MIT Asks How to Improve Manufacturing Innovation

Feb 25, 2013

Photographer: Mark Elias/Bloomberg.

As Greg Galdabini pointed out a few weeks ago, the United States is still a manufacturing nation. The combined sales of the top-500 U.S.-based manufacturers would be larger than Japan’s entire GDP.

But the MIT Production in the Innovation Economy (PIE) research group is searching for answers to questions about America’s continued competitiveness: “What kinds of production do we need—and where do they need to be located—to sustain an innovative economy?” How does “an invention or a new idea about a product or a way of improving a product or process get made into goods and services for sale in the market?”

In a preview of their reports, MIT researchers interviewed manufacturers of all sizes: start-ups, small and mid-sized businesses, and large multi-national corporations about new ideas they tried bringing to market. They were asked where the idea was born, where they got capital to fund the idea, and where they found the talent to bring the idea to market. They wanted to know about ideas that both succeeded and failed and why.

Here are some initial findings.

First, large U.S.-based corporations “have changed from almost entirely U.S. based operations to organizations carrying out R&D and production around the world.”

Second, start-ups found that capital financing was often available early on but became more challenging as the idea got closer to market:

The research team learned that on the whole these highly innovative companies were able to obtain funding through relatively long periods (even up to ten years) of early phases of scaling up through early market demonstration. But many of them when they came to the stage of moving to full-scale commercialization, could not find finance in the U.S. As many of them made the transition from venture funding to high-volume manufacturing, they eventually had to look for foreign investors and often moved abroad to manufacture their products.

Third, for small and mid-sized companies, “Main Street Manufacturers” in MIT’s parlance, “their major innovative contribution is repurposing technologies developed in one sector for altogether different uses.”

PIE’s research also came across possible policy approaches to improving manufacturing innovation. One is the National Additive Manufacturing Innovation Institute (NAMII) in Youngstown, OH that lets companies, universities, and government pool together on manufacturing research. Another example is the Timken Company, also in Ohio, that moved its metal coatings laboratory to the University of Akron. The report notes,

[A]new consortium on coatings and engineered surfaces has been created that is open to other corporate members; and a set of promising coatings technologies that had been “stranded” in a bearings company can now be developed as potential start ups in which both the university and the corporate consortium members can invest.

More meat will be added to these bones when MIT releases two books based on this research in the fall. 

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