I wanted to share the following article with you from the Democrat & Chronicle:

Manufacturing hubs take U.S. policy to new level

Brian Tumulty, USA Today 12:13 a.m. EDT September 20, 2015

WASHINGTON - The photonics center that is coming to Rochester is based on a Reagan-era model for innovation that could be one of New York state's best hopes for reversing its long-term hemorrhaging of manufacturing jobs.

In 1987, semiconductor manufacturers and the federal government formed a partnership to regain U.S. competitiveness with  Japan. The seed money came from a Defense Department grant provided by the Defense Advanced Research Projects Agency (DARPA).

That partnership, called SEMATECH, was a success.

The SEMATECH model is now being used in a variety of industries — from 3-D printing to lightweight metals manufacturing and wide bandwidth semiconductors — in hopes of recovering manufacturing jobs that once sustained cities in upstate New York  and Rust Belt states.

Manufacturing has been in decline in New York for several decades. Between 2000 and 2014, average annual manufacturing employment fell by 297,000 jobs, from 749,300 to 452,300 — about a 40 percent drop — according to the state Department of Labor.

Over the summer, the Obama administration announced that Rochester would host an Integrated Photonics Institute for Manufacturing Innovation, one of seven such hubs announced nationwide so far.

“This will be a step toward bringing manufacturing back in the U.S.,” said Kent Hughes, a public policy fellow at the Wilson Center in Washington, D.C. “For advanced countries of any size, it’s a big part of how you pay your way in the world. Right now we are borrowing $40 billion or more every month from the rest of the world to pay our trade and current account deficit.’’

In recent years, SEMATECH has been remade and relocated to Albany from its original headquarters in Texas, becoming part of SUNY Polytechnic, which has absorbed its overhead.

Now, SUNY Polytechnic also is taking a lead role in the integrated photonics advanced manufacturing hub.

Photonics uses light in fiber optic cable for data transmission and in lasers for robotic manufacturing. Integrated photonics takes the technology further by using photonics in “long-haul telecommunications, enabling much more resilient fiber with much greater bandwidth,’’ according to the Obama administration.

SUNY Polytechnic President Alain Kaloyeros is upbeat about the expected economic impact.

“Between the innovation hub itself and all the additional incentives New York is going to offer companies to locate and expand in New York, we are predicting within seven years about 5,000 to 6,000 jobs in New York,” he said.

Some SEMATECH researchers, he predicted, will play a role in developing integrated photonics.

The emerging national network of manufacturing institutes, Kaloyeros said, is “the first time since SEMATECH where the federal government is investing — not $1.59, like what they usually do with grants — but... significant funding.’’

The $110 million federal grant for the photonics center is being matched by private and state funding, bringing the total to $610 million.

The idea behind SEMATECH was that developing new technologies was too expensive for any one firm, and the time frame for each cycle of new product development was getting shorter.

Despite SEMATECH’s success, the federal government and private sector didn’t launch any other similar initiatives to support the manufacturing industry for 25 years, when the Obama administration announced the first advanced manufacturing hub in 2012.

The reason for the long delay: Proposals that the federal government engage in large-scale domestic industrial policy — apart from giving the Defense Department what it needed — connoted images of Soviet-style central planning.

Several experts said it took the loss of 6.8 million U.S. manufacturing jobs between 2000 and 2010 and the successful bailout of the Detroit auto industry to wipe out most opposition to the idea that the federal government should take steps to boost manufacturing.

Even so, the National Association of Manufacturers didn’t initially support the Obama administration’s approach, said Robert Atkinson, president of the Information Technology and Innovation Foundation, who criticized NAM’s initial position.

NAM now does support the administration’s network of manufacturing hubs, as do many congressional Republicans. The earliest supporters were governors, universities and the communities that vied for hubs because they believed they would be key to future economic growth.

The administration undertook the initiative prior to getting legislative backing from Congress, which didn’t come until late last year.

Jason Miller, deputy director of the White House National Economic Council, said the bailout of the auto industry produced “a deeper appreciation of the risk of allowing the manufacturing sector to erode.’’

In late 2011, Obama asked administration officials to propose ideas for the economy even if it was unlikely they would become law, Miller said. That’s how the administration devised its plan for spending $1 billion on 15 manufacturing institutes formed as consortiums by government, universities and private industry.

“We thought it had had very low likelihood Congress would take action,’’ Miller said. He said administration officials believed they “could scrounge money’’ from various programs to get it going.

By the time the first of the emerging national network’s hubs was announced in 2012 in Youngstown, Ohio (for technologies that build 3-D objects), governors, businesses and universities were vying for the next one.

Six more have been announced — with the two latest ones designated for Rochester and San Jose, Calif.

All seven follow a model similar to SEMATECH.

SEMATECH’s evolution from a stand-alone operation to SUNY Polytechnic’s innovation arm drew the attention of Obama administration officials. Like SEMATECH, the National Network for Manufacturing Innovation relies on major research universities to  play a key role in partnering with industry.

Initial federal funding consists of grants from the Energy and Defense departments. Congress passed bipartisan legislation last year to provide additional money from the Commerce Department’s National Institute of Standards and Technology (NIST).

While New York Democrats, including Sen. Charles Schumer and Rep. Louise Slaughter, took the lead in the announcement of the Rochester photonics institute, congressional Republicans — typically vocal in criticizing Obama’s policies — support the landmark policy shift.

The House passed the legislation by voice vote in September last year. The Senate version of the bill passed as an amendment to a budget bill.

Republican Rep. Tom Reed of Corning, who partnered with Democratic Rep. Joe Kennedy of Massachusetts in authoring the legislation, said that 30 years ago, a National Network for Manufacturing Innovation would have faced intense political opposition as an unwarranted federal intrusion into the free-market economy.

“What I’m trying to do is position American manufacturing to have that renaissance, rebirth on the world stage that I know it can have and that we are going to be part of as we go forward,’’ Reed said.

Scott Paul, president of the Alliance for American Manufacturing, said some conservatives “know we need a thriving industrial base for our national security.’’

Kaloyeros of SUNY Poly advocates having the federal government take another step by refocusing billions in federal research money in the budgets of the National Science Foundation, the National Institutes of Health and the Energy Department.

“Don’t give $100,000 a year to a researcher with two graduate students,’’ Kaloyeros said. “Take part of that money and redirect it to big science.’’

btumulty@gannett.com

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