Can cleantech kickstart a new era of American manufacturing?
WASHINGTON -- As the clean energy industry grows, is it the answer to help the U.S. compete and lead in manufacturing on the global stage -- or will overseas economies dominate high tech?
That's the question that experts sought to address here at the second annual ARPA-E Energy Innovation Summit, where a panel of industry leaders investigated the reasons why some of the world's largest corporations choose the U.S. -- or don't -- for manufacturing.
CHARTING A COURSE
Kicking things off was First Solar president Bruce Sohn, who admitted that American manufacturing "makes all the difference in the world to our economic vitality."
As one of the largest manufacturers of solar modules in the world, First Solar needs "significant" government policy to enable industry to develop innovative technologies, Sohn said.
"We're selling something very much like an annuity -- very large capital expenditure and very little cost after," he said.
So-called federal 'bridge' programs need to be maintained, Sohn said, adding that there is "considerable advantage" to pairing up manufacturing with innovation.
"Other countries compete for these technologies," he said. "They create policies to attract companies like us. Frankly, I'm tired of it."
OPENING THE DOOR
Moderator Ron Bloom, assistant to the president for manufacturing policy at the White House, asked former Michigan governor John Engler what it would take to get incentives in place.
"Increasingly, it's human capital," he said. "It's the talent. At the same time, it's also the competitive environment."
The challenge is that foreign nations are behaving like U.S. states, putting together packages to attract investment, Engler said.
"We need a manufacturing strategy for America.," he said. "And we don't have one."
Among the challenges:
- The U.S. corporate tax rate is among the highest in world. It was much more globally competitive in the 1980s. "We've stood still while every other nation in the world has been cutting corporate tax rates," he said. "In 1991, the U.S. passed an R&D tax credit. It was the best in the world. Now it's [nowhere near that], and it's not even permanent."
- Immigration restrictions have tightened. "We believe you need to staple that green card right on that diploma when obtained," he said. "If it's hard to bring that talent here, a company that's competing globally will have to go there to find it."
The U.S. needs to be the best place for a company's headquarters, the best place to do most research and development, and among the best places to manufacture goods, Engler said.
"We have to recover our zeal to let that investment take place here," he said.
SIMPLIFYING THE SUPPLY CHAIN
John Baumstark, chief executive of photovoltaic solar panel manufacturer Suniva, said his company exports 75 to 80 percent of its products overseas.
"We'd like to see more of that here at home in the U.S.," he admitted.
The problem: inconsistent, short-term policy.
"We need some clear demand signals as we continue to expand," he said. "We need policy that tells investors and us that we can remain local."
It's not an optimal solution for the sustainability of the company's supply chain either, Baumstark said.
"We are spending a lot of money moving product around," he said. "Ultimately, you have to look at the landed cost of making a product."
To ease that burden, U.S. tax incentives must be more competitive, he said.
"We need to make it strategic…to have the most competitive manufacturing platforms in the world," Baumstark said.
Siemens Corp. chairman Peter Solmssen concurred. Despite his company's German heritage, the U.S. is a bright spot for its overall outlook, he said. But location matters.
"Where are the customers?" he asked rhetorically. "The things we build are big and heavy to move."
Quality of the workforce is also a major consideration for a global conglomerate -- and the U.S. isn't as great as some might suspect, he said.
"When I look at the capabilities of this country, what worries me as an American is the education system," he said. "We are seeing currently enough capacity to meet our needs in various parts of the country, but the trends are not good."
IDEAS VS. INVESTMENT
Will a loss of manufacturing capabilities put innovation at risk?
The panelists agreed that the U.S. is home to great ideas but can't survive on them alone.
"We've got lots of great ideas. The structure of the U.S. encourages a lot of good thinking," Sohn said. "[But] manufacturing is an economic engine. We connect the two together, we get economic benefits."
Baumstark agreed, adding that manufacturing job growth actually fosters further innovation growth in the same sectors.
"The U.S. innovates very well," he said. "We lead the world in venture capital investments. The key is not sending those jobs somewhere else."
He added: "I will never bet against the U.S. But I think it puts us as a disadvantage. We can't sit here and kid ourselves that the rest of the world will not innovate."
Solmssen said the "D" in "R&D" is closely linked to manufacturing, and requires further attention.
"There's research, and then there's development," he said. "That's what makes it really commercially competitive. When we move manufacturing to a place, we find the development capacity grows there, too."
PLANNING FOR THE FUTURE
Finally, Bloom asked panelists what they think the government should do to grow the green economy.
Solmssen: "Look at the real infrastructure questions. What is the real cost of moving a person from Los Angeles to San Francisco? We have to look at the full system cost. We have to stop deluding ourselves about what things really cost."
"Also, we have to stop debating our science and debate what's good for our children."
Engler: "Can we please reach agreement on a direction and head to it?"
Baumstark: "We need to have a policy and we need to stick with it."
Sohn: "The largest solar market in the world is in Germany -- sunny Germany. It's not because of the sun. It's because people who understand what it takes to have a vision and put it in place. We need to be in a position where we put a value on things that are very important [to us]. Today, we don't have a value on carbon. If we want to change to a low-carbon society, we need to put a value on it."
Photo: Pete Souza/White House
More from the 2011 ARPA-E Energy Innovation Summit:
- Schwarzenegger: Clean energy 'the next great wave of innovation'
- Bolstering the buzz: how to spur mass adoption of electric vehicles
This post was originally published on Smartplanet.com