TPIM 22

1
Technology Policy and Industrial
ModernizationPUBP 8160 - Philip Shapira

• TPIM 2-2
• ? Understanding industrial modernization
• ? Types of measures
• ? Policy examples - Japan, Germany, Italy
• ? US Case study Manufacturing Extension
  Partnership
• ? Impacts, challenges, best practices and
  conclusions
• ---------
• 10.15 h Introduction of Prof. Ed. Bergman,
  Institute for Regional Economics and Development,
  Vienna University of Business and Economics,
  Austria
• 10.45 h Review and class logistics

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Industrial ModernizationUnderstanding the
Dimensions
?
3
What is industrial modernization?

• the application of upgraded technologies design,
  management, manufacturing, marketing, training
  systems
• to raise productivity, quality, product
  performance, workforce skills, and manufacturing
  capabilities
• requires upgrading not only individual firms but
  improvements in broader technology and industrial
  systems
• ultimately measures by standard of living -
  maintaining competitiveness at higher wage levels

4
Industrial modernization is linked to...

• National industrial competitiveness strategies
• promoting high performance in industry
• Technology policy and transfer
• diffusing innovation
• Economic and regional development
• jobs - especially higher-wage jobs
• Social capital and community development
• building learning and knowledge infrastructures
• Management of technology
• developing firm capabilities
• Reinvented government
• new performance-based strategies

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Industrial modernizationTypes of measures (1)

• Firm level
• Benchmarking
• Information provision
• Assessment
• Strategy development
• Training
• Brokering and referral
• Implementation assistance
• Cost-sharing
• Teaming

• Business infrastructure
• Improvement groups
• Dialogue information flow
• Supply-chain development
• Network development
• Promoting association
• Best practice promotion among customers, vendors
• Complementary services - best practices,
  qualification

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Industrial modernizationTypes of measures (2)

• Social infrastructure
• Facilities
• Demonstration
• Technical assistance
• Partnership promotion
• Best practices
• Tools
• Linking technology developers and users
• Training and capabilities
• Participation and governance
• Clustering and agglomeration

• Policy framework
• Leadership
• Analysis and monitoring
• Evaluation and review
• Policy dialogue
• Funding matches
• Complementary policy reforms and initiatives

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Industrial modernizationPolicy example Japan

• Kohsetsushi industrial centers
• 180 Prefectural and local centers
• Mission technological upgrading of SMEs (under
  300 employees)
• Research (catch-up)
• Examination and analysis
• Information dissemination, technical standards
• Training
• Open laboratories and use of equipment
• Registered technological advisors
• Diffusion of technology groups
• Established 1920s/30s post-war expansion now
  restructuring
• 1980s-gt1990s Emergence of 3rd sector
  organizations
• Technology fusion strategies

8
Industrial modernizationPolicy examples Europe

• Germany
• About 70 Fraunhofer Institutes - focused contract
  research with industry
• Steinbeis Foundation (Baden Wurtenburg) - problem
  solving, applied technology transfer with applied
  polytechnics
• Vocational training
• Italy
• Emilia Romagna (3.9m population...305,000 SMEs)
• Regional organization - 7 industry cluster
  centers, 3 horizontal service centers
• Mission real services to SMEs

9
Context for industrial modernizationUS
Technology Partnerships

• US Technology Partnership examples
• Technology Reinvestment Program (TRP)
• State and local partnerships (e.g. Georgia
  Research Alliance)
• Small Business Innovation Research Program (SBIR)
• Cooperative Research and Development Agreements
  (CRADAs)
• Advanced Technology Program (ATP)
• Manufacturing Extension Partnership (MEP)

• New policy parameters
• Government partners with the private sector in
  developing and deploying new commercial
  technologies
• At least 3 billion federal state investment in
  partnered cooperative technology programs by
  mid 1990s
• Commercialization focus, collaborative approach,
  performance orientation

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Case Study - the MEP US Manufacturing Extension
Partnership
?

• Design objective improve US industrial
  competitiveness, by accelerating the deployment
  of improved manufacturing technologies and
  practices
• Focus SMEs (under 500 employees) and industrial
  communities
• Policy structure federal-state collaboration
  with industry
• Decentralized management and partnering network
  of diverse centers, customer driven services,
  industry advisory boards, affiliated with
  multiple public, non-profit, and private
  providers of services
• Scope quality, manufacturing process, business
  systems, environmental, training, information
  technologies, automation, product development
• Cost sharing 6-year federal seed model,
  evolving towards 1/3 fed 1/3 state 1/3 private
• Performance review Federal sponsor and state
  reviews. 1998 law requires external reviews
  every 2 years for continued federal funding

SME Small and medium manufacturing enterprise
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Manufacturing extension partnerships Chronology

• Pre-1998 - About 10 states have industrial
  extension programs
• 1998 Trade Act, establishes NIST Manufacturing
  Technology Centers (MTC) program
• 1992 7 MTC centers
• 1993-1997 ramp-up of MEP, aided by TRP
  (defense-readjustment) funds

• 1998 - MEP coverage is nationwide
• more than 75 centers in 50 states, PR
• 300 offices, over 2,900 public private
  affiliates
• Service loads 30,000 firms/year (MEP)
• 200m system - 110m federal state and private

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(No Transcript)
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US MEP Precedents and Comparisons

• US Precedents
• Agricultural extension (late 19th, early 20th
  centuries)
• Engineering experiment stations (early 20th C.)
• State industrial extension (1950s)
• State science and technology foundations (1960s)
• Technology transfer programs (1970s)
• CIM centers (1980s)

• International Comparators
• Japanese prefectural technology and testing
  centers (Kohsetsushi)
• Canadian IRAP
• German Fraunhofer and Steinbeis centers
• Netherlands TNO
• UK Business Links

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Manufacturing extension partnershipsMEP service
partner affiliations(1997 data - Number of
reporting centers 54)
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Manufacturing extension partnerships Services
and areas of assistance
Areas of assistance of activities

• Other categories
• Plant layout 6
• CAD/CAM/CAE 3
• Financial 3
• Materials 2
• EDI/comm./LAN 2
• Automation 1
• Controls 1
• General 6
• Other 3

How firms are assisted
Data from 11,753 activities, gt 8 hours, 1997, 74
centers reporting Source NIST MEP
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Manufacturing extension partnerships Industries
and firms assisted
Industries served of clients

• Other categories
• Control devices 5
• Misc.. manufacturing 5
• Apparel textiles 5
• Chemicals 4
• Wood 4
• Primary metals 4
• Food 3
• Paper 3
• Other 5

2/3 under 100 employees
Employees at client firms
Data from 7,681 clients, activities, gt 8 hours,
1997, 74 centers reporting. Source NIST MEP
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Manufacturing extension partnerships
Cross-cutting initiatives

• Examples
• Supply-chain management - Supply America
• Networking and inter-firm collaboration - USNet
• Information technology network (ITN) - Georgia,
  Great lakes, Utah
• Tools and procedures for assistance with
  electronic commerce, CAD/CAM, MRPII, IT
  assessments
• Workforce development initiatives (MEP, DOL)
• Environmental tools and projects
• Performance Benchmarking System
• Evaluation systems
• Center benchmarking projects

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Manufacturing extension partnerships Varied
organizational forms

• No standard mode of center operation
• Varied MEP center sponsors - universities, state
  governments, community colleges, private
  non-profit organizations
• Different modes of structuring MEP service
  partnerships
• Local geographies, distinct industrial needs
• Regional, political cultures
• Institutional capabilities and motivations
• Different service strategies and orientations
• Different local contexts for fee-for-service
• Ongoing innovation, change, copying, improving
• Varied implementation of best practices

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Assessing the MEPs impacts

• 29 MEP evaluation / impact studies (1994-1998)
• Most robust studies show important impacts for a
  few customers, rather moderate impacts for most.
• In comparative studies, little evidence of major
  changes in productivity performance, wages,
  exports - and strategy
• Very little information yet on long-term effects
• Current approaches generate impacts that are
  probably adequate to secure continued federal
  funding, state matches, and fee revenue streams
• But these approaches are probably not adequate to
  generate deep improvements for US SMEs
• Goal of a nationwide MEP system has been
  achieved services have reached scale - the
  challenge now extend the goal to stimulate and
  assist SMEs to make more strategic improvements

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Extending Manufacturing ExtensionOptimization
and improvement in four key areas
?
Challenges, Best Practices, and Conclusions

• 1. Strategic orientation
• For higher productivity wages, SMEs must become
  more distinctive, responsive, specialized
• MEP has to go beyond short-term problem solving
  to more strategic interventions
• Larger, more intense projects
• Product design / development
• Better links to RD, financing, management
• Supply chain and industry network initiatives
• Infusion of emerging technologies

• 2. Partnership operations
• Match with industry clusters
• Tougher, less frequent, more strategic reviews
• Value-added management
• 3. Funding framework
• Post-6 year 1/3 model OK but
• Federal funds increased, more focused to
  strategic priorities
• 4. Policy integration
• Better - but gaps, duplication and turf issues
  remain
• Enhanced SME framework policies (taxes,
  regulation, etc)

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Conclusions

• MEP - a significant new investment in
  infrastructure for technology deployment in the
  US
• Goal of a nationwide MEP system has been
  achieved services have reached scale
• SYSTEM BUILDING -gt OPTIMIZATION -gt HIGH
  PERFORMANCE
• The challenge now stretch the goal to stimulate
  and assist SMEs to make more strategic
  improvements
• Evaluation need much better understanding of
  impact of particular services, both short and
  long-term impacts
• Improved knowledge and transfer of best practices
  within the system
• Better forward research information on
  capabilities and readiness of firms, current and
  emerging conditions of SMEs and US manufacturing
  in an international context