Letters to the Editor

Incentives Can Re-invigorate US Manufacturing

By Bruce Johnson

A government program called the Independent Research and Development Program (IRAD) was very strong and effective until the mid-1990s. It allowed industry to recover costs for doing research and development that was in the interest of the government as well as business. As a Technical Director I was responsible for many IRAD projects while working for several major US corporations. This was a win/win program for both the federal government and business because it nourished new product development and manufacturing in the USA.

After decades of outstanding contributions to our economy, the federal government cut back IRAD programs, and there was uncertainty about the long-term commitment to support them. In this atmosphere, the great research laboratories, for example those run by GE, Bell, RCA, Westinghouse, ITT and many others, were shut down, and key new product development at US corporations either disappeared completely or declined to the low levels that we have today. Foreign countries subsequently picked up the R&D and manufacturing work that we either gave them through outsourcing or let them have outright.

This industrial IRAD work was supported by R&D cost recovery, not a bailout, for business to perform or extend the required fundamental research, and then develop and manufacture new products, US products. Not only did the large corporations benefit, but the smaller feeder industries that made parts and components also flourished.

Congress should seriously revisit this program, look at how it would enhance US business and the US economy, and make it part of new economic legislation moving through Congress at this time.

Unlike the investment and banking industries, industries that manufacture products in the US, for not only US but world markets, need long-term incentives to develop new products and markets. This kind of dedicated support will result in continued economic growth for US manufacturing. The present mindset in Congress, to simply cut spending and not increase taxes, misses the most important part of finding ways to improve our economy. These efforts are just wasting time as our economy continues to suffer.

Our chief economic advisers do not understand what needs to be done to strengthen US industries. Getting people to simply spend more money, like buying more Chinese doo-dads at Wal-Mart, does not strengthen our economy. We must provide world markets with value-added products made here in the US.

University and government research programs do not meet these needs because they are not directly linked to US manufacturing. Industry will not do the required R&D to create major new products for manufacturing in the US on its own initiative, with only occasional short-term and uncertain tax cuts, etc. There must be a structured and long-term government managed plan, like the original IRAD program, to accomplish this manufacturing resurgence effectively.

The rebirth of manufacturing in the US can and should be nurtured and sponsored by the federal government. We need to utilize our innovative skills and put new life into a results-proven government program, one that can guarantee strong growth, stability, and a means to reduce our lopsided negative balance of international trade. Its successes were key to our past innovation and market leadership.

A renewed IRAD stimulus program, coupled with manufacturing, along with similar ideas put forth by Andrew Liveris, CEO of The Dow Chemical Company, in his book “Make it in America, The Case for Re-inventing the Economy” are necessary if the US economy is ever to be re-strengthened. This is a matter that requires the urgent attention of Congress for the good of the US economy.

Bruce Johnson is an independent consultant. He was Technical Director for ITT Night Vision, and he held similar positions with other major corporations, including RCA Electro-optics & Devices, Bendix Research Laboratories & Litton Electron Devices. He is a Senior Member of APS and a Life Fellow of the Institute of Electrical and Electronic Engineers.