The Smartest Places on Earth

by Antoine van Agtmael

  Smart Manufacturing: Learning

  TraditionalManufacturing: Outsourcing

  Smart Manufacturing: Sharing brainpower

  TraditionalManufacturing: Rigid hierarchy

  Smart Manufacturing: Flat organization

  TraditionalManufacturing: Power from job position

  Smart Manufacturing: Authority from knowledge

  TraditionalManufacturing: Regimentation

  Smart Manufacturing: Creativity

  TraditionalManufacturing: Rule following

  Smart Manufacturing: Questioning

  TraditionalManufacturing: Command and control

  Smart Manufacturing: Commitment and influence

  The smartfactory of the future will be transformed with three key technologies: robotics, 3D printing, and the Internet of Things. Next-generation robotics—smart, versatile, mobile, and cheap—will make automation affordable to start-ups and smaller enterprises and will offer an unprecedented level of customization to consumers. The use of 3D printing will reinvent how we produce components (with an ever-increasing range of materials) and will dramatically reduce waste while allowing unprecedented creativity. The Internet of Things will create a system in which machines, components, products, producers, suppliers, customers, and just about everybody and everything else can communicate with one another. The purpose will not be to create endless chatter and useless information but to shorten the time from order to production, drive defects to zero, reduce downtime to nothing, and take waste out of every system.

  In every brainbelt and innovation zone we visited, we caught glimpses of the new way of making things: smart, fast, cheap, customized, creative, complex, amazing.

  Robotics: Automation Obliterates the Labor Cost Advantage

  When we met with Scott Eckert, president of Rethink Robotics,9 at his research lab in Boston,10 for example, he introduced us to Baxter, one of his employees. Baxter looks rather like an ordinary human, at five feet ten inches and 165 pounds, with the requisite eyes, arms, and a brain of sorts. He is pushed around a room easily and responds to commands. He is not a human, of course, but a humanoid robot, functioning in the world with the aid of three cameras, sonar, multiple sensors, and other technologies. Baxter can “see” and “feel” his environment. He can find things even when their location changes. He can grab, hold, lift, and move objects. He works as an assistant to real people and is a skilled multitasker because one arm can do a completely different job from the other.

  Baxter is not only versatile but also cheap to buy and operate. With a purchase price of $22,000 and a work capacity of 6,500 hours, Baxter gets “paid” about $3 an hour. This kind of labor cost advantage makes Baxter and his ilk extremely appealing to smaller companies that, until now, could only dream of using robots in making things. Such companies simply couldn’t afford the six-figure price tags or the massive infrastructure such robots required. In terms of mobility, innovation, and cost, Eckert compares traditional industrial robots to mainframe computers and Baxter to a PC.

  Rodney Brooks, founder of Rethink Robotics, with Sawyer and Baxter.

  Credit: Rethink Robotics

  Designed by former MIT professor Rodney Brooks, a robotics pioneer who is sometimes called the “bad boy of robotics,” Baxter exemplifies the smart robot designed for the smartfactory.11 A dozen or so companies in the United States, Japan, Germany, and South Korea make such humanoid robots, but until recently they were mostly for research or military applications.12 Now that they’re taking their place on factory floors, these user-friendly robots are transforming the notion of what a factory is.

  Robots and automation are key to smart manufacturing. As the price of robots comes down and wages rise in developing economies, it makes less sense to produce goods halfway around the world when you can make them close to the consumer for the same price. When we asked Phil Knight, founder and chairman of Nike, whether shoes could be made by robots in high-wage countries, he said, emphatically, yes. “In fact, Olympic shoes are mostly made that way already. I can see the day when anyone can have their feet measured with 3D equipment and shoes are then made entirely to order, avoiding the problems people have with shoes that don’t fit quite right.”13 The same may be true for garments, from underwear to outerwear.

  Baxter illustrates just how much more versatile, cheaper, easier to use, and smarter this generation of humanoid robots is compared to its forebears. Combining artificial intelligence, sensors, and big data analytics with cheap computing power, these smart robots can keep learning instead of repeating the same task over and over again—they can learn, and their “brains” can expand in capacity. Robotics experts estimate that robots currently perform only 10 percent of the industrial work of which the latest generations are capable,14 so the potential remains huge.

  However, it will take time to realize that potential. Innovations like the humanoid robot require the development of common standards and operating systems as well as the creation of specialized components. Still, even with these challenges, automation is becoming the new normal, and brainbelt entities are leading the way in its development.

  3D Printing: Creating Almost Anything in Additive Layers

  The second essential element of “smartfacturing” is additive manufacturing, also called 3D printing. Today, 3D printers are at work in research labs, start-ups, outer space, operating rooms, museums, and schools—and are now becoming more and more a factor in manufacturing.

  In traditional manufacturing, objects are created in a variety of ways that include injection molding, machining, laser cutting, and welding. The 3D printer deposits layer after layer of material to construct three-dimensional shapes in a single solid piece without joints or weak points. A digital design template (CAD file) instructs the printer about the exact shape of each layer in order to form the final object.15

  We saw 3D printers at work in an old warehouse in Youngstown, Ohio,16 that houses America Makes—formerly called the National Additive Manufacturing Innovation Institute (NAMII)—the first of fifteen such institutions announced during President Obama’s 2013 State of the Union address.17 Kevin Collier, manager of the Innovation Factory at America Makes and a former employee of 3D Systems, gave us a tour of the facility. He described the extensive progress made in moving from rapid prototyping to real manufacturing during the previous four years. “Each day, the number of applications and types of processes grows, the speed improves,” he said. Chronic problems, such as warping and how to work with two different materials, are being resolved. Automotive and aircraft makers are using 3D printing for making prototypes and also for shaping the composite materials that are becoming ubiquitous. In medicine, 3D printers are building knees, hips, and replacement parts for people with battlefield injuries. “The progress keeps accelerating,” Collier says.18

  When we visited Chapel Hill in North Carolina, venture capitalist Steve Nelson, managing partner of Wakefield Group, intrigued us when he partially lifted the veil on a remarkable new device, a 3D printer that would take on the entire production process, from fashioning prototypes in the lab to turning out whole products on the factory floor. One of the inventors of the system, Joseph DeSimone, personifies the breakdown of academic silos and sharing of brainpower between academia and business. DeSimone is professor of chemistry at the University of North Carolina and professor of chemical engineering at North Carolina State University and has over 350 patents to his name. He is also an entrepreneur who cofounded several companies and took a leave of absence from his academic positions to become CEO of a new company, Carbon3D. Its new system will be dramatically faster than previous models—eventually as much as 1,000 times faster—and can fabricate to extremely tight tolerances. It can be used in the “microfabrication” of products such as stents that can be custom designed for a particular patient’s anatomy and that can dissolve over time, for vaccine and drug delivery systems, and for high-precision turbine blades. “Our process allows anyone to produce commercial quality part
s at game-changing speeds,” DeSimone said.19

  We believe that 3D printing will create a highly efficient manufacturing model that saves energy while eliminating flaws and waste. Most important in the long run is that 3D printing holds tremendous potential for unleashing creativity and imagination that will lead to products we can’t yet imagine.

  The Internet of Things: Connecting Everything, Everywhere

  The third smart manufacturing component is the Internet of Things. According to statistics from the World Bank, 25 billion “things”—as compared to about 5 billion people—are, in 2015, using the Internet, increasing the necessity of wireless machine-to-machine communication. Embedding sensors in machines and constantly analyzing the data they produce reduces unplanned downtime and warns when maintenance is due. In the future, it may even allow for fixing machines before they break. In a TED talk he gave in 2013, Marco Annunziata, chief economist at GE, called the Industrial Internet “a marriage between minds and machines that is as powerful as the Industrial Revolution.… It makes machines not intelligent but brilliant.”20

  Recognizing this revolution, Intel, Cisco, IBM, AT&T, and GE announced the formation of the nonprofit Industrial Internet Consortium (IIC) in March 2014, an open-membership group aimed at setting common standards so that information can flow freely between machines. Projects like these show that at least some key, technology-savvy American companies are taking the Industrial Internet seriously. Siemens does, too, with Siemens Industry Sector North America CEO Helmuth Ludwig claiming that “the future of smart manufacturing is today. There is nothing less than a paradigm shift in industry: real and digital manufacturing are converging. New technologies are bringing the once-separate worlds of product design and planning, production engineering and execution, and services together in exciting ways.”21

  Siemens isn’t just acknowledging the future—it’s already applying these principles. At a 108,000-square-foot smart manufacturing facility in Amberg, Germany, Siemens builds 950 different types of Simatic control devices (with 50,000 annual product variations) from over 1.6 billion components made with 10,000 materials from 250 suppliers—with only fifteen defects per million. Touch screens are strategically located in the plant to allow the machine operators to check everything down to the production line and individual part.22

  To see how the Industrial Internet works within a factory, we visited GE’s brand-new industrial battery factory in Hudson Valley’s Schenectady that is ironically surrounded by old buildings that once housed GE’s old lamp and generator factories—truly a rustbelt-to-brainbelt transformation. In this $170 million facility, GE employs its version of the Industrial Internet in the form of an advanced system of connected sensors that records and tracks every parameter of the production processes—ranging from contaminants and resource source to temperature and machine number—so that any potential inconsistency can be digitally traced to its source and corrected. Presented with a completely clean slate, GE has built this state-of-the-art information system right into the new machinery to help identify exactly where errors occur or efficiencies can be achieved. It also helps to reduce unplanned downtime to zero and to fix machines before they break. GE’s factory vividly illustrates the ever-increasing role of digital technologies in traditional manufacturing.23

  So, these three elements—robots, 3D printing, and the Industrial Internet—come together to support products and technologies developed through the sharing of brainpower in smartfactories of the kind that exist or are being developed in brainbelts throughout the United States and Western Europe.

  And that brings us to the result of all this “brainsharing” and smart manufacturing activity: the products and technologies they produce. As we’ll see in the following chapters, these are concentrated in three areas: chips and sensors, new materials, and life sciences (including biotechnology and medical devices). These are brainbelt activities because they are endeavors that could not be pursued by a single player with anywhere near the speed, efficiency, or creativity of a brainsharing endeavor, if they could be developed at all.

  But fortunately they are being developed, in unexpected places like Akron and Eindhoven, Lund, and Dresden, and, yes, even in the former rustbelt, often snowbound, towns of upstate New York.

  Chapter Two

  CONNECTORS CREATING COMMUNITIES

  Hives of Innovation in Chips and Sensors

  In our travels to the former rustbelt regions throughout the United States and Europe, our research uncovered strong similarities among brainbelts—the history, types of players involved, connectors, methods of sharing brainpower, and the use of advanced manufacturing technologies—as well as distinctions. Each brainbelt is focused on one or two well-defined economic activities, even though they all involve specialized technical research and high complexity, require multidisciplinary collaboration, and share costs that are often too high for any single party to bear. In Akron and Eindhoven, for example, the major focus is on polymers. In Minneapolis and Oulu, it’s life sciences. In Albany and Dresden (and also Eindhoven), chips and sensors. What makes brainbelts different from industrial clusters—which consist essentially of a group of related businesses and their suppliers proximately located in a particular area—is that universities are an essential part of the mix and that the entities in a brainbelt are not only connected but are also highly collaborative. Their knowledge is so specialized and their research so focused that they do not feel threatened by others and, as a result, feel free to form close partnerships and engage in open collaborations that make all the participants stronger and more competitive. They are secure enough in their positions to sometimes compete with one another in separate areas where their respective expertise does not overlap.

  To create this unique combination of focus and openness, whatever the industry, the fundamental factors are the same, as we’ll see, but come into play somewhat differently. In this chapter, we’ll look at the following elements: the role of the connector, the importance of the physical environment, the power of legacy, the transformation of supply chains into value chains, and the way that strong community is built to push forward the creation of breakthroughs in the field of chips and sensors.

  A Quintessential Brainbelt Challenge: The Rise of the Internet of Things

  Today, smartphones connect several billion people and put an exploding amount of information at our fingertips, but this is nothing compared to the impact on our lives of the Internet of Things, which could connect hundreds of billions of machines, devices, and other things to one other, and enable instantaneous analysis of the massive stream of big data they produce. Cities, homes, transportation systems, communications networks, manufacturing facilities, and public utilities—imagine a world in which virtually every device can be connected through the Internet to every other device, sharing information in real time. The implications for our health, productivity, food security, education, and indeed, happiness are immense. For example, the self-driving car may help solve gridlock in crowded metropolitan areas and reduce accidents causing injury and death. Tiny sensors in our bodies could help monitor and manage our health. And smart energy grids could enable us to tap into alternative sources of power with phenomenal efficiency and reliability. The positive potential of the Internet of Things is almost unimaginable. (There are also, of course, major issues related to security and privacy.)

  Realizing these potential benefits hinges first and foremost on the computing power and storage capacity of sensors embedded in all those gadgets and the chips used to connect them and process the enormous quantities of data gathered. They must become ever smaller, ever more powerful, and ever cheaper to produce. That is the quest of technology innovators worldwide, not only in the well-known centers of innovation but also in three brainbelt areas that we visited: Albany, New York, at the center of the Hudson Tech Valley; Dresden, Germany; and Eindhoven, the Netherlands.

  These under-the-radar, chip-focused areas are competing in the latest phase of the decades
-long quest for tinier, more powerful chips by concentrating their efforts on two fundamental issues. First, how to create larger silicon wafers (the thin slice of semiconductor material from which chips are fabricated) that yield a greater number of chips per wafer, thus cutting cost. And, second, how to shrink the distance between the microscopic electric wires (circuits) in each chip, so that smaller chips can pack even greater processing power. These challenges require the sharing of brainpower in design and development and smart manufacturing methods in production.

  In Albany, the focus is on designing the next generation of large silicon wafers, 450 millimeters in diameter, through the use of nanotechnology, which is the manipulation of matter at the scale of atoms and molecules. In the Dresden brainbelt, the manufacturing processes themselves take center stage. In Eindhoven, the sharing of brainpower is applied to both the design of chips and the development of manufacturing processes, particularly a new method that employs extreme ultraviolet lithography (EUVL) to more reliably create chips of ever-higher precision.

  All three brainbelts are examples of “awakening beauties,” areas that have been brought out of a period of dormancy through a fortunate combination of the factors common to all brainbelts.

  Albany: The Essential Role of the Connector in Bringing Brains Together

  The Albany area would not have become a brainbelt without the engagement of Alain Kaloyeros, head of the $20 billion SUNY Poly’s NanoTech Complex, the short name for SUNY Polytechnic Institute’s Colleges of Nanoscale Science and Engineering (CNSE), part of the State University of New York system. He was raised in Lebanon, where, as a young man, he fought as a Christian militiaman in the Lebanese civil war. After narrowly escaping death several times in the strife-torn labyrinthine streets of Beirut, he abandoned the life of an urban guerrilla and turned to academia. In 1987, he earned his PhD in experimental condensed matter physics from the University of Illinois, and he quickly proved his mettle as a physicist. Although he has heavy-duty scientific credentials, he is neither the prototypical tech nerd from MIT or Stanford nor an entrepreneurial boy wonder from Silicon Valley, but brings the all-important skill of the connector in fostering the renaissance of a rustbelt region, a skill whose importance we will see time and again throughout the book.