-proprietary continuous manufacturing
testbed. Within NIIMBL, hundreds of subject matter experts from dozens
of companies collaborated over the past two years to design a
continuous manufacturing process that is generally (but not
specifically) the same as the proprietary platforms in the company
labs--with the notable exception that the NIIMBL process is shared.
Scientists from different companies can work alongside each other and
with those from academia and government to turn the proverbial knobs on
the equipment to develop a shared understanding of how continuous
manufacturing works. They can take those learnings back inside their
own companies to gain confidence in this approach. Vendors and
suppliers can work on standardized solutions to streamline supply
chains. And small companies with innovative technologies can test their
technologies in the testbed to show the improvements that can be made.
We see the desire by companies, and by the U.S. Government, to
increase domestic biopharmaceutical manufacturing capacity going
forward. Our vision for the future of continuous manufacturing is a
future where there are smaller, less expensive, more flexible, and more
geographically distributed manufacturing facilities. A future where
first-generation continuous manufacturing factories are being built in
the US, while NIIMBL works on demonstrating second and third generation
continuous manufacturing paradigms. This future will result in a more
resilient supply of medicines, increased patient access and more and
better jobs. Our NIIMBL continuous manufacturing testbed, not to
mention 100+ other technology innovation projects at NIIMBL, are going
to help us realize this vision.
Neither NIIMBL, nor any of the Manufacturing USA innovation
institutes, can meet the global competitiveness challenges of today by
advancing technology alone. Our country must also focus on workforce
development. NIIMBL's workforce development programs are designed to
ensure that these new factories, which are ideally geographically
distributed around the country, can be staffed by skilled workers who
are also located around the country. All Americans should have an
opportunity to gain the skills needed to work in this important
industry, or in advanced manufacturing careers generally, and all
Americans should have access to those opportunities near their
communities. Realizing this vision for the American manufacturing
worker is vital to having a resilient economy. But workforce
development needs aren't only a concern for large manufacturing
companies. Small companies need skilled, agile workers; and even the
U.S. Government will benefit directly, and indirectly, from a much
greater focus and investment on people acquiring industry-relevant
manufacturing skills.
Four Considerations for the Future as Opportunities to Improve
America's long-standing ability to meet and overcome any crisis is
rooted in a spirit of innovation, a capability to manufacture, and a
people with skills and a commitment to succeed. Multiple global events
over the past few years have challenged America's ability to respond
rapidly to threats and there are gaps to be addressed to ensure
America's national, economic, health, and energy security in the face
of such threats and the rise of more technologically advanced
competitors. As Chair of the Manufacturing USA Institute Directors
Council, I believe we must create a coordinated set of strategic
investments, including policy and regulatory updates, that build upon
existing institutions, address gaps, and anticipate future needs.
1) Enhance and expand upon the successes of the Manufacturing USA
Program.
The Manufacturing USA Program is an established, effective, and
proven program that promotes U.S. competitiveness. Institutes have
demonstrated significant amounts (2.8 to 1) of non-Federal co-
investment for every Federal dollar [6]. However, our
investment as a nation for advanced manufacturing innovation is
relatively small compared to other countries. Relative to the need,
institutes have very limited resources available to support ecosystem
development and workforce development for their sectors. For example,
the United Kingdom has a similar program called the Catapult Network.
Their broad-based initiative includes three institutes that work in the
same technical area as NIIMBL. Based on a variety of public sources and
press releases, we estimate that the UK government invested about $1
billion USD for biopharmaceutical manufacturing innovation for the
period of 2015 to May 2021. That amount is roughly 12 times more in
absolute dollars than the U.S. investment in NIIMBL over that same time
period and about 90 times more investment than the U.S. when normalized
to GDP. The other Manufacturing USA innovation institutes almost
certainly have similar examples. Other countries want to be the home of
global innovation and manufacturing and the U.S. must scale our
investments appropriately to ensure our economic and national security.
Beyond the issue of funding for any single institute, the
collection of institutes is intended to serve as a network providing a
national competitive advantage. By ensuring complementarity of
technology sectors, institutes can collaborate on technologies allowing
each ecosystem the ability to bring their own expertise and
capabilities to help address each other's needs. For example, CESMII,
the Department of Energy-sponsored Smart Manufacturing Institute could
provide valuable expertise to support NIIMBL's future vision of
continuous manufacturing. As a network, we have not yet achieved our
potential because of resource constraints. Moreover, the authorization
of exciting new innovation-centered programs such as DOC's Regional
Technology and Innovation Hubs and the NSF's Technology, Innovation,
and Partnerships Directorate risks duplication of effort. I urge the
Subcommittee to 1) work with appropriators to ensure there are adequate
resources for DOC to provide more support to all institutes for their
own work and to collaborate across the network, and 2) ensure new
initiatives build upon existing successes, maximize coordination, and
minimize duplication.
2) Capital Investment in Demonstration Facilities.
A key gap in U.S. competitiveness relates to manufacturing scale-up
infrastructure in this country. Manufacturing USA innovation institutes
seek to mature and de-risk technologies to the point of commercial
adoption. However, as a technology matures the cost to make such
demonstrations also increases, largely influenced by the need to test
the technology in real-world manufacturing environments. Such
environments have high utilization rates by companies and therefore are
not available for testing purposes. Investments to create such
infrastructure around the Nation for various sectors, would help
Manufacturing USA innovation institutes move technologies from proof of
concept all the way through commercial realization. Without such
infrastructure, manufacturing technologies may mature to a point, then
move overseas for final demonstration and adoption as competitor
nations benefit from early-stage U.S. technology development. The
ability and investment to establish such specialized research and
testing facilities here in the U.S. will support small manufacturers
de-risking their technology. It can also be the basis for a national
network of workforce training facilities that would provide the U.S.
with world-leading workforce training capabilities. I recommend the
Subcommittee consider explicit language authorizing DOC to invest and
create such specialized research and testing facilities through the
Manufacturing USA Program.
3) Advance a National-Scale Manufacturing Careers Campaign and Program.
I believe that any advanced manufacturing innovation strategy
without a clear emphasis on workforce and talent development will fail.
Current Manufacturing USA innovation institutes have an incredible
range of effective programs that connect people to skills, leading to
careers. NIIMBL's eXperience program partners with historically black
colleges and universities and other minority serving institutions to
introduce students to biomanufacturing careers. Our friends at the DoD-
sponsored LIFT institute run Operation Next, an innovative training and
credentialing program to transition active-duty soldiers nearing the
end of their service into high demand manufacturing fields. The
FlexFactor program run by the NextFlex institute is a highly successful
STEM outreach program to introduce students to advanced manufacturing
technology careers--it's so successful that many other institutes,
including NIIMBL, are working to adapt the FlexFactor framework to
their own industry sector. Despite these great programs, meeting the
workforce needs of today, and tomorrow, can't be done by inspiring or
training on a local level alone. The U.S. needs a significant upgrade
in how we think about manufacturing careers. The impression of dirty,
dark, and dangerous environments still persists, even though, for
example, a biopharmaceutical manufacturing facility is clean, cool, and
quiet. Only the U.S. Government has the resources and power to change
this perspective rapidly. Without such a change, and an available and
ready workforce, companies will continue to build their factories where
they can get talent and that poses risks to our competitiveness. I
understand that solutions to this important question are both within
the Committee's jurisdiction and might also require collaboration with
others. I recommend the Subcommittee explore ways to significantly
expand advanced manufacturing workforce and talent development programs
by Manufacturing USA institutes including a national campaign to
promote manufacturing careers that would be available to all Americans.
4) OTAs: Ensuring Efficient and Effective Use of Federal Resources
Aligned with the Goals.
Across the 16 institutes, there are a variety of contracting
vehicles that have been used by the Department of Commerce, Department
of Defense, and Department of Energy to work with the institutes. Some
of these vehicles are Cooperative Agreements and others rely on Other
Transactional Authority (OTAs). The industry-led nature of the work of
the institutes, including an emphasis on working with small
manufacturers to advance their technologies, is well-aligned with the
concept of OTAs which were established as ways to permit Federal
agencies to work with non-traditional contractors and small businesses
to prototype and advance technologies and allow close collaboration
between the Federal agency and the partner. Our experience is that the
use of Cooperative Agreements is not as efficient nor effective for
working within ecosystems as large as a Manufacturing USA innovation
institute such as NIIMBL, and its use can create disincentives to
participation by companies. I urge the Subcommittee to find ways to
have the DOC Manufacturing USA Program adopt the use of existing other
transactional authority for DOC-sponsored institutes to facilitate
enhanced interactions between institutes and small and large
businesses.
Conclusions
I am grateful to have the opportunity to share my perspective on
American manufacturing, the role of small to medium enterprises,
Manufacturing USA, and our global competitiveness. Our history as
leaders of research and development of advanced technologies and a
domestic capability for manufacturing those technologies was no
accident. Our country's significant investment in early-stage science
and technology together with an entrepreneurial and innovative mindset,
and a skilled and capable workforce made us the greatest nation in the
history of the planet. However, the world is changing, technologies are
advancing, and other countries are investing and implementing policies
that have eroded our leadership position. We must not wait!
As Marv Levy, Hall of Fame NFL coach of the Buffalo Bills from the
1980s-90s, is attributed to have said: ``If you don't change with the
times, the times are going to change you''.
______
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Baldwin. Thank you, Dr. Lee. And now Mr. Zakreski.
STATEMENT OF C. TODD ZAKRESKI, PRESIDENT, HUSCO
AUTOMOTIVE LLC AND BOARD CHAIR, WISCONSIN
MANUFACTURING EXTENSION PARTNERSHIP (WMEP)
Mr. Zakreski. Thank you. Good afternoon, Chair Baldwin and
Ranking Member Sullivan. Thank you for the opportunity to
testify about the role of small and medium sized enterprises in
advancing domestic manufacturing, and the potential support
that the Commerce Department can provide through its
manufacturing extension partnership.
I am President of HUSCO Automotive, a medium sized,
minority owned, Wisconsin based, global manufacturer of highly
engineered hydraulic and electromagnetic controls for current
and new automotive propulsion systems.
I am also the current Board Chair of the Wisconsin
Manufacturing Extension Partnership, providing me the unique
position of being both an MEP consumer, and directly connected
witness to the exceptional value and return on investment that
the MEP system delivers to America's SMEs.
My first experience with the WMEP was in my current role at
HUSCO. And prior to joining the WMEP board, 5 years ago, HUSCO
embarked on a venture to design and build our own advanced
manufacturing equipment. As we developed into becoming our own
integrator, we decided also we wanted to help small
manufacturers in Wisconsin solve their manufacturing
challenges.
The WMEP provided multiple manufacturing specific programs
and venues for us to introduce our capabilities and
competencies to just such a group. We connected with a small
manufacturer in need of solving a complicated packaging problem
that was difficult for the operator to execute by hand, making
a three shift per day, 5 days a week task frustrating and
physically unpleasant.
The issue was also creating internal capacity constraints
causing lost sales and profits. Our advanced manufacturing
group established a unique solution that eliminated the need
for the operator to execute the specific task. We built the
machine, introduced it to their shop floor, and successfully
eliminated the problem.
The small manufacturer, with the help of the WMEP, secured
training for the operator such that he gained new skills
associated with providing technical support and maintenance for
this and several other production equipment machines on their
factory floor.
As simplistic of an example that this specific engagement
represents, it was a powerful statement across several areas
pertaining to key elements of the MEP mission. And sometimes it
is the simplest success stories that carry the most insight
into the way forward.
First, through their targeted technology and services
programs and statewide manufacturing events, they introduced a
small manufacturer to local sources of relevant advanced
manufacturing technology and integration.
Second, they facilitated the development of a machine
operator such that he could step into a more value adding role
for both the company and for his overall personal situation. I
share this story because it represents how two SMEs, one with
an advanced manufacturing solutions capability, connected and
collaborated through the MEP system, and advancing the state of
manufacturing the common good, developing a workforce such that
both the business and the worker realize a positive outcome.
To be globally competitive--and no, strike that, to be the
clear global leader of the most advanced technologies and
manufacturing processes in the world, we must embrace and grow
organizations like the MEP, who onboard some of the best talent
across all aspects of manufacturing, leveraging their many
years of expertise in their respective areas to help guide
their SMEs and ultimately all of America's manufacturers toward
that goal.
The MEPs are perpetual drivers of innovation in product and
process. They have mastered how to couple that with helping how
to find the right paths of development for the workforce. The
link between onboarding advanced technologies and processes and
connecting SMEs with the right training for its workforce, is
an especially important attribute of the MEP expertise
portfolio that I wanted to highlight here for you today.
Another area I would like to touch on is supply chain.
HUSCO Automotive has experienced its own share of challenges in
securing material from overseas and has been working hard over
the last 3 years to move parts to local sources. As Board Chair
of the WMEP, I have had the opportunity to see several
engagements that have solved supply chain problems.
Help us find a source for this part in the United States as
we can no longer afford supply chain delays from overseas
sourcing due to volatility in freight schedules, international
shipping costs, and political unrest is a common ask of our
consultants. The MEP system is a natural leader to help solve
this problem.
As more and more MEP engagements occur, America's SMEs will
become the best global solution for supply. In fact, it is
happening already. At the WMEP, I have seen multiple SME
manufacturers that we have engaged with grow their sales by 15
percent plus and becoming that onshore solution thanks to the
process and improvements and new investments in advanced
manufacturing technology and workforce development, all guided
by WMEP consultants.
With more success stories like these, which I have
witnessed at the WMEP, we will be able to move even more
quicker in getting SMEs to play a bigger role being that
onshoring solution. An additional benefit to these types of MEP
engagements that will also come out of the proposed CHIPS Act
MEP investment, there will be a national database of suppliers
that will be available for MEPs, system wide access and use to
help identify high potential local source options, facilitating
fast, cost effective solutions to these supply chain problems.
It truly will be a game changer when it comes to further
assisting manufacturers find onshoring solutions. Senators,
expanding MEP is a critical seed in the CHIPS and Science Act.
As you well know, for every $1 in Federal investment, MEP
generates $26 in new sales growth, and $34 in new client
investment.
MEP-led innovation in manufacturing related products and
processes, coupled with training our workforce to support these
new technologies, will only further evolve the small and mid-
sized manufacturers here in the United States.
As expanded MEP--an expanded MEP system, thanks to the
CHIPS Act, investment will be a foundation for America's SMEs
to build their own opportunity for exponential growth through
local supply of material, new product and process technology,
and a highly skilled workforce.
I leave you this afternoon with both my WMEP Board Chair
and SME leader hats on and ask that you continue to support
CHIPS and Science Act and the designated funding for the MEP
Network. Thank you.
[The prepared statement of Mr. Zakreski follows:]
Prepared Statement of C. Todd Zakreski, President, Husco Automotive LLC
and Board Chair, Wisconsin Manufacturing Extension Partnership (WMEP)
Good afternoon, Chair Baldwin, Ranking Member Sullivan, and
distinguished Members of the Committee. Thank you for the opportunity
to testify about the role of small and medium sized enterprises (SMEs)
in advancing domestic manufacturing and the potential support that the
Commerce Department can provide through its Manufacturing Extension
Partnership (MEP). I am President of Husco Automotive, a medium sized,
minority-owned Wisconsin based global manufacturer of highly engineered
hydraulic and electromagnetic controls for current and new automotive
propulsion systems. I am also the current Board Chair of the Wisconsin
Manufacturing Extension Partnership, providing me the unique position
of being both a MEP consumer and directly connected witness to the
exceptional value and return on investment that the MEP system delivers
to America's SME's.
My first experience with the WMEP was in my current role at Husco
and prior to joining the WMEP board. Five years ago, Husco embarked on
a venture to design and build our own advanced manufacturing equipment.
As we developed into becoming our own integrator, we decided we also
wanted to help small manufacturers in Wisconsin solve their
manufacturing challenges. The WMEP provided multiple manufacturing-
specific programs and venues for us to introduce our capabilities and
competencies to just such a group. We connected with a small
manufacturer in need of solving a complicated packaging problem that
was difficult for the operator to execute by hand, making the 3-shift
per day/5 days-a-week task frustrating and physically unpleasant. The
issue was also creating internal capacity constraints causing lost
sales and profits. Our Advanced Manufacturing Group established a
unique solution that eliminated the need for the operator to execute
this specific task. We built the machine, introduced it to their shop
floor and successfully eliminated the problem. The small manufacturer,
with the help of the WMEP, secured training for the operator such that
he gained new skills associated with providing technical support and
maintenance for this and several other production equipment machines on
their factory floor. As simplistic of an example this specific
engagement represents, it was a powerful statement across several areas
pertaining to key elements of the MEP mission. Sometimes, it is the
simplest success stories that carry the most insight into the best way
forward. First, through their targeted technology and services programs
and state-wide manufacturing events, they introduced a small
manufacturer to local sources of relevant advanced manufacturing
technology and integration. Second, they facilitated the development of
a machine operator such that he could step into a more value-adding
role for both the company and his overall personal situation. I share
this story because it represents how two SME's, one with an advanced
manufacturing solutions capability connected and collaborated thru the
MEP system in advancing the state of manufacturing for the common good
and developing the workforce such that both the business and the worker
realize a positive outcome.
To be globally competitive . . . no, strike that, to be the clear
global leader of the most advanced technologies and manufacturing
processes in the world, we must embrace and grow organizations like the
MEP, who onboard some of the best talent across all aspects of
manufacturing, leveraging their many years of expertise in their
respective areas to help guide our SME's, and ultimately all of
America's manufacturers, toward that goal. The MEP's are perpetual
drivers of innovation in product and process. And they have mastered
how to couple that with helping to find the right paths of development
for the workforce. The link between onboarding advanced technologies
and processes and connecting SME's with the right training for its
workforce is an especially important attribute of the MEP expertise
portfolio that I wanted to highlight here for you today.
Another area I would like to touch on is supply chain. Husco
Automotive has experienced its share of challenges in securing material
from overseas and has been working hard over the last 3 years to move
parts to local sources. As Board Chair of the WMEP, I have had the
opportunity to see several engagements that have solved supply chain
problems. `Help us find a source for this part in the United States as
we can no longer afford supply chain delays from overseas sourcing due
to volatility in freight schedules, international shipping costs, and
political unrest' is a common ask of our consultants. The MEP system is
the natural leader to help solve this problem. As more and more MEP
engagements occur, America's SME's will become the best global solution
for supply. In fact, it's happening already. At the WMEP, I have seen
multiple SME manufacturers that we have engaged with grow their sales
by 15 percent+ and becoming that onshore `solution' thanks to process
improvements and new investments in advanced manufacturing technology
and workforce development--all guided by WMEP consultants. With more
success stories like these which I have witnessed at the WMEP, we will
be able to move even quicker in getting SME's to play a bigger role
being that `onshoring' solution.
An additional benefit from these types of MEP engagements that will
also come out of the proposed CHIPS Act MEP investment will be a
national database of suppliers that will be available for MEP's system-
wide to access and use to help identify high potential, local source
options facilitating fast, cost effective solutions to these supply
chain problems. It truly will be a game changer when it comes to
further assisting manufacturers find `onshoring' solutions.
Senators, expanding the MEP is a critical `seed' in the CHIPS and
Science Act. As you well know, for every one dollar of Federal
investment, MEP generates $26 in new sales growth and $34 in new client
investment. MEP-led innovation in manufacturing related product and
process coupled with training our workforce to support these new
technologies will only further evolve the small and mid-size
manufacturers here in the United States. An expanded MEP system, thanks
to the CHIPS Act investment, will be the foundation for America's SME's
to build their own opportunity for exponential growth through local
supply of material, new product and process technology, and a highly
skilled workforce. I leave you this afternoon with both my WMEP Board
Chair and SME leader hats on and ask that you support the CHIPS and
Science Act and the designated funding for the MEP network.
Thank you for your time and consideration.
Senator Baldwin. Thank you, Mr. Zakreski. I just want to
explain, you will see a little shuffling around. We have just
had a vote called on the Senate floor, and so we are going to
take turns.
Ranking Member Sullivan is going to go cast his vote,
return, and then I will put the Committee into his control
while I do the same. And I am expecting other members to come
in and out during that.
So, apologies to our witnesses for the disruptions, but
let's carry on with Dr. Shivakumar.
STATEMENT OF SUJAI SHIVAKUMAR, Ph.D., DIRECTOR
AND SENIOR FELLOW, RENEWING AMERICAN
INNOVATION PROJECT, CENTER FOR STRATEGIC
AND INTERNATIONAL STUDIES
Dr. Shivakumar. Chair Baldwin, and Ranking Member Sullivan,
and others who may come in and out, my name is Sujai
Shivakumar. I am a Senior Fellow at the Center for Strategic
and International Studies.
As a bipartisan, nonprofit policy research organization
dedicated to advancing practical ideas to address the world's
challenges, CSIS's purpose is to define the future of national
security. Accordingly, CSIS has launched a major program called
Renewing American Innovation, which I lead.
RAI's purpose is to strengthen the policy foundations that
have created the most dynamic and successful innovation system
in history, and which is the foundation of our national
security today and in the future.
So thank you so much for this opportunity to testify today
about the importance of manufacturing and innovation to our
national security. Innovation, in fact, has long been cited as
a critical to addressing the Nation's challenges in economic
growth and national security, and improving the health and
well-being of Americans.
It is also important to recognize that our innovation
system itself is a national security asset, one that underpins
our continued prosperity and competitiveness, and military
strength. This asset has to be rejuvenated as new global
realities and opportunities arise.
As we know, other countries in recent decades have invested
in building their innovation systems, recognizing it to be an
engine for their own rapid economic development and national
strength. They now have the means and often the will to
capitalize on the investments that we make in R&D.
China, for example, is investing heavily in building up its
workforce and manufacturing infrastructure, enabling that
nation to capitalize on the new ideas generated by our world
class research system. This strategy allows them to develop
advanced weapons and create competitive products for the global
markets more rapidly. We then need a new strategy for this
technologically multipolar world.
A strategy informed by a better understanding of the
innovation process. So this term, innovation ecosystem, is used
frequently, but it requires--but what it does, it describes a
rich networks of cooperation among scientists and researchers,
entrepreneurs and investors, small and large manufacturers,
high skill and technically skilled workers, as well as local,
State, and Federal agencies.
This process, when it works well, is both bottom up and top
down. It is actually federalism in action, and it is arguably
the secret sauce behind American technological leadership. But
this system does not work--does not exist in a vacuum.
It relies on all of these actors overcoming a variety of
barriers to cooperation. They need to speak the same technical
language. They must be able to share their ideas securely and
easily. They need to convince investors of the values of their
ideas, and they need to find able partners and collaborators to
scale up and manufacture products, creating jobs and creating
regional growth.
Fortunately, the solutions to many of these problems exist,
and Congress needs to upgrade and reinvest in these solutions,
while engineering new ones that strengthen our national
innovation system. So what can Congress do to strengthen the
American innovation system?
Permit me to briefly outline six priorities for America's
small and medium manufacturers. First, Congress should
reinforce U.S. standards leadership. Leadership in setting
standards has long allowed the United States to set the terms
of the global technology conversation, but this leadership is
under threat.
China's leaders recognize that the commercial and national
security advantages of standards leadership, especially in
emerging communications technologies. They have embarked on a
China Standards 2035 strategy plan and are actively
participating in global standards setting organizations.
The role of NIST in working with the private sector to
develop global technological standards needs to be reinforced
by vigorous American re-engagement in organizations such as the
ITU. Second, Congress should secure the patent system. Strong
intellectual property rights ensure that individuals can
benefit from their ingenuity and hard work, creating an
opportunity to monetize new ideas.
Third, Congress should encourage entrepreneurship.
Americans celebrate entrepreneurship, but entrepreneurial small
businesses often find it challenging to demonstrate their
ideas, commercial potential to investors.
Federal programs like the Small Business Innovation
Research Program can help bridge this gap through merit based
awards. SBIR alerts potential investors to technologies with
commercial viability, improving the functioning of private
capital markets.
Congress can help the SBIR by stabilizing this program and
making it more predictable. Fourth, Congress should continue to
focus on U.S.-based manufacturing. National and regional
investments in manufacturing undertaken by our foreign
competitors are significantly larger than comparable U.S.
investments and are more weighted toward later stage applied
research and product development.
In response, the United States has sought to build the
Manufacturing USA institutes, which are loosely modeled on a
German Fraunhofer system and are designed to support
translational innovation by companies, particularly by small
firms.
But while the program has significant potential to
strengthen our innovation efforts, these institutes are
underfunded. With just some 14 institutes, Manufacturing USA is
a relatively lean program compared to the 70 plus Fraunhofers,
and China also has borrowed the manufacturing center concept
and has apparently expanded significantly.
Fifth, Congress should connect regional resources. The
innovation system as a network of networks can be strengthened
by building connections across existing research, financing,
and manufacturing assets, and the NIST MEP program is an
indispensable asset in this regard. The CHIPS and Science Act
expands MEP to help these manufacturers improve cybersecurity,
worker training, and supply chain resiliency.
As we have heard, this support of course is welcomed, but
it needs to be followed up by sustained and substantial funding
from Congress. It is a long term effort. Finally, Congress
should build and broaden a skilled technical workforce.
Renewing our innovation system requires overcoming decades
of underinvestment in our own citizens. Congress can support
and enhance strategies ensuring that all stakeholders,
including students, workers, employees, educational
institutions, have the right information, tools, and incentives
to improve access to quality, technical education and training.
In that regard, as an example, the Department of Labor has
supported innovative efforts to strengthen the talent pipeline
in the semiconductor industry through the efforts of the
National Institute for Information Technology, an institution
designed to support regional talent development on a virtual
platform that can generate scalable and stackable credentials
for the rapidly growing needs of the semiconductor industry,
and that the model can also be transferred to other industries
as well.
So overall, our Nation's innovation system, which as I
mentioned, is the foundation of our economic competitiveness
and national security, is continually strengthened by
encouraging new ideas, nurturing entrepreneurship, and
fostering cooperative connections.
As I have outlined, there is no silver bullet, we need to
do all of the above, but on a sustained basis and at scale. In
times past, Congress has repeatedly stepped up to renew and
strengthen our innovation system, and this is a critical
opportunity to do this again. Thank you for your attention.
[The prepared statement of Dr. Shivakumar follows:]
Prepared Statement of Sujai Shivakumar, Ph.D., Director and Senior
Fellow, Renewing American Innovation Project, Center for Strategic
and International Studies
Securing the U.S. Innovation System
Chair Baldwin, Ranking Member Sullivan and Members of the
Subcommittee, my name is Sujai Shivakumar, Senior Fellow at CSIS, where
I direct the project on Renewing American Innovation. As a bipartisan,
nonprofit policy research organization dedicated to advancing practical
ideas to address the world's challenges, CSIS's purpose is to define
the future of national security. Accordingly, CSIS has launched a major
program called Renewing American innovation, which I lead. RAI's
purpose is to strengthen the policy foundations that have created the
most dynamic and successful innovation system in history to strengthen
our national security today and in the future.
Thank you for the opportunity to testify today about the importance
of manufacturing and innovation for our national security.
Innovation as a National Security Asset
Innovation has long been critical to addressing the nation's
challenges in economic growth and security, and to improving the health
and wellbeing of Americans. Indeed, it is important to recognize that
our innovation system is itself a national security asset--one that
underpins our continued prosperity, competitiveness, and military
strength. This asset has to be rejuvenated as new global realities and
opportunities arise.
Much of today's industrial strategy was designed in the 1950s to
meet our needs during the Cold War. At that time, Congress invested in
the nation's continued technological leadership by creating new
institutions such as the National Science Foundation, expanding the
National Institutes of Health, and by developing new infrastructure for
research and development through the organization of National
Laboratories and increased funding for research universities.
Federal policy in the postwar period focused on funding research
and development at the front end while enabling the commercialization
and procurement of new technologies at the back end, allowing new
products to reach the market. Early procurement of semiconductors
through the Minuteman and Apollo spaceflight programs allowed us to
take an early and strong technological lead, becoming a key element of
our economic and military superiority over the Soviet Union.
An Innovation Ecosystem for a Multipolar World
Today we can no longer rely on this strategy alone because other
countries in recent decades have invested in building their innovation
systems, recognizing it as an engine for their own rapid economic
development and national strength. They now have the means and often
the will to capitalize on the investments we make in R&D. China, for
example, invests heavily in building up its workforce and manufacturing
infrastructure, enabling that nation to capitalize on the new ideas
generated by our world class research system. This strategy allows them
to develop advanced weapons and create competitive products for global
markets.
We need a new strategy for a technologically multipolar world, a
strategy informed by a better understanding of the innovation process.
The term ``innovation ecosystem'' is now widely used to describe rich
networks of cooperation among scientists and researchers, entrepreneurs
and investors, small and large manufacturers, high-skilled and
technically skilled workers, as well as local, state, and federal
agencies. This process, when it works well, is both bottom-up and top-
down--it is federalism in action, and it is arguably the secret sauce
of American technological leadership.
But this system does not exist in a vacuum. The innovation system
relies on all these actors overcoming a variety of barriers to
cooperation--they need to speak the same technical language, they must
be able to share ideas securely and easily, they need to convince
investors of the value of their ideas, and they need to find able
partners and collaborators to scale-up and manufacture products,
creating jobs and regional economic growth. Fortunately, solutions to
many of these problems exist and Congress needs to upgrade and reinvest
in these solutions while engineering new ones to strengthen our
national innovation system.
Strengthening the Innovation System
What can Congress do to strengthen the American Innovation System?
Congress should Reinforce U.S. Standards Leadership:
Technical standards provide the shared vocabulary and grammar
that allows researchers, manufacturers, and consumers to speak
the same language across the innovation ecosystem. Leadership
in setting standards has long allowed the U.S. to set the terms
of the technology conversation, but this leadership is under
threat. China's leaders recognize the commercial and national
security advantages of standards leadership, especially in
emerging communications technologies. They have embarked on a
China Standards 2035 strategy and are actively participating in
global standards-setting organizations. The role of the
National Institute for Standards and Technology in working with
the private sector to develop global technological standards
needs to be reinforced by vigorous American reengagement in
organizations such as the International Telecommunications
Union. We need to recognize that organizations that were
previously not the focus of U.S. policy makers' attention now
need to be--they are certainly high on China's policy agenda.
Congress should Secure the Patent System: Strong
intellectual property rights ensure that innovators can benefit
from their ingenuity and hard work, creating an opportunity to
monetize new ideas. However, in the American system,
patents are important not only as incentives to invent, but as
incentives to share ideas. The ability to protect an idea
provides the security inventors need to bring their innovations
into the public forum and forge commercial collaborations with
other innovators through licensing agreements. The U.S. needs
to maintain the role that its patent system has played in
spurring innovation against those who would benefit from weaker
enforcement, including defending it vigorously against poaching
of intellectual property belonging to small business by large
businesses, and by brazen theft through cyber intrusions by
China and other rivals. In addition to maintaining our patent
system so that it continues to protect our innovative small and
medium enterprises we need to include courses in cyber defense
as a routine part of our science, engineering, and business
education curriculum. Congress can further support this by
beefing up our national cyber defense infrastructure.
Congress should Encourage Entrepreneurship: Americans
celebrate entrepreneurship and recognize that failure is often
a step on the path to commercial success. But entrepreneurs
often find it challenging to demonstrate their idea's
technological potential to investors. Many promising
technologies are lost to the so-called ``Valley of Death''
between early-stage research and commercial adoption due to
lack of sustained investment. Federal programs like the Small
Business Innovation Research Program (SBIR) help bridge this
gap through merit-based awards. A key finding of a major
National Academy of Sciences study \1\ is that SBIR alerts
potential investors of technologies with commercial viability,
improving the functioning of private capital markets. Congress
needs to institutionalize this exceptionally effective program,
one that is widely emulated abroad as a best practice in
innovation policy. \2\
---------------------------------------------------------------------------
\1\ National Research Council. An Assessment of the SBIR Program.
Washington, DC: The National Academies Press, 2008. https://doi.org/
10.17226/11989.
\2\ Jonathan M. Barnett. Innovators, Firms, and Markets: The
Organizational Logic of Intellectual Property. Oxford University Press,
2021.
Congress should Continue to Focus on US based Manufacturing:
Seeking to capture the global market opportunity in emerging
technologies, major U.S. competitors in Europe and East Asia
have launched targeted, large-scale programs, with significant
government funding to develop these new technologies, refine
them, and ultimately manufacture them within their national
borders. National and regional investment undertaken by our
foreign competitors are significantly larger than comparable
U.S. investment and are more weighted toward later-stage
applied research and product development. In response, the
United States has sought to build a nationwide network of
cooperative research Centers, known as the Manufacturing USA
institutes, which are loosely modeled on the German Fraunhofer
system and are designed to support translational innovation by
companies--particularly small firms. While the program has
significant potential to strengthen innovation networks, these
programs are underfunded. With just 14 institutes,
Manufacturing USA is a relatively lean program compared to the
70+ Fraunhofers. China, by contrast, has borrowed the
Manufacturing Center concept and apparently has expanded it
significantly.\3\
---------------------------------------------------------------------------
\3\ National Academies of Sciences, Engineering, and Medicine.
Securing Advanced Manufacturing in the United States: The Role of
Manufacturing USA: Proceedings of a Workshop. Washington, DC: The
National Academies Press, 2017. https://doi.org/10.17226/24875.
Congress should Connect Regional Resources: The innovation
system, as a network of networks, can be strengthened by
building connections across existing research, financing, and
manufacturing assets at the state and regional level. The NIST
Manufacturing Extension Partnership (MEP) helps small- and
medium-sized manufacturers make these connections so that they
have the resources needed to improve efficiency, reduce costs,
create new products, and find new markets.\4\ The CHIPS and
Science Act expands MEP to extend its work with small- and
medium-sized manufacturers to improve cybersecurity, worker
training, and supply chain resiliency. This support is welcome
and needs to be followed up with sustained and substantial
funding from Congress. Above all, it has to be a long-term
effort.
---------------------------------------------------------------------------
\4\ National Research Council. 21st Century Manufacturing: The Role
of the Manufacturing Extension Partnership Program. Washington, DC: The
National Academies Press, 2013. https://doi.org/10.17226/18448.
Congress should Build and Broaden a Skilled Technical
Workforce: Renewing America's innovation system requires
overcoming decades of underinvestment in the American
workforce. Federal efforts must encourage training programs
anchored on industry-relevant skills and must promote hands-on
experience through industry internships and in community
colleges through public-private partnerships. In response to
globalization and advances in science and technology, American
firms are demanding workers with strong interpersonal,
technical, and problem-solving skills. Employers also
increasingly cite the presence of a skilled workforce as a key
factor in decisions to re-shore production.\5\ Congress can
support and enhance strategies ensuring that all stakeholders,
including students, workers, employers, and educational
institutions, have the right incentives to improve the quality
of technical education and training, and develop new models of
governance to encourage fruitful experimentation and
collaboration. Universities, like other institutions, need to
adapt to new challenges--and they need the right incentives to
do so.
---------------------------------------------------------------------------
\5\ National Research Council. Rising to the Challenge: U.S.
Innovation Policy for the Global Economy. Washington, DC: The National
Academies Press, 2012. https://doi.org/10.17226/13386.
---------------------------------------------------------------------------
A New Agenda
Our nation's innovation system--which is the foundation of our
economic competitiveness and national security--is continually
strengthened by encouraging new ideas, nurturing entrepreneurship, and
fostering cooperative connections. As I have outlined, there is no
silver bullet. We need to do all of this on a sustained basis. In times
past, Congress has repeatedly stepped up to renew and strengthen this
critical national asset. That opportunity is at its door again.
Senator Baldwin. Yes. Thank you, Dr. Shivakumar. And we
are--last but not least, Mr. Vasko, welcome.
STATEMENT OF DAVID VASKO, SENIOR DIRECTOR, ADVANCED
TECHNOLOGY, ROCKWELL AUTOMATION
Mr. Vasko. Thank you, Chair Baldwin, and Ranking Member
Sullivan, and distinguished panel. My name is David Vasko. I am
Senior Director of Advanced Technology at Rockwell Automation.
I have worked in this field for 38 years.
Rockwell was founded as Allan Bradley in 1903, and they are
a global leader of industrial automation and digital
transformation. We are headquartered in Milwaukee, Wisconsin.
We employ nearly 26,000 employees, serving customers throughout
100 countries. It would be difficult to walk into a factory
today and not see any of our products being used.
We like to say by the time you get to work, you probably
have used four or five products we have helped to create, from
coffee to breakfast to transportation to energy or fuel. So why
is a large company like Rockwell Automation here to talk to you
about small manufacturing?
Rockwell partners with small and medium enterprises, SMEs,
every day to provide automation products and solutions,
enabling them to be globally competitive. SMEs are vital part
of our and our Nation's integrated supply chain.
U.S. manufacturers are being challenged with global supply
chain disruptions and greater demands for mass customization,
driving reshoring of manufacturing, both a great opportunity
and a challenge for SMEs.
The CHIPS and Science Act supports this reshoring trend by
strengthening domestic chip manufacturing and creating a
stronger manufacturing ecosystem. We recommend focusing on four
critical areas to achieve this vision.
First, we need to build the workforce to succeed. The MEPs
can help to inform young Americans that manufacturing jobs are
attractive, high tech, clean, safe, and offer family sustaining
wages to help increase the number of workers seeking careers in
manufacturing.
The National Association of Manufacturers estimates
approximately 800,000 unfilled manufacturing positions today,
and this is projected to increase to 2.1 million by 2030. These
are solid, high paying careers.
Second, promote the upskilling of our current workers, as
well as new employees entering the workforce, ensuring they
have the skills they need for tomorrow's manufacturing.
Upskilling not only increases the workers' salaries, but
provides them with versatile skills to ensure rewarding,
lifelong careers.
Third, MEP and Manufacturing USA should increase the
productivity of workers by adoption of advanced automation
tools and solutions. These are the automation tools and
solutions we see developed every day in the 16 Manufacturing
USA institutes.
The U.S. has a remarkable workforce, equipping them with
the best automation tools, including advanced tools like
artificial intelligence, augmented reality, robotics, and cloud
based analytics will ensure they will be successful. And
fourth, we need to ensure SMEs remain an integral part of the
modern, interconnected supply chain.
We are seeing gaps emerged manufacturing between the best
and the rest. Leading manufacturers are deploying advanced
automation technologies and cybersecurity hardening to drive
unprecedented productivity, resiliency, flexibility required in
today's global markets. But many manufacturers struggle with
adopting these practices, and this is especially true for the
SMEs.
The MEP and tech hubs are vital to achieving this goal.
Rockwell has been a member of four of the Manufacturing USA
institutes. Each institute focuses on critical technical areas
in specific to different areas of being in factoring. These
projects are generally conducted with suppliers, academics, and
manufacturers to demonstrate real life applications of these
technologies and to facilitate adoption.
Let me give you one example of a project we worked on in
Manufacturing USA's advanced regenerative manufacturing
institute, ARMI/BioFab. In a laboratory environment, research
scientists were able to generate a person's own cells, tissues,
and parts of some organs, a medical miracle that virtually
eliminates the possibility of rejection and the need for immune
suppression in patients.
But it is a large step from a lab experiment to producing
these regenerative solutions, to the quality, quantity, cost,
and location where they are used and where they are needed. And
that is where Manufacturing USA comes in. We worked with the
scientists there to develop a scalable, modular, closed loop
system, which isn't much larger than this desktop we are behind
today, that allows cells and tissues to be produced at volume
with controlled quality.
Rockwell applauds the spotlight the CHIPS and Science Act
has put on American manufacturing. Federal investment
supporting American entries will revitalize our world class
manufacturing ecosystem, support our workers, and ensure future
supply chain resiliency.
Rockwell appreciates the Subcommittee's continued
leadership and support and welcome the opportunity to testify
at this hearing. We look forward to continued collaboration
with you and your staff to ensure America can maintain and
enhance our leadership in advanced manufacturing for years to
come.
Thank you.
[The prepared statement of Mr. Vasko follows:]
Prepared Statement of David Vasko, Senior Director, Advanced
Technology, Rockwell Automation
Good afternoon, Chair Baldwin and Ranking Member Sullivan, and
distinguished Members of the subcommittee. Thank you for this
opportunity to speak with you today about the value and continued
importance of our Nation's manufacturing, supply chain and workforce
development.
My name is David Vasko. I am the Senior Director of Advanced
Technology for Rockwell Automation, responsible for applied research
and development and global product standards and regulations. I have
been working in this field for 38 years and am honored to serve on the
Department of Commerce's National Institute of Science and Technology
(NIST) Visiting Committee on Advanced Technology.
Founded in 1903 as Allen Bradley, Rockwell Automation--
``Rockwell''--is a global leader in industrial automation and digital
transformation. We connect the imaginations of people with the
potential of technology to expand what is humanly possible, making the
world more productive and more sustainable. Headquartered in Milwaukee,
Wisconsin, Rockwell employs nearly 26,000 problem solvers dedicated to
our customers in more than 100 countries.
Rockwell's automation tools help our customers produce key products
and solutions Americans need and use every day, including electric
vehicle and automotive parts and components, pharmaceuticals and
vaccines, food and beverages, medical devices, chemicals, printing,
paper and publishing materials, products and components for the defense
industry, semiconductors, and extractable minerals, oil, and gas.
Additionally, Rockwell's products and systems operate critical
infrastructure such as power generation and water treatment facilities.
Our products permeate across our Nation's manufacturing ecosystem. In
fact, it would be difficult to walk into a factory in the U.S. and not
see our hardware and software helping manufacturers to become more
competitive, agile, and sustainable.
Rockwell partners with small- and medium-sized enterprises (SMEs)
every day to provide automation products and solutions enabling them to
be globally competitive and deliver high quality products and services.
SMEs are a vital part of our Nation's integrated supply chain.
U.S. manufacturers are facing a new era of uncertainty and change
because of global supply chain disruptions, and greater demands for
mass customization. These upheavals have spurred new opportunities,
driving reshoring and localization of manufacturing--both a great
opportunity and a challenge for SMEs.
The CHIPS and Science Act aims to support this reshoring trend by
strengthening domestic chip manufacturing and creating a stronger
manufacturing ecosystem--from a more robust supply chain to a greater
skilled manufacturing talent pool.
To ensure a stronger domestic ecosystem for generations to come,
the Commerce Department, through its Manufacturing Extension
Partnership (MEP), Manufacturing USA (MUSA) initiative, should focus on
four areas:
1. Attracting more workers to seek careers in manufacturing.
2. Improving the skills of people in manufacturing today to prepare
them for the future.
3. Adoption of advanced automation tools and solutions to improve
productivity.
4. Supporting further integration of SMEs into our modern connected
supply chains.
First, the CHIPS legislation, although a great step towards
codifying industrial policy, will fall short of its ambition unless we
build and cultivate the workforce necessary to succeed. The largest
generation in U.S. history, baby boomers, is aging out of the
workforce, hitting the manufacturing sector particularly hard. The
shortage of manufacturing workers is not only demographic but cultural
as well. The new MEP authorities must show, and convince, young
Americans that manufacturing jobs are high-tech, clean, safe, and offer
family-sustaining wages, to help increase the number of workers seeking
careers in manufacturing. The National Association of Manufacturers
estimates that the approximately 800,000 unfilled manufacturing
positions could increase to nearly 2.1 million by 2030. These are
solid, high-paying careers, but there is a perception that
manufacturing, and factory jobs are low-skilled, low-paying, menial,
and hazardous. That couldn't be further from the truth in today's high-
tech manufacturing.
Second, the Department of Commerce should implement new regulations
promoting the upskilling of our current workers as well as upskilling
new employees entering the workforce. This means leveling up our
manufacturing workers and ensuring they have the skills they need for
tomorrow's manufacturing. Upskilling means adopting a model of life-
long learning to meet the needs of employers as well as take advantage
of the latest technology. Upskilling not only increases worker
salaries, but it also arms them with versatile skills that will ensure
future job security as consumer demands change, and create rewarding,
lifelong careers.
To tackle the critical skills shortage in the fast-evolving
manufacturing sector, in 2017 Rockwell and ManpowerGroup developed the
Academy of Advanced Manufacturing (AAM)--a joint initiative to provide
U.S. military veterans with the upskilling they need to succeed in
advanced manufacturing roles. The 12-week training program combines
instructor-led classroom learning with hands-on technical laboratory
experience. More than 300 veterans have gone through the training and
become certified, resulting in more than 85 percent of graduates
securing a job paying on average between $60,000-$75,000 annually after
completing the program. Programs such as this could be replicated and
scaled in high-need areas to address the skills gap.
Third, MEP and MUSA should increase the productivity of each worker
by adoption of advanced automation tools and solutions. These are the
automation tools and solutions we see developed every day in the 16
Manufacturing USA institutes. The U.S. has a remarkable workforce and
equipping them with advanced automation tools--like artificial
intelligence or machine learning, augmented reality, robots, and cloud-
based software--will give these workers the superpowers needed to
remain globally competitive and will continue to increase employment.
Fourth, we need to ensure that SMEs remain an integral factor in
today's modern and inter-connected supply chains. We are seeing gaps
emerge in manufacturing between the best manufacturers and the rest.
Leading manufacturers are deploying advanced technologies such as
Augmented Reality/Virtual Reality, Artificial Intelligence/Machine
Learning, Digital Twins, cloud, additive manufacturing, wireless
networking, and advanced robotics to drive unprecedented productivity,
resiliency and flexibility required to be competitive in today's global
markets, and then securing it with robust implementation of
cybersecurity strategies. But most manufacturers are unable to do these
things at this time--especially SMEs. Cloud solutions are particularly
important because they democratize automation and reduce large capital
investments which can be a barrier to SME adoption.
We need to ensure all U.S. manufacturers can adopt these solutions
so they can keep pace with the larger players in the industry. The MEP
program and technology and innovation hubs can be that bridge and can
help enable SMEs to adopt advanced manufacturing solutions.
Beyond revitalizing the manufacturing of today, the MUSA program is
critical to accelerating the manufacturing growth needed for tomorrow's
innovations. Rockwell has been a member of four out of the 16 American
manufacturing institutes, including CESMII, MxD, REMADE, ARMI/
BioFabUSA, and collaborated with NIIMBL. Each institute focuses on
critical technical gaps in specific areas of manufacturing with the
goal of resolving these critical gaps and delivering these solutions to
U.S. manufacturers. Typically, these projects are jointly conducted
with suppliers, academics, and manufacturers to demonstrate the real-
life applications of these technologies. It goes beyond writing an
article, and applies the technology on a manufacturing line, factoring
in all the required real-world constraints.
Manufacturing USA provides solutions to these deep technical gaps,
needed to develop cutting-edge technologies and innovations, and we
must continue to fund these and new institutes to tackle America's
emerging needs.
Let me give you an example of a project we worked on at the
Manufacturing USA ARMI/BioFabUSA Institute where research scientists
were able to demonstrate remarkable regenerative medical solutions. In
a laboratory environment, they were able to regenerate a person's own
cells, tissues and parts of some organs, a medical miracle that
eliminated the possibility for rejection and the need for immune
suppression medication in patients. But it is a large step from a lab
experiment to producing these regenerative medical solutions at the
quantity, quality, cost, and location where they are needed. That is
where Rockwell comes in--we worked with the research scientists at
ARMI/BioFabUSA to develop a scalable, modular, closed loop system that
isn't much larger than a desktop. This type of manufacturing suite is
quite typical in manufacturing processes but revolutionary in
regenerative medicine. It allows cells and tissues to be produced at
volume and with controlled quality.
Rockwell applauds the spotlight the CHIPS and Science Act has put
on American manufacturing industry. After decades of offshoring jobs
and overreliance on foreign supply chains, Federal investments
supporting American industries will revitalize our truly world class
manufacturing ecosystem; support our workers; and ensure future supply
chain resiliency through local sourcing. But beyond legislation
adoption, we must ensure proper implementation, cultivate a reliable
skilled workforce here at home, and expand the MEP's role through the
creation of regional tech hubs so SMEs can keep up with the latest
innovations and ensure the success of manufacturing in the U.S. for
current and future generations.
Rockwell appreciates the Subcommittee's continued leadership and
support, and we welcome the opportunity to testify at this critical
hearing. We look forward to continued collaboration with you and your
staffs to ensure that America can maintain and enhance our global
leadership in advanced manufacturing for years to come.
Acronyms
AAM Academy of Advanced Manufacturing
ARMI/BioFabUSA Advanced Regenerative Manufacturing
Institute
CESMII Clean Energy Smart Manufacturing Innovation
Institute
CHIPS Creating Helpful Incentives to Produce
Semiconductors
MEP Manufacturing Extension Partnership
MUSA Manufacturing USA
MxD Manufacturing times Digital
NIIMBL National Institute for Innovation in
Manufacturing Biopharmaceuticals
NIST National Institute of Science and
Technology
REMADE Reducing EMbodied-energy And Decreasing
Emissions
SME Small and Medium-sized Enterprise
Senator Baldwin. Thank you for your testimony. Thank you
all for your testimony. We are now going to begin a round of 5
minute questions from members of our subcommittee. I will note,
since it perhaps wasn't made clear prior, that we do have
several people who are joining remotely.
We have implemented that since the beginning of the
pandemic. And so you may, as the afternoon moves on, have some
of those questions come. You will be able to see and hear the
individuals when that happens. I want to start with myself, and
with Mr. Zakreski. Thank you again for making the trip to
Washington, D.C.
It is great to have you here. You mentioned in your
testimony that MEP has helped Wisconsin manufacturers increase
their capacity so that they can become a supplier for domestic
manufacturers who may have big orders to fill.
We often think of reshoring as bringing back capacity that
was totally gone. But it sounds like in some cases this
reshoring or supply chain shortening is a matter of getting
small manufacturers to grow so that they can work with bigger
partners.
Can you elaborate a bit on that dynamic and explain how MEP
has been able to help in that upshoring?
Mr. Zakreski. Absolutely. Chair Baldwin, thank you for the
question. The small manufacturers have really embraced some of
the activities that the MEP system is deploying through
improving efficiencies within the small manufacturer, through
providing solutions, to enhancing capacity.
The WMEP, for example, has a large group of consultants
with an extensive list of expertise and strengths. And what
they do is, they go into the small manufacturer, they assess
their situation, they assess the challenges that they have,
whether it be capacity, whether it be cost, whether it be an
awareness issue of just getting their name out so that larger
OEMs can actually understand that they are a solution for them,
and the MEP steps in and provides that guidance.
They provide the tools, they provide them with the
introductions to the organizations that they need to enhance
their operations. And by doing that, it really creates a much
more competitive situation for that small manufacturer, such
that the larger manufacturers now, it makes sense for them.
Not only does it offset the logistics problems, as it
offset the political unrest challenges that they have had, but
probably the big piece of that is that it creates a more cost
competitive solution that makes them competitive against the
overseas option.
Senator Baldwin. Right. Thank you. Dr. Lee, you noted in
your testimony that we invent things here, but those inventions
often are manufactured elsewhere.
In my opening remarks, I mentioned my Invent Here, Make
Here legislation which was inspired by stories of federally
funded breakthroughs being licensed to Chinese manufacturers
due to a lack of interest by investors in the United States.
In your experience, what are some of the concerns that
manufacturers and their investors have on their minds when
considering licensing Federal innovations? And how can
Government address some of those concerns in order to encourage
more domestic production of these cutting edge inventions--
sorry, innovations?
Dr. Lee. Thank you very much for that question. I think
there is an aspect of Government marching rights as it applies
under the current Bayh-Dole Act, but I actually don't think
that is a driver.
So I want to mention it, but I don't think that is the
driver. I think the bigger way to think about this is as
technologies are invented, they have to mature in order to
ultimately be valuable to society and therefore valuable to
companies.
And as things are invented, they are still at a pretty
early stage in many cases. And so as investors or as big
companies look at the portfolio of technology options, they may
not have the risk tolerance to take something that is
relatively early stage and mature it themselves to realize that
benefit later.
And if you look at other countries or you look at other
ecosystems around the world, they may have a different risk
tolerance profile which might make them attracted. I think that
is exactly to the heart of what Manufacturing USA institutes
are supposed to do, to take those early stage proof of concept
inventions, mature them here, make them available here, ensure
there is a workforce here to understand how to use and deploy
those technologies, and help create that environment that we
all seek to support our economic security.
Senator Baldwin. Thank you. Thank you very much. Next in
order is Senator Sullivan. I am going to be departing to try to
cast my vote. The order after that, if full committee Chair
Cantwell arrives, we are going to turn to her for opening
statements and questions.
If she does not, Senator Peters has been on remotely since
the beginning of the meeting, and he would be called on next.
All right, Senator Sullivan.
Senator Sullivan. Thank you, Madam Chair. Well, let me--I
am going to start with just a general question, and it relates
to manufacturing and input of manufacturing, and I would like
all of you to just touch on it.
My state, we are trying to be a much bigger manufacturing
state, but we are a huge energy state. And having low cost,
reliable American energy, whether it is renewables or oil or
natural gas, I think, provides comparative advantages to us in
a whole host of areas. We also do it with the highest
environmental standards of any place in the world.
Can you guys--can I get all the witnesses to just briefly,
but just talk about from your perspective in the areas that you
are focused on, what it means to have reliable, domestic
supplies of American energy for manufacturing and how important
that is.
And maybe we will just start along the line here with you,
Ms. Hines to begin with.
Ms. Hines. Thanks, Senator. It is a great question. It is
critically important that we do our best to create low cost,
reliable energy for manufacturers. As we have seen things being
disrupted internationally, we have got to have that option for
our manufacturers----
Senator Sullivan. And if it is domestic produced, all the
better?
Ms. Hines. All the better, of course. Definitely----
Senator Sullivan. Well, you wouldn't--I mean, I agree, of
course. But trust me----
Ms. Hines.--needs to be said.
Senator Sullivan.--there are certain people. We are--the
Biden Administration just lifted sanctions on Venezuela to
import more oil from Venezuela. And we have a very big project
in Alaska called the Willow Project that they are still looking
to shut down. So it is, of course, to most people, but not
everybody, unfortunately, so I appreciate your directness and
honesty on that.
Ms. Hines. Sure. Obviously, the energy sector with a lot of
investments in the energy sector, there is a lot of reason for
manufacturers to really increase their workforce skills in that
area, technologies in that area.
So not only creating it here but learning how to use it
effectively and efficiently in their manufacturing facilities.
So there is a big opportunity there for manufacturers to,
again, look how that technology can influence their
manufacturing processes and also make sure that we are
upskilling the current workforce to be able to adapt to those
new energies.
So that is critically important to manufacturers across the
country that we have those.
Senator Sullivan. And energy is kind of manufacturing too,
right, with all the inputs and----
Ms. Hines. Yes, absolutely.
Senator Sullivan. Great. Dr. Lee, do you have a view on
that?
Dr. Lee. Yes, thank you. I will look at it from the lens of
sort of the biopharmaceutical manufacturing industry.
Senator Sullivan. Yes, right.
Dr. Lee. Which is to start by saying, I think we want to be
able to control our energy future.
Senator Sullivan. Yes.
Dr. Lee. To the extent to which we can control that, then
we can have that stability and that reliability through
whatever----
Senator Sullivan. And again, mostly domestically--to the
extent we can----
Dr. Lee. Absolutely. Absolutely. And so the reason I raise
that is, when it comes to manufacturing of biopharmaceuticals,
it is actually an industry that is pretty risk averse. When it
thinks about where am I going to put my next factory?
Senator Sullivan. Yes----
Dr. Lee. Of course there are a variety of considerations
related to where is the R&D done, where is the workforce done.
There might be tax and other financial incentives to
consider, but certainly the stability of the environment, the
stability of energy, the stability of the workforce, the
stability of policies, that all drives a lot of that
decisionmaking. So I think it is critical.
Senator Sullivan. Yes. Mr. Zakreski, what about you and
HUSCO?
Mr. Zakreski. Thank you, Senator Sullivan. I think my
comment will be more along the lines of that I think domestic
energy means more jobs here in the U.S., whether that is
Alaska, whether that is North Dakota----
Senator Sullivan. Right.
Mr. Zakreski. But for me, as a leader of a U.S. based
company who is also trying to localize a lot of material from
overseas back to the U.S., that equates to jobs.
And that means that there are more jobs for our suppliers,
there are more opportunities for suppliers. And I have to
believe that the more domestic energy that we can generate and
consume, whether it is renewable, whether it is gas----
Senator Sullivan. Yes, all the above, right. We have it in
abundance for the whole country. I don't discriminate. You have
got American energy and it is helping American workers and
American industry, let's do it. Good. Great.
Mr. Zakreski. Yes.
Senator Sullivan. Dr. Shivakumar, do you have a view on
that, sir?
Dr. Shivakumar. Well, I think that Senator, as you pointed
out, energy is manufacturing. And I think almost everything
that this panel has said about the importance of having a
secure manufacturing ecosystem, to make sure that we have
reliable and adequate energy for our industry is essential.
I think it not only is integral to our other industries,
but it also supports our domestic innovation ecosystem, which
as I mentioned in my earlier remarks, is critical for our
national security.
Senator Sullivan. Let me just real quick to follow up with
you before I get to Mr. Vasko, you are an expert on our
relationship with China and competing with China.
One thing I know, because I read the reporting and
everything, the Chinese Communist Party leadership is very
afraid of America's energy dominance. It is an area where we
have giant strategic advantages internationally, and they don't
have them. They are very reliant, as a matter of fact, on those
kind of supplies.
Have you seen that in your studies at all, just what they
worry about in terms of energy, because it is a big comparative
advantage we have relative to China?
Dr. Shivakumar. I agree with you. Our ability to be self-
sufficient in energy is a major strategic advantage for us.
Senator Sullivan. Yes. Great. Dr. Vasko--or Mr. Vasko, do
you have any views on this in your business and some of the
work you have done?
Mr. Vasko. Sure. Absolutely, Senator Sullivan. All of the
manufacturing that is done requires energy. And we have seen
that within the supply chain disruptions we have had. The
better you control those, the better off you are.
So having a local source of energy, having control of that,
having low cost energy helps America's manufacturers become
more competitive. There is no doubt about that.
Senator Sullivan. And resist supply shocks, too, like we
saw in the 70s.
Mr. Vasko. Absolutely. Absolutely.
Senator Sullivan. Good. See, we have unanimity on a big
topic, so that is very good. OK, I am going to turn it over. Is
Senator Peters on still or--? Senator Blumenthal. OK.
STATEMENT OF HON. RICHARD BLUMENTHAL,
U.S. SENATOR FROM CONNECTICUT
Senator Blumenthal. Senator Peters is not on.
Senator Sullivan. OK.
Senator Blumenthal. So I am happy to jump into the breach,
so to speak. Thank you all for being here. This is a very
important topic, as you have gathered at a very busy time in
our schedules, so I apologize for the lack of full attendance
here. We have been talking a little bit about energy.
I want to talk about a different kind of energy, human
energy. As I go around the State of Connecticut and every time
I am back, which is every weekend I go back at the end of the
week, I come down on Mondays, I try to visit businesses, mainly
small and medium sized businesses.
And the most common refrain that I hear is, we can't find
people to fill these jobs. Sometimes it is, can't find people
with the right skills to fill these jobs. And in every sphere
of manufacturing, I hear it again and again.
So my question, first of all, to I guess, Mr. Zakreski,
because you are the one who actually runs a business here, if I
am not mistaken. You are in charge of your business. And I
don't know what things are like in Wisconsin, but I am
wondering whether you have any thoughts about the, really the
skilled workforce challenge that the United States faces today.
In my view, it is the biggest challenge of this country
right now. We can talk in very abstract terms about capital,
about supply chains, but if we don't have people to make things
or to implement the grand designs that companies may have, big
companies but also small companies, we are not going to have
supply chains or manufacturing.
Mr. Zakreski. Thank you, Senator Blumenthal. And I spent 8
years of my life growing up in East Hartford, Connecticut, and
so it is a pleasure to actually get to meet you today.
Senator Blumenthal. Wonderful.
Mr. Zakreski. You are absolutely correct in the how much of
a challenge it is to find people. I want to share with you a
story that I can get a little emotional about, but I want to
share it with you because it is important, is that we really
struggle to find second and third shift people to meet the
demand earlier in the year.
Working with the Wisconsin Lutheran Services and Manpower,
we were introduced to some Afghani refugees who were in
Wisconsin. And we were able to bring a few of them on and then
a few more and a few more. We made accommodations to adjust
them and help them with the culture.
We ended up with now over 20 Afghan refugees from--and who
were placed in Wisconsin, rescued from a horrible situation.
And that saved our rear end in the first half of the year
because we were able to get the workers that we needed. But
that is an example of just a creative pathway to finding help
in that area.
Now, as you point your point out, besides just the
operators that we needed for the second, third shift, finding
engineering talent is a challenge. But there are programs that
are starting to get some legs within our state, and I am sure
within some of the other states, STEM programs that--programs
like our Waukesha County Business Alliance have and introducing
young high school kids to and elementary school kids to
manufacturers and getting them excited about going in and
working with automation, with other types of technologies.
So there is a lot going on. It doesn't help now, but I see
a light that really kind of gives me some hope that between
maybe some opportunities in our immigration policy, coupled
with the opportunities that a lot of organizations are
delivering, State and Federal organizations, I see a lot of
hope in the future in this space. But right now, it is a
challenge.
Senator Blumenthal. That is a very hopeful and in fact,
inspiring answer. And I might just make the point, we have had
the same experience in Connecticut with Afghan refugees. They
want to work. They are thrilled to learn a skill. They are
bedazzled by the opportunity to understand English and go to
work.
And I might just say, although it is not directly relevant
to this hearing, but for the benefit of my Republican
colleagues, I am very hopeful that the bipartisan Afghan
Adjustment Act will be adopted before the end of this session,
because it will give those refugees a more permanent status in
this country, an opportunity to continue to work for you and
businesses in Connecticut and others like them around the
country.
Same with Ukrainian refugees who are coming to this
country, who have the same kind of work ethic and desire to
learn. So I think your answer both on the general need for more
skilled people with the kind of training that we can afford
them, I am glad that there is a glimmer of hope, but I think we
really need to focus on it.
And unfortunately, my time has expired, and colleagues have
come to ask their questions. But any ideas that any of you
have, if you want to submit them in writing or comment later in
the course of this hearing, I think it is a real challenge, and
I apologize that I don't have more time. Thank you.
Senator Sullivan. Thank you, Senator Blumenthal. Senator
Young.
STATEMENT OF HON. TODD YOUNG,
U.S. SENATOR FROM INDIANA
Senator Young. Well, thank you, Chairman, for holding this
hearing. I want to thank our panelists for being here today.
Manufacturing is just so important to my state of Indiana. We
are the most manufacturing intensive state in the country on a
per capita basis.
So my constituents expect that I advocate on behalf of our
manufacturing economy. Roughly a quarter of the output in my
state is attributable to the manufacturing sector, and about
one out of every six workers works in the sector, and of course
is an important sector to our Nation's economic health and our
global competitiveness as well, to say nothing of national
security.
The CHIPS and Science Act is some legislation I led on in
concert with Senator Schumer, and of course, now law, it as
some of you know, incentivizes semiconductor companies to re-
shore back here to the United States of America, and in the
process, not only creates good paying jobs, will help ensure
that we have a more secure supply chain moving forward.
We have had some fabs, as they are known, locate in the
industrial Midwest in the wake of that announcement. SkyWater
Technology in the state of Indiana, roughly $2 billion
semiconductor facility being constructed in West Lafayette,
Indiana.
And then the CHIPS and Science Act has a related provision
pertaining to tech hubs, that is the identification of centers
of excellence, regions of excellence across the country that
will be so designated as a sort of market signal so that
workers in these industries of tomorrow can be trained, those
areas can receive special dispensation through public law to
incentivize the creation of more startup companies, and the
market signal for venture capitalists to go into those
designated areas and make investments.
So I have high hopes for the CHIPS and Science Act, and I
wanted to ask Ms. Hines, how you believe the CHIPS and Science
Act will impact our small American manufacturers, which is why
we are here today to discuss them.
Ms. Hines. Thank you so much, Senator, for that question.
First of all, I think it can impact small manufacturers in two
ways, one of which is really expanding the MEP program through
the expansion awards and helping them increase their
competitiveness in supply chain workforce and technology,
specifically cybersecurity.
The other one you mentioned too is the regional tech hubs.
And the regional tech hubs are really important within CHIPS
and Science because it kind of takes about MEP does on a state
level, which is integrate local and state resources at the
State level, but expands them regionally, because we know
manufacturing isn't just within a state's boundaries.
Especially with the supply chain, it expands all across the
country, internationally too, but I think what we need to do is
really harness the integration and leverage the resources both
state and locally into a more regional model so we can help
support things like the semiconductor industry.
Senator Young. Thank you. I find that characterization of
the tech hubs helpful, and I will probably borrow that, usually
without attribution as we are apt to do around here, right, and
use that as I talk to constituents and colleagues. I hope I
pronounce your name correctly, Dr. Shivakumar.
In your testimony, sir, you discussed the concept of
innovation as a national security asset. You go on to mention
that this asset has to be rejuvenated as new global realities
and opportunities arise. Can you elaborate on this nexus
between national security and innovation in manufacturing, sir?
Dr. Shivakumar. Certainly, Senator. The United States has
an innovation system which is made up of complex networks
related to manufacturers, related to research organizations,
related to educational organizations, and all of these work
together to support a broader innovation system.
That system has been the basis of our strong lead in
technological leadership. And that technological leadership in
turn, has been the basis of our military leadership and
national security advantages over the past, you know, since the
World War II and perhaps earlier. The point that I tried to
make in my opening remarks was that the system has to adapt to
new realities.
That system was predicated on a world where the United
States was already in our leadership position in terms of
research and science. That world has changed. We have a number
of near-peer competitors, including countries that are--that
have deliberate policies or deliberate strategies to work off
of the investments that we make in research and development,
and focus much more on the second half of the equation, which
is manufacturing and commercialization of products.
So we can no longer continue to prosper in a world where we
do the front end, the research and the development, and the
fruits of that effort are then capitalized in other countries.
We need to build our small and medium sized manufacturers,
and we need to connect them to large manufacturers, and we need
to connect them to the education system, we need to connect
them to the research system so that collectively that we have a
strong innovation system that continues, that adapts us to the
21st century, and allows us to compete effectively, and allows
us to maintain our national security advantages.
Senator Young. Well, thank you. Chairman, if I could just
continue with your leave, I would like to maybe tease out a few
things. So if we think about this nexus, national security,
innovation, manufacturing.
If we are investing in each of those areas, sometimes there
is of course, important overlap. But if we are investing in
that nexus as it were, or opportunities for job creation for my
constituents and people across the country, that is really
appealing, innovation will occur not just in kind of hard
science, but also as you manufacture.
It is sort of iterative innovation, as I understand it,
manufacturing innovation oftentimes, and it doesn't occur in
labs, it occurs on the factory floor. And then there is a third
piece that you hit on in your testimony, and that is leadership
and global standards.
And you call on Congress, in fact, to secure the patent
system. How does manufacturing something lead to leadership
globally, as it relates to standards? And why is U.S. standards
leadership so important as we look to the future?
Dr. Shivakumar. Well, standards, I think the way I
understand is, you know, it is basically a technical language.
If we are speaking in the language of English, we understand
each other's vocabulary.
We have we share a grammar. We have idiomatic, you know,
structures in our language and that helps us to communicate
rapidly, easily. And the country that has, that establishes
that the language of technology is the language that leads in
technology.
So it is very important that we maintain that leadership
because it helps us dominate the conversation. The Chinese
understand this. They have a new, you know, China 2035 standard
strategy.
They are working very hard to take over that conversation.
We have for a long time dominated the conversation because of
our natural strengths in research and development. But we have
sort of taken that leadership for granted, I think, for the
past few decades. That leadership is under challenge.
One of the areas where the Chinese are moving with some
deliberation is in the international standards setting
organizations. That requires not only NIST in terms of setting,
helping small business, you know, small and large businesses
develop standards cooperatively.
But it also involves, you know, our diplomatic services,
our other parts of our Government to engage with these
international organizations, make sure that we send people
there that will pay attention to what is going on.
We understand, you know, their processes to make sure that
standards, particularly in fast evolving technologies like
information technologies, communication technologies, are the
ones that we are conversant with and that we are setting the
conversation on.
Senator Young. Thank you. And as we develop these out, of
course, stitches our different partner countries together to
the mutual benefit of all of us. Thank you so much, doctor.
Dr. Shivakumar. Very well.
Senator Young. Chairman.
Senator Sullivan. Thank you, Senator Young.
Senator Blackburn.
STATEMENT OF HON. MARSHA BLACKBURN,
U.S. SENATOR FROM TENNESSEE
Senator Blackburn. [Technical problems]--Hines, I want to
thank you for the support that you lent to us as we were
working on the MEP Supply Chain Data base Act and getting that
signed into law. And as you know, this gives us, give the
National Institute of Standards and Technology, NIST, the
ability to establish a database that will give a national
overview of the networks of U.S. supply chains.
And I would love for the record for you to give me just a
quick comment on how you think this is going to be helpful, and
what should the Department of Commerce keep in mind as they are
implementing this?
Ms. Hines. Thank you, Senator, for the question. And I am
glad to see you. And I would like to thank you, too, for your
leadership on that bill. I think it is critically important
that the Department of Commerce invest in a manufacturing data
base. It is a tool essentially for the supply chain.
MEP is really the key program to be in position to operate
that supply chain intelligence network, because we are really
at the ground floor with small manufacturers all across the
country. So we know their capabilities, their certifications,
we know what they can do, what they can produce, and what they
can support.
And there is some great examples, too. I will just give you
a couple of, you know, we are sampling in this area. We have
data all across the country of manufacturers everywhere. And
there is a couple great examples that I can share with you.
One of which that I mentioned in our written testimony is
that in the recent Ukraine conflict, that essentially we had a
manufacturer in Florida that was--had some supplies being
supplied from Ukraine.
Obviously, when that conflict broke out, they had to find
new suppliers and quickly. And what they did is they looked
into a local database that is right now in existence in Florida
and found other suppliers, and I think actually found some
suppliers in Indiana, for those parts. So it is really, really
important.
They also use that intelligence network, again, to find
those ventilators supplies to respond to Hurricane Ian. And so
it is really critically important, the database as a tool, that
is really an intelligence network the MEP program can provide
because of our access to small manufacturers across the
country.
Senator Blackburn. Well and thank you for that. And right
along with that on the supply chains is workforce. And Senator
Rosen and I have done the Advanced Manufacturing Jobs in
America Act that would put some pilot programs in place.
We have got 153,000 Tennesseans that work in advanced
manufacturing, and we have had recently 36,000 advanced
manufacturing-related graduates since 2016. So we are picking
up the pace there.
But talk a little bit about what we need to see in
collaboration with higher-ed, with industry, with the MEPs so
that we can incentivize this advanced manufacturing workforce?
And Ms. Hines, I am throwing that one to you.
Ms. Hines. Thank you Senator. There is many things we can
do. One thing that we are doing across the country in a kind of
smaller scale at this point is MEP centers are working with
their local community colleges to develop curriculums where we
can actually put a workforce in place, where we can look for
what the needs are of the manufacturing industry.
They can actually get accredited courses and be skilled in
what the manufacturing industry needs. So that is obviously
one. The other big issue that we have is recruitment, and the
MEP program across the country is really working with K-
through-12 students in a lot of different really kind of
interesting programs across the country.
Again, they are kind of smaller, individual within the
state. So the MEP--the CHIPS and Science Act would allow us to
expand those programs to scale. So there is a multitude of
things that we can do, from recruitment, to upskilling, to
working with our local community colleges, and really trying to
skill the workforce that our manufacturers need.
Senator Blackburn. Thanks. Mr. Vasko, let me come to you.
Good to see you today. And let's talk about Manufacturing USA
for a moment.
As we have worked with small business manufacturers in
Tennessee, I was interested to note that 50 percent of most of
the new business formations fail within a 5-year period of
time.
Some of this is lack of resources, lack of funding. But I
would like to hear from you. How is Manufacturing USA using
their resources and their experience to help these startups and
these small businesses that are trying to grow?
If we are going to bring manufacturing back from China,
back from India, then it is going to be important that these
new start companies be able to support themselves and last
longer than 5 years.
Mr. Vasko. Thank you for the question, Senator Blackburn.
That is an excellent question. And you look at what the
Manufacturing USA institutes do, they de-risk technologies.
They take things, from technology--levels which are actually
very, very risky, and they work, and they work, and they try to
operationalize that so people can adopt those technologies.
And that is important for people adopting those and trying
to build businesses around those technologies to have those
technologies de-risked. That is what Kelvin does in his
institute. What happens in all 16 of the institutes.
And that is so incredibly important to be able to take that
technology, get it ready, do demonstrations, how it can be
used, have the support there, and then using the--leveraging
the MEPs and the tech hubs, push that out to a wider audience,
and that really forms that safety net, helping those vendors to
be successful--those manufacturers to be successful.
Senator Blackburn. Thank you for that. Thank you, Mr.
Chairman.
Senator Sullivan. Thank you, Senator Blackburn. Let me
conclude with just a few more questions. Dr. Lee, your opening
testimony on the trade deficit that kind of spiked despite the
fact that we were the, really originators of
biopharmaceuticals, was--those are shocking numbers. And I am
just curious if there is a lesson there.
Well, first, why did that happen? And then, is there a
broader lesson there that we can learn from and try to rectify
what seems to be a real challenge, where we started out as the
innovator and now we are the big importer.
Dr. Lee. Yes. Thank you for that question. It is really
shocking when you hear those numbers and you look at the
trajectory, and it is not--if you were to look at the data, it
is a trend, it is not a spike even.
So, I think there are some lessons learned. I think when
you look at where those factories are being built, where the
companies are going to actually do their manufacturing, they
are placing those factories in countries that have a workforce.
I have been visited by many people from different countries and
they talk about what their strategies are and kind of compare
notes.
And in one example, I won't go into any details except to
say their strategy is that when they are talking to a company
and they are trying to convince them to build that factory,
they will tell the company, we will find you x number of
workers that meet your needs in terms of their skills.
And if you don't like some of them, we will find more to
replace them. So I think the whole conversation that all of us
have touched on, on the importance of workforce and ensuring we
have a workforce with skills, is a very important problem that
we have to solve. And it is not a simple problem to solve
because it is not just this organization or that part of the
Government can solve it.
I think it is a whole of Government strategy to reset what
we are doing and create that workforce that is going to want to
incentivize organizations to be here. I think there is another
piece of this which is, I think there is an interest for
companies to try to build their next factories closer to their
R&D sites.
Yes, but in order to do that, they want to see that the
return on investment is going to be there. They want to see a
supportive and nurturing environment. And they want to have
access to not only the best workers, but they want to have
access to the best technologies. And that is where our
opportunity lies.
Other countries, and we have talked about a lot of them
here, are investing in that middle stage of technology
readiness and maturing them. And that is the piece that has
been missing here for a long time, until programs like the
Manufacturing USA program were created, and they were expressly
created to begin to move the needle in that space. And I
personally don't think we invest enough.
I think there is a lot of untapped potential, but I think
we are seeing the value that these programs are creating. So I
am looking forward, I am excited about what the future can
bring as long as we can have the right kinds of strategies to
meet the needs.
Senator Sullivan. Good. Let me ask two final questions. One
is really a follow up to what you just mentioned, and I will
pose them to all the witnesses today. But let's go back to the
issue of workforce and the challenges we have heard from
Senator Blumenthal, and the Afghan refugee issue is an idea.
Some of what you just mentioned, Dr. Lee. Mr. Vasko, in
your testimony, you touched on a topic that is very near and
dear to my heart, and that is this pathway that you look for as
it relates to bringing American military veterans into
manufacturing and good training. I think it is a very good
match.
I serve on the Veterans Affairs committee. I serve on the
Armed Services committee. I have been trying to look at ways in
which we can really streamline the ability of our young men and
women who are getting out of the military to go into
manufacturing, to get the training, to get into apprentice
programs or good union programs. What has been your experience
in that regard?
You know, these young men and women are disciplined. They
know how to get up early. They know how to show up for work.
They know what it is like to work 12 and 15 and 20 hour days
when you are deployed. So what are some of the other ideas that
we have here from you but others on the workforce challenge?
Mr. Vasko. Yes, Senator Sullivan, we--I totally agree. And
I have to say that it is a shame that many of our military
veterans are underemployed when they leave. They may have
really high tech careers in the military. They have skills,
leadership skills, responsibilities which are unimaginable.
So----
Senator Sullivan. I will tell you--I am a Colonel in the
Marines. I had a, many years ago, a young Marine Sergeant
getting out, right. And he--you know, I would check out with
all my guys and women.
And he said, well, sir, you know, I really don't have much
of a background and training, and this guy was a combat vet.
Led combat missions in Afghanistan, awards for valor. I said,
you have a better education than a Harvard MBA. You do. It is a
fact. You have more experience, more leadership.
Some of them don't know it, though, either right. And that
it is kind of--we need to work more on it.
Mr. Vasko. Absolutely. Absolutely. So I think there are
things we could do to bridge that gap. And part of it is just
perception. You may see a skill used in the military and not
see how it could really have relevance in the commercial
environments. We actually have a program that bridges that gap,
a 12 week program where hands on, they use manufacturing
equipment. 30 percent----
Senator Sullivan. Is that while they are still on active
duty and then they are allowed to do that or once they get out?
Mr. Vasko. No. After they retire, yes. And we--it is called
the Academy for Advanced Manufacturing. And we are able to
transition people very quickly from that. And 95 percent of
them get a job walking out of that.
Senator Sullivan. That is great.
Mr. Vasko. The participation there is actually even paid.
The people that are hiring them pay for the all the schooling
and they get a stipend.
Senator Sullivan. I bet the employers who hire them love
them.
Mr. Vasko. They love them. You wouldn't believe how many
people come back and hire more and more and more. And it is,
but you are right. Those are----
Senator Sullivan. If you could submit for the record some
of the information on that program.
Mr. Vasko. I will do that.
Senator Sullivan. Good.
Mr. Vasko. We have a great deal. I will submit that for
you.
Senator Sullivan. Perfect. Anyone else on just innovative
ideas to address this big challenge we have on manufacturing?
Dr. Shivakumar.
Dr. Shivakumar. Yes. I think, Senator, you hit the nail on
the head in terms of identifying that veterans have many of the
soft skills that employers are really looking for. There are a
number of initiatives that are underway or could be supported.
One is, you know, create a curriculum for veterans even
when they are--or for our servicemen and women, even while they
are in service so that they are prepared for a transition into
civilian life.
We need to provide better transition support from the
military to civilian life. Part of that is also to create a
system where the experiences that they have had while in
service are transferred into something that the civilian
marketplace understands and values.
Senator Sullivan. Right. Yes. It is not always as easy as
it sounds.
Dr. Shivakumar. That is true. And the final point I would
add is to provide support for military spouses. In many cases,
you know, if you are a spouse of a service man or woman, and
your wife say is, or your husband, is a hairdresser in one
state, that--the license to cut hair or style hair in another
state doesn't transfer across state lines.
And so that is a huge disincentive, and it is something
that, you know, our service families really struggle with.
Creating--and I understand that, you know, this is sort of a
local jurisdiction, but at least for military families, if
there was some sort of Federal provision where these
credentials could be carried across States, it would be really
helpful for our service families.
Senator Sullivan. Good. Any other thoughts? Yes, Dr. Lee.
Dr. Lee. I think you raise a really important point. And so
my response is kind of there are two elements. One is I think
there are many very good pilot or existing programs that we
need to ensure that we can scale as successes.
And so one of my sister institutes, Lift, they run a
program called Operation Next. And it takes service members who
are in the last 6 months of their duty and gives them the
skills to work in a manufacturing environment, so that when
they are done with their service, they then have the skills----
Senator Sullivan. Could you submit the information for the
record----
Dr. Lee. Yes, I will follow up in writing with some
information about that.
I think the other piece, though, is while we have to have
those regional, those local, those skill specific kinds of
opportunities and try to scale them, I do want to go back to my
earlier comment and say, I think we still have a perception
problem, that manufacturing can be a career. It is not just a
job and a set of skills, it can be a career.
And I think if we can think about a national strategy to
reset that mindset, we might see a greater interest by the
workforce.
Senator Sullivan. Great. Ms. Hines, do you have a comment?
Ms. Hines. Yes. I want to take kind of a little turn on
some things that we have seen with veterans, especially
returning from overseas, is they are actually very innovative
in their experiences.
They come back and they say, I needed this or I want to do
this. So we have actually worked with a lot of manufacturers
across the country who have an idea and bringing that idea to
market. And it is based on their experience.
So and it is really the nuance of what we do because they
are really a small, small kind of company, but it makes a huge
impact. So it is definitely a little nuanced on the training.
Senator Sullivan. Yes. Good. Let me ask one final question,
and I again, I will throw it out to everybody, and it is, you
know, I think that we have all awoken to this idea of being too
over reliant, particularly on Communist China and the risks
that that entails, right.
Xi Jinping could wake up tomorrow and say, hey, I don't
like this sector, and, you know, there would be a problem if
you are getting your supplies from there. So this idea of
strategically decoupling the U.S. and our allies' supply chains
from overreliance on China, but of course, we are not going to
be able to manufacture everything in the United States.
So how do you go about thinking about the balance of supply
chains? There is this big push to, you know, onshore or do it
with our allies, which I fully support, and I think you are
seeing here is a very bipartisan.
But what are the lessons there from your own personal
experiences, and how do we do that balance to make sure that it
is a strategy that could work? And there is a lot of nuances
here. It is one thing to say, all right, we have got to
strategically decouple from China. I agree with that. But in
practice, what are the key elements of the factors we need to
consider, particularly as it relates to legislation but what
you have also seen in your own experience?
And Dr. Shivakumar, why don't we begin with you, sir,
because I know you have been thinking a lot about this topic.
And then if anyone else has views on this, I would welcome it.
Dr. Shivakumar. No, we do have a strategic vulnerability in
terms of the fact that we are heavily dependent on a variety of
products that are manufactured in China.
There is this topic about decoupling, but if we actually
look at, you know, go back two or 3 years in terms of the
manufacturing, almost everything that we can think of that we
wear, see, drive, talk about has some element that has been--
that involves China in the network of activities that have
produced a product or service.
I think decoupling is going to be extremely slow and
painful. If we try to do--if we think of decoupling as pulling,
you know, the plug out of here and putting it into that, I
think what we need to do is actually accelerate our own growth
in terms of the discussion we were having here, in terms of
growing our own innovation ecosystem, in terms of building our
own networks, our own strengths.
And I think, you know, there is a growing awareness among
established firms worldwide of the real dangers of operating in
China. Most companies have either an alternative plan or exit
plan from China.
We have a golden moment in the sense to really invest in
our own innovation capacities, our own manufacturing
capacities, so that we are growing those new neurons, if you
will to use that analogy, of--well, the links to the other
system, the existing system, slowly, you know, wither away. But
we need to do that now.
And this is, I think a lot of the legislation that has been
passed is very much in that direction. What my concern is that
the Congress maintains its commitment to growing our innovation
ecosystem over a sustained period of time.
You know, you can't have MEP funded at this level 1 year
then this level next year, or even our Manufacturing USA
network. We have a very small, relatively small initiative
there. The Chinese have looked at our program. They have--they
like it and they have scaled it up enormously.
Our system is sort of inspired by the German model, and the
German model is many times what our system is. So we have--you
know, we need to think about our innovation system much in this
way in which we talk about national security in terms of ships
and aircraft carriers and planes. We are still thinking very
small.
Senator Sullivan. Yes.
Dr. Shivakumar. We need to think much larger. And we
didn't--we haven't prevailed over the past so many decades
since the World War II by thinking small about our national
defense. But what we continue to think small about how much we
fund MEP, and Manufacturing USA, and a whole series of other
efforts to build our innovation workforce and so on and so
forth.
So I think we need to--our metaphor we have in mind, we
need to be much more, thinking in terms of a, you know, a
rebirth, a major investment in ourselves. And I think that is
the way to go forward.
Senator Sullivan. Good. Anyone else? Thoughts? Ms. Hines.
Ms. Hines. I think one aspect that you talked about, too,
about decoupling, which is really important, is risk
mitigation. You have to really look at the supply chains. We
are not going to necessarily be able to decouple in all cases.
What we can do is really mitigate the risk and say we have
a supplier that is overseas here. Let's identify another one as
a backup or one that can retool and make something, should that
one where crisis come into play.
So I think that is a really important point of what we need
to do, especially for small manufacturers that really have no
idea. You know, they get their source, one supply from one
source. They aren't looking at the big supply chain and the
risks associated with that.
Senator Sullivan. Right. Dr. Lee.
Dr. Lee. Yes. I just want to reflect for a minute that, you
know, as you go deeper into the tiers of supply chains, not
only do they get very complicated, but the supply chains for
the products that we buy in the stores end up being
intermingled in part of the same supply chain that also feeds
our military and our national defense.
So I think it is critical to think about how we can ensure
that we have that capability more local. But I also want to
amplify the comments about ensuring that we are what I would
call a wellspring of innovation.
You know, I often have conversations about how are you
going to prevent this technology from going overseas. And at
the end of the day, I don't know that you can over time. As
things mature, they move on.
What we can do as a country is ensure that we are always
going to be that heart of innovation, that wellspring of
innovation, and that is going to attract the kinds of
organizations, companies, and supply chain that we need for our
own future.
Senator Sullivan. Right. Good. Mr. Zakreski.
Mr. Zakreski. So I will give you a bit of the kind of the
hard realities of some of this is that there are some parts
that some people here in the U.S. just don't want to make. And
it is hard to find people here to make them.
Senator Sullivan. Right.
Mr. Zakreski. We buy parts from overseas. We have to
because we have not been able to find people who want to make
the investment to deliver the kind of quality and expectations
that we have for the parts. So we have to go and have had to go
overseas for those parts. That is a big challenge is to create
an awareness that there are potential suppliers out there who
maybe can help.
I mean, and that is where maybe the database that we had
talked about through the MEP can come into play and help out
for--help somebody like us to say, oh, wait a minute, there is
somebody down in, you know, the Northern part of North Dakota
or some part in Anchorage that can help us out. And we need to
have that data, because if you don't find it, it is really hard
to find that resource.
And it is--the other part of it is, it is really hard if
you have parts over there to move them back, especially in the
automotive industry. You have to go through tons of validation
and extra work, and it can take a year to resource a part and
an awful lot of your technical resources away from developing
opportunities for new business to re-source a part from
overseas back to here, so that when you get your car that
annoying little check engine light doesn't come on.
And so, it is a challenge.
Senator Sullivan. Good. Mr. Vasko, do you want to close on
that topic?
Mr. Vasko. Sure. The one thing I would add is we need to
consider flexibility as well. So we have done a lot to optimize
our manufacturing operations, but many times to the detriment
of flexibility.
And we found that flexibility really provides a lot of
opportunities. You may still be able to produce many other
products with the equipment, with the parts you have, and
really developing that into our manufacturing.
As we customize more, that sort of flexibility is going to
be required for American manufacturers to be successful. So
that is the one element I would add and make sure we consider
that as well.
Senator Sullivan. Great. Well, listen, thank you very much
for the discussion, and it was great. And I think you are
seeing a lot of good ideas on both sides of the aisle here.
I want to just mention the additional questions you might
be getting from the Committee. Senators have until December 20
to submit additional questions. The hearing record for this
hearing will remain open until the 27th of December.
And I ask the witnesses to respectfully to try to respond
to those questions by the 27th. I am sure as you are having
Christmas with your family, you are going to be really focused
on these questions. I am just kidding.
But I want to thank you again. Great discussion, and I am
looking forward to getting some of the things that I have
requested for in terms of the hearing. This concludes our
hearing. Thank you.
[Whereupon, at 3:35 p.m., the hearing was adjourned.]
[all]