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Report

Cut to Invest: Create a Nationwide Network of Advanced Industries Innovation Hubs

Mark Muro and Devashree Saha

Congress should authorize the build-out of a national network of advanced industries (AI) innovation hubs, expanding on the modest beginnings now being made through the Department of Energy’s Energy Innovation Hubs program and the Department of Commerce’s National Network for Manufacturing Innovation (NNMI) initiative. Functioning as regional centers of excellence, the new hubs would focus on cross-cutting innovation and technology deployment challenges of critical interest to advanced industries by drawing universities, community colleges, state and local governments, and other actors into strong industry-led partnerships. The creation and appropriate funding of at least 25 such hubs would greatly accelerate the pace of innovation and new-product development in the nation’s advanced industries and so strengthen their long-term competitiveness.

Background
In the aftermath of the Great Recession, the United States needs to transition from an economic model focused on finance and consumption toward a “next economy” model oriented toward innovation, engineering, and production. Such a model promises to increase the nation’s productivity, drive export growth, and provide good-paying jobs.

Advanced industries—characterized by dynamic R&D and engineering-intensive industrial concerns—must be a focal point of this new direction. Delivering products and services in industries ranging from aerospace and space to auto assembly, advanced energy systems, IT, and medical devices, AIs comprise over 10 percent of the overall economy, generate 45 percent of U.S. goods exports, and support over 4 million high-skilled, and several million more ancillary, jobs.

All too often with advanced industries, companies fail to make adequate investments in innovation because the benefits are undetermined, the risks are too high, and the project timelines too extended. A national network of innovation hubs would address these challenges by greatly accelerating the pace of innovation and new-product development.

Nor is that all. A prime site of R&D activity in the U.S. economy, AIs punch well above their weight in building and expanding national and regional economic competitiveness. Innovations in AIs—such as photonics technology with applications in optical communications, medical diagnostics, semiconductors, optical imaging, and the now ubiquitous GPS technology—tend to ripple across the economy and drive broader productivity. As a result, AIs contribute inordinately to the competitiveness of the nation’s critical traded sectors, which will be crucial in helping the United States to balance its foreign trade.

Simply put, the U.S. economy will not regain its full vitality and preeminence without a strong push to extend the leadership of AIs.

Proposal
Given these challenges, the Metropolitan Policy Program at Brookings proposes that Congress authorize the build-out of a national network of advanced industries innovation hubs by funding at least five more Energy Innovation Hubs and supporting the creation—with stable funding—of at least 20 institutes for advanced manufacturing innovation as proposed in the NNMI initiative. Such a build-out could at once scale-up two existing programs while packaging them appropriately as a single transformational initiative for renewing the U.S. economy.

Concentrating innovation resources into a network of purpose-designed, collaboration-based regional applied research centers focused on industry-relevant product and process issues holds out great promise for accelerating technology advances and subsequent market-share growth in crucial U.S. industries.

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Such centers will tackle the toughest problems with the biggest commercial pay-offs in technology and process development, technology deployment, and platform establishment. Because they will be regional and intensely collaborative, with strong private-sector participation, the hubs will produce substantial economic spillovers into the regional advanced industry clusters amid which they will be sited.

Form will follow function, moreover. To ensure the hubs foment intense collaborative activity, federal cost-shared funding will be allocated by means of competitive solicitations that stipulate extensive industry, state, and academic participation. To ensure the collaborations remain commercially relevant, federal support will be contingent on co-investment by businesses and other non-federal entities. Progress toward sustainable operations will be stipulated from the start and hubs must become financially sustainable within seven years.

Finally, in order to ensure a robust attack on important problems and real results, each hub will require annual funding of $25 million for a period of at least five years. Possible themes for the new hubs could include carbon capture and storage, solar photovoltaics, and smart grid on the energy side and advanced materials, nanomanufacturing, and industrial robotics on the advanced manufacturing and engineering side. Funding would be contingent after five years on demonstrated progress and results and each hub would move toward self-sufficiency. No criteria for success would matter more than industry willingness to partner and invest.

Along these lines, the creation of 25 advanced industries innovation hubs combined with stable funding for all would:

  • Send a strong signal that the United States remains fiercely committed to investing in game changing breakthroughs and cultivating a vibrant innovation ecosystem
  • Accelerate the pace of applied research in advanced industries
  • Drive down the cost of advanced industries technologies and accelerate their deployment
  • Contribute to workforce development not just at the Ph.D. level but at all levels
  • Spawn new, good-paying jobs and industries and aid the nation’s recovery through its huge employment multiplier effects
  • Boost exports and enable the United States to compete effectively in global markets, which in turn will ensure a vibrant national economy

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