Budget ax threatens manufacturing program that puts America first

Blog | June 15, 2017 - 9:50 am
By R. Neal Elliott, Senior Director for Research

For all the talk that comes out of Washington, DC, about the importance of American manufacturing, the government does strikingly little about it. There is no Department of Manufacturing, for example. Fortunately, the Department of Energy has the Advanced Manufacturing Office (AMO), which is slated for a 68% cut under the proposed 2018 budget.  

AMO embodies the vision of putting America first and could even be renamed the American Manufacturing Office. It promotes the technologies, practices, and workforce that can make American manufacturing internationally competitive. Energy efficiency technologies can reduce industrial energy waste and help improve manufacturing. They can do so while lowering costs, helping our plants compete, creating jobs, and spurring growth.

An economic multiplier effect

Every dollar spent in manufacturing generates between $1.33 and $1.81 in other services and production (see here and here). This multiplier effect in the manufacturing sector is higher than in any other sector of the US economy. Manufacturing jobs spur related job growth, such as in mining, freight, warehousing, engineering, and professional services. Reducing waste through energy efficiency makes advanced manufacturing more competitive. Thus, AMO’s work increases job growth.

Creating knowledge

Central to AMO’s mission is the creation of knowledge that industry can use to innovate new products and processes. AMO programs leverage our national labs to create knowledge. They train students through universities that lead to successful job placement in industry (as well as yielding a new manufacturing focus within universities), and they engage in technological partnerships with industry to transfer that knowledge. These public-private partnerships take many forms to apply the technologies developed and leverage federal resources through the private sector.

As an example, AMO has partnered with the American electric motor industry to develop Next Generation Electric Machines (NGEM). Electric motors account for half of industrial electricity. The partnership leverages our national labs to focus research on the development of next generation electric motors.  The initiative also leverages DOE’s Power America Institute collaborative between the National Renewable Energy Laboratory and several companies and universities to bring cutting-edge knowledge on semiconductors to this research. Just replacing less-efficient motors could reduce industrial electricity consumption by 2–4% and yield up to $2.7 billion in annual electricity savings.

Targeting small business and medium-sized businesses

AMO’s efforts target small business and medium-sized businesses through technical assistance. Small businesses are an engine for job creation. Yet, small businesses and medium-sized companies usually do not have the necessary resources to apply innovative technology. AMO provides the needed technical assistance to achieve growth and international competitiveness.

As the largest federal initiative focused on advanced manufacturing, AMO puts America first and boosts the American economy at its roots, making American businesses grow through energy efficiency. The proposed 2018 budget, however, threatens to slash or eliminate key AMO programs, highlighted below. We call on Congress to reject such cuts and to support American manufacturing.

Key AMO examples

Industrial Assessment Centers (IACs) perform energy assessments of small businesses and medium-sized industrial facilities (annual energy bills $100,000 to $2.5 million), while also providing workforce training and successful job placement. IACs are located at 28 universities nationwide. They provide invaluable field experience that trains approximately 300 students each year to perform the assessments. Since the program’s inception in 1976, students have performed more than 16,000 assessments. Upon graduation, 53% have gone on to work for companies, helping them to save even more energy. A study commissioned by DOE in 2015 evaluated the performance of the program over 15 years (1997-2013) and confirmed the measurable impact it has had on both energy savings and job skills development.

Combined Heat and Power Technical Assistant Partnerships (CHP TAPs) perform market analyses, educate stakeholders, and provide technical assistance for combined heat and power (CHP), one of the single largest opportunities to save energy in the manufacturing sector. When most power plants make electricity, they waste two-thirds of the energy contained in the fuels they use. CHP, or “cogeneration,” captures the waste energy and uses it for other purposes. Only a fraction of the potential to use CHP has been realized in the United States. AMO funds seven CHP TAPs to help hundreds of organizations each year assess the features and benefits of CHP. More than 280 CHP projects are under development or online, with an estimated installed capacity of more than 2 gigawatts.

Manufacturing Demonstration Facility (MDF), located at Oak Ridge National Laboratory, is focused on developing new knowledge on additive manufacturing and production of low-cost carbon fiber. The MDF has formed a collaborative that shares a common R&D infrastructure. It engages in pre-competitive manufacturing, development of best practices, and sharing of know-how including design and processing tools, qualification, and certification approaches.

ISO 50001 Ready helps small businesses and medium-sized businesses implement best practices through technical assistance. The ISO 50001 Energy Management Standard is the gold standard for systematic energy management and savings. Thousands of companies around the world have invested in training their workforces to implement these best practices. Through a suite of online tools, ISO 50001 Ready makes these benefits accessible to small business at a fraction of the cost they would otherwise incur. When applying both ISO 50001 and the Superior Energy Performance (SEP) program, businesses achieved, on average, verified energy intensity improvement rates more than four times larger than their prior rates.

Contributing to this report are Pasha Majdi and Ethan Rogers