America can turn a slow recovery into a strong comeback, one that grows our economy and firmly reestablishes our country as a powerhouse of ideas and production. One of the keys — and what will determine the winners and losers of an exciting new era — is our willingness and ability to lead the next “big waves” of productivity.
There are four new drivers of productivity, and success in each depends on the technology and talent we develop. The first is how shale gas is changing the energy debate and the balance of energy power. The second is the Industrial Internet — owning and connecting the analytical layers around industrial products in order to improve performance and efficiency. Next is speed and simplification: the only way to serve our customers better is by working faster and smarter. The last driver and the focus of a forum GE is convening today, is advanced manufacturing. Manufacturing excellence, forgotten for too long, is once again a competitive advantage.
Manufacturing is still an essential driver of the U.S. economy, employing about 12 million people in America, or 9 percent of the workforce. It generates $1.7 trillion in value each year, and manufactured goods account for 53 percent of all U.S. exports. Seventy percent of private sector spending in research and development in the U.S. comes from manufacturing companies. Manufacturing also has an outsized impact on our economy as a whole. It is responsible for roughly 7 million American jobs in other industries, and every dollar in manufacturing sales generates $1.34 in output from other sectors.
Despite all of this, companies have historically outsourced critical capabilities in their supply chain and focused too much on cheap labor rather than speed, innovation and market access. As a nation, short-term gains fooled us into believing that we could build a sustainable economy solely based on service jobs. We also didn't fully appreciate the negative effect that poor labor/management relations and eroding "systems of competitiveness," from the regulatory environment to education, had on our ability to innovate and grow the economy.
Today, we can reverse these trends. Indeed, advanced manufacturing — both imbedding technology into products and processes and creating the highly skilled workforce that can support these efforts — and other new innovations in manufacturing are changing what we make, where and how we make it, and even who makes it. Large or small companies that invest in their own capabilities and "own" or control a local supply chain have a competitive advantage as they develop their next breakthrough.
GE Aviation is a great example. To date, we've manufactured jet engine components mostly by casting, stamping and cutting steel and alloys. Now, through 3D printing, or additive manufacturing, we can "print" complex parts layer by thin layer. Our newest jet engines like the CFM LEAP, a joint venture with France's Snecma, will have printed combustion system components and other parts inside, reducing engine weight and saving our customers money.
There are other examples across our businesses. Researchers in our Global Research Center labs in Niskayuna, N.Y., invented a new sodium-based battery technology that stores nearly four times as much energy as the lead-acid batteries used today. GE teams also designed an advanced manufacturing process to build the battery efficiently in Schenectady, just a few miles away, where our Energy Storage business is headquartered.
Now is the time to bring these and other efforts to scale, changing both the way we build complex machines and the entire competitive landscape. The rise of analytics and software in the industrial world only multiplies the opportunity in front of us. America must capitalize.
We are on the right path, but to lead in manufacturing and to compete and win globally, we must: