This will basically follow the health of the cluster and particularly with small and mediumsized firms, what are they doing to essentially help lee is relatively small firms . Help these small firms. . . John, said a funny thing. You said no matter how much the government screws up, caltech will still be caltech and m. I. T. Will still be m. I. T. Outside the beltway, it is a different reality and you talked about public and private partnerships at the local level. Can you talk about why they are so important and maybe share your story about how you see the power partnerships . I did not mind it versus the real world. I spend most of my time with the companys seen what kind of problems theyre having in what theyre struggling with. Its true. In the same way that jeff immelt was not worried about only g e come up but there are a lot of companies out there that you do have to worry about. Im not worried were going to get left behind in terms of did creating all of these. We have the smartest people in the world at caltechs and m. I. T. s. We need to Work Together to bring that to bear so businesses are doing well and we have jobs. That has been my concern for a long time and it continues to be so. This morning, there is a lot of discussion of partnerships. Then we heard about network subcommunity level. Then i will talk about teams and the importance of that in being successful. I think this is still very true and it is something we are not necessarily always good at. We have to find ways to combine this with social technology so we have social technical systems up the large corporate level, National Community level, and on the very front lines of value creation. I first got involved in this. About National Oil Policy 30 some odd years ago and i spent some time working for toyota before they brought the system to the United States. I worked in toyota city to help transfer systems to the United States. I have done that over the years. As we went through a process of determining what skills are necessary and it won wonderful consensus is the fact that we need a good education. Community colleges are still very important. The one pressure we have as we started working with uaw, general motors, to find the right kind of employees to work in a system was teambased problem solving and this goes back 30 years ago. This is not new. I do not think the equation has changed now that were bringing a lot of manufacturing back. I think it is a matter of how we have come to understand the cost of living things overseas without understanding the implication. The cost of moving things. This will be the key to how well we can be successful. Immelt also talked about power obtained. There are two other things that he said that i want to push to you now that you are his lawyer. When he said that the future of manufacturing looked great and thered be not only nominal growth but also that manufacturing growth had a chance of increasing as a share of the total climate, he also said he was extremely bullish 3d technology. When a look at the side by side, i see there is going to be a lot more manufacturing work and bring more labor in to the United States, but at the same time, there is this new cutting edge of the Horizon Technology that is a labor and timesaving and does replace hours worked and jobs. What we were thinking about is impossible and a tradeoff between manufacturing productivity growth and manufacturing employment. What are some good ways to think about how to solve this . The key is to said that there is a chance. There are a lot of if in that. We have productivity growth argent 4 per year and when it manufacturing was roughly stable. We lost 2 of total jobs in that decade. In the last decade we lost 5. 7 Million Manufacturing jobs and we also had a 4 productivity growth, actually a little bit slower. Whats different . We have seen an enormous increase in the u. S. Trade deficit, especially with countries like china. Today, they happened to release a report that looked at the effect of currency manipulation, perhaps the single most important factor and explain the growth of our trade deficit. Eliminating the trade deficit or eliminating currency manipulation could reduce the trade as a by roughly 190 490 billion. Doing this would increase manufacturing employment by up to 1 million jobs. Thats a big downpayments in the whole we have created in manufacturing and employment. One thing we need to do is create demand. That is what we did do but we did not do that in the last decade. We need to shift the demand to domestic produced goods resulting in the hiring of domestic workers. Manufacturing jobs are amongst the best for workers especially for those without a College Degree. High wages, good benefits. Bruce, you worked in washington, d. C. , and brookings is right off dupont. I am mostly on a plane. Industrial policy is a dirty word. If you go to any other domestic place, it will land you in a city that practice is something that looks a lot like industrial policy, picking winners and losers, giving tax credits to a specific companies and trying to build clusters. Theyre giving us an advanced manufacturing systems. First, a shot at the capitol. We do have industrial policy. It is called the real estate sector, mortgage interest deduction. We have decided the big winners. That partially describes why we have had the consumption we house. We get to the local level, what is your choice . How quickly do we built with public money next convention some are coming the next performing arts stadium . Do we try to throw money to bring a firm literally across the border in many cases . Or another alternative, can we strengthen our strength in the traded sectors . It may be 20 35 that drives Everything Else and that is what has begun postrecession. We are beginning to see a bit of reshoring with shale gas. Mayors, but more importantly business leaders, firms, universities, and the skills intermediaries together, the network, are saying what do we have here . What do they need . The biggest response they get for most of these firms is that theyre facing a industrial worker retirement to some extent than they have no feeder system in the locality or mitropoulos because they got rid of them. What were basically working on across the country is called the race to the shop where we can bring back a 21st century kind of Technical Training customized to these very differentiated specialized clusters. About five minutes ago, i said there was a tension between productivity growth, competitiveness, and job creation here in the United States. As i was saying that, i wanted to correct myself or throw in a caveat. Your time at kodak, you spent seven and a half years at eastman kodak. That suggests that maybe there is not such a clear tradeoffs. Maybe it is possible to have competitiveness and raising job creation and learn from some of these companies that have outsourced to quickly and lost competitiveness. Can you tell us about the kodak story . I spent 28 years in the industry. When youre in the industry, you have all these problems every day. Every day there is a crisis, especially when i was at kodak. You do not have time to sort out the problems or have been working through that list of problems at Harvard Business school. They said i have always been an academic but i just did a 28 year field experiment im just slow at interpreting the data. I walked into kodak and they said, we want to build digital cameras in the United States and we know the labor cost differential is really high so here is this automated factory we built. It is magnificent except all the components have to come from japan. In those days in the 1990s, there were still the tacit knowledge that jummy did. In reviewing the problem, back in the 1960s photography was all about film. None of the profit was in the cameras. Someone probably not trained at harvard and said, if you get rid of camera out manufacturing, but profits will go up. It sure did. The same time the Consumer Electronics industry shifted all of the Television Assembly offshore. Everybody made more money doing that, right . The problem was then the technology change. All of a sudden, everything that are not important, electronic sensors, motors, viewfinders, lenses. There was no longer any capability to make them in new york anymore. This is where it came up with the notion of the health of the industrial commons which is really important to being able to sustain your ability to innovate. The Company Leaders then think about more broadly the capabilities embodied by suppliers, educational institutions to train workers . Component manufacturing, toolmakers, all of those things. There is a classic tragedy of the comments problem. Does the government have a role in helping Companies Like kodak . Not kodak themselves, but are there other laws we can pass to nudge people away from outsourcing not only jobs but also their intellectual capital and their ability to grow in the future . Absolutely. I have talked about demandside policies. We need a level Playing Field to get the Exchange Rates right. That will cut our trade deficit about in half. It is but the problem and an opportunity. We can bring many more jobs back if we make investments in the right kind of supply cycles. I can last four or five of them. We need to invest in technology development. We need to invest in research and development. Other countries invest a lot more than we do. We need to invest more in manufacturing Extension Services to build these Networks Among regional firms. In a paper i just published, a look at spending in germany and japan and on a comparative basis, theyre spending anywhere between 28 and 40 times as much as we are as a share of gdp i exactly those kinds of activities. We need to work on financing. In germany, for example, small and mediumsized firms get their financing directly from banks. In this country, those firms do not have access to bank capital, so there really constrained in their access to cash. That is another area where we can contribute. We talk about the idea of creating a fannie mae. We have one for housing, why do not have an institution to get capital to manufacturing institutions . That would be very productive. And a not take a lot of money, but it would be helpful. We already talked about investing in training. The thing we really do not do well at all is planning. If you look at successful countries, japan has had the ministry of industry and trade. China has the handsome as five year plan. We need to do planning to figure out how to allocate resources. You would think the Commerce Department might do that. They do little of that right now. Rob laid out a veritable buffet of things we can talk about. John, do you want to comment . What about planning . If not, you mentioned three terms that i thought were near synonyms and want to make sure i understand the difference teaming, partnerships, and networks. Are there meaningful differences . How can they help us think about competitiveness here at home . The same thing at different practical levels. This morning, there was a lot about partnership at the highest level here in washington, a partnership between industry and the government. I think thats an important dimension to have. At the community level, there is not working. Its also critical. Then mignonette outside companies actually creating value, whether it is manufacturing or service, it is about how we can promote the most effective and efficient creation of values. It turns out the way you do that is teaming, teambased collaboration. One of the nice thing, perhaps the only nice thing, about being older is that you can see the pendulum swing over the decades. And so now, reshoring is a big thing. Were here sponsored by the atlantic. There was a good article in the december issue about in sourcing. There has been a trend of moving things back and forth over the decades. Now we are reshoring. Different things will be made in different places. As jeff immelt says, globalization is not a bad thing. Things will be made in different places and they should be. We should be spared about what we do and where. That means making holistic Decision Making of understanding where we are now and thinking long term. There are great examples of companies that have done this all along. One i can think of right now is an Office Furniture company that has introduced some great things, they are the apple of Office Furniture. If you go and visit them today coming you will see this incredible teambased problem solving innovation. They were under the same pressures to offshore 10, 15, 20 years ago and their competitors did that. A look the other business and realize that it was worth staying. Having operations near where they are doing design, near the customers was important for the kind of synergy. They realize that early on and decided they could find ways to make it work and be competitive right here. The key was networking within the company where they combine people and technology. Bruce. I think these are great comments. I want to add to the list infrastructure. For many of these small and mediumsized firms, strategic advice. Some of the issues in small and mediumsized firms are about facility remodeling. Some is about a succession plan. A lot of these are family owned and they are now in the Third Generation or so and they really have to think about it. I think whats happening is we are pushing down responsibility from a governmental perspective to the states and to the major metros. They have become an unreliable partner. If sequestration goes through in the next couple of weeks, they are basically going to take a hair cut to everything in non defense discretionary including our and the. Research and development. Theyre not making any choices. They are telling these firms, the clusters, that somehow theyre going to have to compensate. In some areas they are and can compensate, particularly with foreign firms coming in. Theyre demanding the locality organize themselves in such a way that part of the deal is you guys act like we act in europe. Its very interesting. I think were seeing a defacto resorbing responsibility in the public sector. Is this if its the best solution . Probably. Your attitude is, we get stuff done and were going to go through this list and figure out some kind of intermediary reinstitution. We will figure this out. Very different on a mind set kind of perspective. Just about every single success for recovery going back the last 30 years has relied on exports to help drive growth. Its very difficult to operate financial crisis for domestic demand to raise. We have seen that every year and quarter since 2008. You have to revise it you have to rely on others to fuel you. Can you talk to is a little bit about your attitude toward domestic manufacturing being export first . In the states, we are not like germany. We are not surrounded by all of these companies requesting goods. We are the biggest consumer in the world. Talk a little bit about how to refocus us for an exportdriven world with 1 billion new customers. It is a really interesting and opportune question. One thing we have been blessed with is the Worlds Largest market. Were still four times larger than china. For many firms, especially the smaller ones, do i work harder to develop my export business when all of the businesses are near at hand . I think it requires a change in mindset. I have actually done a lot of work in denmark recently. Its really interesting. You find all of these small countries, a population of 5. 6000046 of their gdp is in exports. It is a mentality that is, if im going to survive, what do i have to do to do that . We are entering in the world. If you look today, these statistics are a little older, but the mobile handset market in east asia is about 3. 5 times larger than north america. China is the Worlds Largest market for automobiles. Vw and bmw sells twice as much there than they do in germany. One of the things in the new world order here is as you have all of these new consumers coming on, we have to think about this and mr. Immelt talked about this notion of a larger market as well. The u. S. Historically, especially if you look in the postworld war ii era, we had this wonderful period when we dominated mass manufacturing. Scions had won the war. We made these Huge Investment because of the cold war that led to Space Technology and so on. It was a unique time. Now the times have really changed because not just china, but india and brazil, some of the other markets, they are going to be or they will be growing too large markets. It makes it a particular challenge for ceos in terms of what my global footprint needs to be in terms of tapping into all those clusters, recognizing market opportunity, and also leverage skills. Its really a different world. A lot of people think about manufacturing products. One thing that comes to mind, i think, just because so many people have it is a smartphone like the iphone and a tablet. It occurs to me we cannot just keep buying screens. There is a limit to the number of screens a family can possibly own. We have run completely out of ideas. This is sort of an annoying and journalist question. If i had to write a piece, theoretically, about the next manufactured product that American Families are going to get hyper about, one sector that it occurs to me may be fruitful, may be the medical device industry, some sort of medical device that everyone can use in their home so then you would have to have a manufacturing and Transportation Network to make this new thing and bring it to the houses. Should they go back to my office after this panel and write that . If you disagree, what may be the next new thing . Go to microsofts campus and look at their smartphone. They are already beginning to play with those technologies. What did the inevitable demographic we have in this country . Aging. The baby boomers wi