The Smartest Places on Earth
Page 1
Copyright
Copyright © 2016 by Antoine van Agtmael and Fred Bakker.
Preface to the Paperback Edition copyright © 2018 by Antoine van Agtmael and Fred Bakker.
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The Library of Congress has cataloged the hardcover edition as follows:
Names: Agtmael, Antoine W. van, author. | Bakker, Alfred, author.
Title: The smartest places on earth: why rustbelts are the emerging hotspots of global innovation / Antoine van Agtmael and Fred Bakker.
Description: First edition. | New York: PublicAffairs, [2016] | Includes bibliographical references and index.
Identifiers: LCCN 2015036396 | ISBN 9781610394352 (hardcover) | ISBN 9781610394369 (ebook)
Subjects: LCSH: Technological innovations—United States. | Academic-industrial collaboration—United States. | Research, Industrial—United States. | Industries—United States. | Industrial Location—United States. | Entrepreneurship—United States.
Classification: LCC HC110.T4 .A645 2016 | DDC 338/.0640973—dc23
LC record available at http://lccn.loc.gov/2015036396
ISBNs: 978-1-61039-816-9 (paperback), 978-1-61039-436-9 (ebook), 978-1-61039-435-2 (hardcover)
E3-20180301-JV-PC
CONTENTS
Cover
Title Page
Copyright
Dedication
Preface to the Paperback Edition
Introduction Welcome to the Brainbelt: The People, Places, and Practices That Are Turning Globalization on Its Head
Chapter One Sharing Brainpower and Smart Manufacturing: How a Rustbelt Becomes a Brainbelt
Chapter Two Connectors Creating Communities: Hives of Innovation in Chips and Sensors
Chapter Three Making a New Movie of an Old Story: Dramatic Scenarios of New Materials Development
Chapter Four White Coats and Blue Collars: Cross-Boundary Collaborations in Bioscience and Medical Devices
Chapter Five A Smarter World: How Brainsharing Can Meet the Challenges of the Twenty-First Century
Chapter Six Awakening the Beauties: Could Your Region Be One of the Smartest Places on Earth?
Conclusion We Meet at the End
Acknowledgments
About the Author
Praise for The Smartest Places on Earth
Bibliography
Notes
Index
For my granddaughter Victoria, who will grow up in the world that is the subject of this book
—A. V. A.
For Frances, Sam, and Jim
—F. B.
PREFACE TO THE PAPERBACK EDITION
Rustbelts and the plight of people who lost jobs as manufacturing declined received scant attention during the years we were researching and writing The Smartest Places on Earth. All of that changed in the months following publication of the hardcover edition in March 2016 with the presidential campaign and election of Donald Trump as president of the United States. As a candidate, Donald Trump understood better than his rivals the anger and anxiety of those left behind by the demise of manufacturing—and how that could be turned into a powerful political weapon. He won states like Michigan, Ohio, and Pennsylvania in part by promising to revive industries such as iron and steel and “bring back manufacturing jobs” from China and Mexico.
Rustbelts suddenly matter again after having been forgotten by politicians, pundits, and economists. It turned out that what mattered even more in the 2016 election was whether rustbelt cities had been successful in transforming into what we call brainbelts, places where close collaboration among universities, start-ups, and legacy businesses had put them at the forefront of innovation, revived economic activity, and brought boarded-up downtowns back to life. Contrary to popular perception, Democrats didn’t “lose” the entire rustbelt, just those areas that made little effort or were unable to reform and revitalize their economic foundation. Those that did—the brainbelts—the “smartest places” that are the subject of this book—were actually won by Democrats. We’ll discuss below the story of Pittsburgh, where Hillary Clinton won with a wider margin than Barack Obama had four years earlier, even though the vote in Pennsylvania went in another direction and contributed to Trump’s Electoral College victory.1 In other “red” states that voted Republican, Akron and Columbus defied the electoral trend in Ohio, as did Indianapolis in Indiana, as well as many others. In New York State, the key “blue” areas besides New York City were cities such as Albany, Syracuse, Buffalo, and Rochester, where efforts are underway to embrace the new high-tech economy and to become “smart places.”
The American political parties and most media could not quite believe the appeal of Bernie Sanders and Donald Trump. Trump’s nostalgia for “dirty growth” and promises to bring back manufacturing jobs attracted a group of voters who felt left behind and who resented the prosperity of people in other sections of the country. But promising to put “America first” and bring back manufacturing jobs through economic protectionism is fighting the last war. Protectionism would relegate the United States to permanent second-class status. Smart innovation is already well on its way to replacing cheap labor as the key competitive edge.
Trump can’t expect to resuscitate jobs and industries that are no longer economically competitive. If Trump actually wants to make good on his promise to revive the rustbelt, he should instead focus on reinventing manufacturing rather than bringing back your father’s manufacturing. Cheap goods like shoes and shirts could be made in the United States—by robots and 3D printers—while more American workers could be employed to make products with advanced features like sensors and big data. Technical skills will be in demand. Smarter, not cheaper, will be the mantra. And even if Trump manages to roll back Chinese imports, the real threat to jobs isn’t foreign competition but rather automation, the next big challenge, especially for millions of people with service jobs.
How exactly can President Trump do this? We already know that the trend is in his favor: Although American manufacturing lost 7 million jobs between 1990 and 2010, jobs in advanced industries are growing, and since 2010, roughly 1 million manufacturing jobs have been added back, the overwhelming majority in higher-tech industries. The rustbelt has the potential to keep moving in this direction: its manufacturing heritage means it still holds deep reserves of technical and engineering expertise. This expertise just needs to be redirected through close collaboration with local universities that are becoming the new magnets for innovation, human talent, downtown vibrancy, and local start-ups, as we are already seei
ng in dozens of rustbelt cities all over the country.
Reinventing manufacturing in the United States will require Congress to invest further in research and development and to provide the means to jump-start the shift from older industries to advanced manufacturing. It means building an infrastructure that is truly “smart,” not only by focusing on areas where manufacturing has to be reinvented but also by incorporating in the plans new transportation modes such as on-demand self-driving cars and trucks.
As Trump has already proved willing to use the bully pulpit to influence private companies, he could similarly lean on businesses, workers, and community colleges (with some help from foundations and local tax credits) to negotiate a much-needed new “social contract” in which work-study programs that both retrain older workers and train young workers in much-needed skills for the new economy (that is as much digital as it is physical) would become the rule rather than the exception. Businesses would agree to offer on-the-job training; community colleges would provide the “study” component; and workers would commit to lifelong learning. Focusing on retraining instead of protectionism would be a much more effective, targeted approach comparable to employing gene-based, precision medicine rather than chemotherapy, as we describe later in this book.
Trump can’t forget about the collateral damage of the manufacturing decline on suburbs and outlying areas, even as rustbelt metropolitan areas such as Pittsburgh and Detroit rebound. He needs to bring these damaged areas back into the economy, reaching out specifically to local leaders in business, academia, and government to encourage the kind of collaboration that would help bring start-ups to those areas. He has an opportunity to modernize infrastructure by making it smarter. It would take some salesmanship. But he could actually bring hope to the rustbelt voters he loves for having elected him.
We were pleased to find that our book has had an impact well beyond the United States and Europe. The government of Ontario, Canada, has found our blueprint for a brainbelt helpful in determining how some of its rustbelt regions can transition to brainbelts. Ed Clark, the former CEO of Toronto-Dominion Bank who is now advising Kathleen Wynne, the premier of Ontario’s government, knew that you could only aim at making Ontario an alternative to Silicon Valley by focusing on an innovative new niche of expertise that builds on unique old strengths without falling into the trap of trying to “save” old industries. Clark was looking for fresh ideas when seeking a new lease on life for rustbelt areas left behind in the decline of the automobile, chemical, and mining industries. He intuitively embraced the ideas of reinventing manufacturing, sharing brainpower in close collaboration between top-notch universities—the University of Waterloo, for example—and businesses, and creating vibrant brainbelts when others were giving up hope for down-and-out rustbelt regions. Giles Gherson, Ontario’s deputy minister in charge of innovation, had his team draw up more detailed plans and was particularly intrigued by such questions as: Who could be the “connector”? How can the “connective tissue” that binds universities, legacy businesses, and new start-ups be strengthened? In their speeches to the Ontario Economic Summit,2 Canada’s minister for innovation, Navdeep Bains, cited The Smartest Places on Earth in his efforts to move to an advanced, knowledge-based economy, and Ontario premier Kathleen Wynne pointed to our book when she reminded the audience of the importance of making cities vibrant to retain top talent. Ontario’s University of Waterloo is, together with Stanford University, Massachusetts Institute of Technology (MIT), and Carnegie Mellon, one of the world’s top training grounds for computer scientists. Its graduates funded and staffed Research in Motion (RIM, the maker of BlackBerry). In a development similar to Oulu Innovation (see here), BlackBerry’s fall gave rise to the birth of many start-ups in Waterloo (some in Kitchener’s nearby incubator, Communitech) instead of the widely expected demise.
Even as far away as Australia, policy makers and university presidents took to heart the lessons from The Smartest Places on Earth. Caroline McMillen, president and vice chancellor of the University of Newcastle, located north of Sidney, invited us to visit Australia and address over nine hundred university presidents and academics at their annual conference in Canberra. Like Pittsburgh, Newcastle was a coal and steel town. Today, the former corporate research lab of mining-steel giant BHP has become a leading research center with its Institute for Energy and Resources, next door to the university’s main campus for 35,000 students. When we visited, an eye-catching new building was reaching completion (similar to what we saw in Portland, Oregon, with the new research facilities of Oregon Health & Science University [OHSU], see here). It was the first step in the planned move to a new downtown campus, and university administrators discussed with us how they could revitalize the whole area around it. The steel industry is now gone, and Newcastle does not count on remaining the largest port for exporting coal to Asia forever. Already, collaboration with local industry now funds 38 percent of the university’s $98 million research budget. That is the highest percentage in Australia, and half of this budget is now focused on medical research. We also listened to enthusiastic start-up entrepreneurs at a local co-working space and talked about university efforts to work closely with local small businesses that had remained competitive but could benefit from a stronger R&D base. All of these were signs that Newcastle is becoming a brainbelt where research-based activities are replacing old manufacturing.
In Europe, the political debate was completely overshadowed by the negative outcome of the British referendum. On June 23, 2016, a majority of the electorate voted to enact “Brexit,” or the exit of the United Kingdom from the European Union (EU). For European skeptics in other member states, the outcome was celebrated as a victory as well.
Many extreme-right-wing politicians in the Netherlands, France, and Germany saw Brexit as evidence of the need to bring sovereignty back to the nation-state. There were fears that the elections in these major European countries would bring right-wing parties into the government, but in the end that did not happen, although more voters than before supported their views. Calls for an unraveling of the European Union turned out to appeal to growing minorities but were rejected by broad majorities in each of the three countries.
Among British scientists and universities, there is a growing fear that Brexit will have a devastating effect on collaboration with their colleagues on the Continent. Just a month before the Brexit referendum, the EU announced a flagship project on quantum computing.3 For a period of twenty years, €1 billion will be invested to keep up with the competition in the United States and China. The project is coordinated by German, Dutch, and British research institutes.
Together with private and public partners such as Microsoft and Intel, the Dutch government will invest over €250 million over the next ten years in the development of quantum computers and quantum Internet through the Delft research icon QuTech. Microsoft announced in the autumn of 2016 that the collaboration with QuTech that began in 2010 will be intensified. A quantum lab will be built on the campus of the University of Delft. This lab will be managed by Leo Kouwenhoven,4 a Dutch physicist who recently proved the existence of the Majorana quasiparticle, which is seen internationally as a major leap toward making the quantum computer a reality.
Regional policy makers, business leaders, and universities were intrigued by our book. Entrepreneurs in Kortrijk, a small Belgian town near the border with France, wondered how their region could become a “smart place.” The strength of this Flemish region is in the small-and medium-size family-owned industrial companies that traditionally prefer to operate on their own. Collaboration is seen as a marriage with the devil. But there are signs that the need for collaboration is becoming apparent and that new role models will lead the way to sharing brainpower.
In an old factory once used by Philips Electronics and located in the heart of Eindhoven in the Netherlands, we met Daan Kersten and Jonas Wintermans, the founders of Additive Industries, a start-up that developed a 3D printer within the unusua
lly fast time frame of three years. The MetalFAB1 is the first 3D printer in the world that can make a series of high-tech metal parts in identical quality. Asked why they succeeded in making this printer in such a short time, they enthusiastically told us that it all came down to “sharing brainpower.” And the key instrument was the establishment of AddLab six months after the founding of Additive Industries.
Eight partners from the Eindhoven region shared their knowledge of mechanics, robotics, new materials, sensors, lasers, and software. According to Kersten and Wintermans, it was a unique step, and the partners they invited to join AddLab needed some time to get used to the idea of sharing strategic knowledge with competitors in an open atmosphere. But finally the founders of Additive Industries succeeded in bringing together a wide variety of suppliers to the food, aerospace, health care, and semiconductors industries.
The AddLab team met once every two weeks, bringing fourteen experienced engineers together who shared their experiences, accelerating the development process. The distinguishing feature of the 3D printer is the technical concept of a modular approach, a kind of “Lego solution.” Four construction rooms make it possible to work with various metals at the same time. This flexibility has another huge advantage, because in most existing 3D printers, only one room is available. So if you want to work with various metals, the laser is idle while the production room is cleaned between each such use. In the MetalFAB1, the laser can be used longer and more frequently.
In late 2015, the first beta version of the machine was delivered to a subsidiary of Airbus in Munich. In 2016, the shipment of six additional machines followed, sent to various customers in Europe, including the global engineering group GKN.5
Pittsburgh: From Steel City to Smart City
There is a new downtown Target not far from Google’s 160,000-square-foot office on Bakery Square. High-end boutiques can be found on the renovated Indigo Square; the former YMCA has become a trendy Ace hotel; and now there are coffee shops, such as The Coffee Tree Roasters, and numerous restaurants, for example, Spoon and The Livermore.6 Becoming a brainbelt matters—not only in making a city more vibrant and attractive again but even in politics. The turnaround in Pittsburgh and the influx of younger people had a lot to do with Hillary Clinton beating Donald Trump in Pittsburgh’s Allegheny County.