I was with some manufactures in Colorado Springs a while back. They had gotten together for the first time to talk about how they might be more effective as a business community after a lot of them were hammered by the downdraft in electronics earlier in this decade. I thought it was interesting that they identified as their top goal ways to be more innovative.

Fly across the country now to Pennsylania and that same topic is on the minds of Keystone State manufacturers. A recent issue of PA Manufacturer had a very good article about the innovation imperative. Appropriately enough, it is titled, “Open Your Mind to Innovation: See How Formalizing Innovation Can Create a Whole Other Paradigm for Your Manufacturing Outfit.”

This article, by Evan Pattak, shows how companies can build innovation into their other processes and faults those executives who only think innovation is sparked by a eureka moment and not cultivated. They take a look into Wilton Armetale in Lancaster County that got a group of employees together for their “Skunk Works” meeting to brainstorm about “off-the-wall product and distribution concepts.” Ken Lefever, the company’s president and CEO, says “One of our rules is: no idea is a bad idea. We don’t laugh at it. Skunk Works determines if we will move forward.”

While this sounds like something everyone would do to envision their next generation of products and processes, it appears that what Wilton Armetale is doing is somewhat unique. The PA Manufacturer article says that too many companies are only focused on controlling costs and too few have an innovation process that should include these elements:

* talk to customers about current products to gain insight on how they might be improved or where there is gap
* measure results such as time to market for a new product or set a revenue goal
* question everything; an outside facilitator might be useful so a company can think out of the box.
* create a culture of innovation by being open to suggestions from all parts of the company
* designate a process change leader.

If you want to read the whole article, click here and go to page 6.

This week, Shell Oil Co. president John Hofmeister spoke to the National Press Club with his strategy for energy security. He avoids calling for “energy independence”, by the way, because he thinks it is naive to think that we could every go solo on all our energy, considering how much is already imported. But his plan would give us greater diversity of energy resources and more security in the long run. Earlier this week we blogged on the top steps in Mr. Hofmeister’s energy plan. Here are the next three:

* Develop other forms of energy, such as wind and solar. Shell is investing in new wind farms across the country, including new electricity-generating facilities in West Virginia and Hawaii. Shell is also investing in solar, including a new technology he referred to as copper indium diselenide technology.

* Build a hydrogen economy. Shell has partnered with General Motors on hydrogen fuel cell vehicles. Shell powered hydrogen vehicles were parked outside the Press Club and Mr. Hofmeister made it clear that Shell wants to be in the lead on this new fuel.

* Emphasize energy efficiency. He calls for a change in American culture and a new drive to redesign energy-using vehicles, homes and workplaces to help reduce the use of oil and gas to power them.

Yesterday we blogged on remarks that Shell Oil Co. president John Hofmeister delivered on Monday at the National Press Club. Mr. Hofmeister’s viewpoint and recommendations should be read by any American who drives a car, rides a bus, uses an elevator, has refrigerator and works in a heated home, school, office or factory.

His first two steps toward energy security were that we should continue to seek new conventional oil and gas sources (such as the ones recently announced in the Gulf of Mexico) and that we should utilize the Colorado oil shale deposits. Now let’s summarize his next three recommendations for a better U.S. energy future:

* Use more coal. Technology has advanced to the point where coal can be used more extensively without the environmental downsides. The United States is king when it comes to coal because we have so much of it and using it this way makes sense.

* Use natural gas more effectively. American industry needs natural gas to operate. In fact, manufacturers use one-third of all the natural gas produced here. If we want a strong manufacturing sector, we need more of this fuel to keep growing. It’s particularly important for the petrochemical, fertilizer and steel industries. Mr. Hofmeister pointed out the limitations due to Outer Continental Shelf leasing restrictions and their obvious constraint on supply and called for more LNG (liquefied natural gas) facilities too. After all, the United States has the same number of LNG ports as South Korea.

* Go after alternative fuels. Shell is a major investor in cellulosic ethanol, which can be made from straw among other things. Attending the Press Club luncheon was their partner in this endeavor, an executive from Iogen, which leads in development of this kind of ethanol.

Energy drives American industry and fuels our offices, schools and transportation system. Too many people take it for granted and few understand what the real choices are to reach greater energy security.

One executive has a clear and focused plan and he was at the National Press Club yesterday discussing it. John Hofmeister is president of Houston-based Shell Oil Company and he gave a compelling address about Steps to Energy Security. Mr. Hofmeister is not a believer in “energy independence” by the way, which he says is a naive belief that we can go it alone on energy. We already import too much, he says, to make that concept a realistic objective. But he does believe we can do a lot more to ensure a secure supply of energy. That’s why Shell has launched a 50-city tour to talk about energy with Americans of all walks of life. Getting back to yesterday’s remarks, the top two items on his list are:

* continue to bring conventional oil and gas to market, such as the new finds in the Gulf of Mexico. The easy oil and gas is pretty much running out, but new technology is enabling Shell and other companies to locate and bring to market oil that would have been impossible to drill a generation ago; and

* focus on oil shale in Colorado, where there may be as much as a trillion barrels of oil. Once again, new technology is being tried that won’t require quarries to mine the oil shale and extract it from the rock. Instead, Shell is piloting an in situ approach that would heat the oil in the rocks and allow it to be extracted in a conventional way. They hope to have this new technology perfected by 2010.

Decades ago, Mao launched China on a Great Leap Forward that was anything but great. It was more of a leap into an abyss.

Today’s Chinese leaders are smarter. For one thing, they don’t take manufacturing for granted like too many Americans do. They want it. They nurture it. They attract it. They must have studied how U.S. manufacturing became a global power, because they are taking pages from the U.S. innovation play book.

The latest news about this genuine Great Leap is from the World Intellectual Property Organization (WIPO). Generally, we might think that a group like WIPO would be complaining about intellectual property violations in China, because there are plenty of them. But in this report, released recently, a different picture of China’s interest in IP emerged: a country that is accelerating its own patent filings.

The WIPO report says that patent filings in China increased sixfold in the past ten years, with more than 130,000 applications being filed there in 2004, the latest year for such data. That leap puts China fifth–behind the Japan, the United States, EU and South Korea. About half the patent applications were from Chinese and the rest from foreigners. So we are still ahead on this score, but China is moving up fast. Emphasizing an innovation agenda, as you have read about at other times on this blog, is critical for the United States to keep its competitive edge. Germany has displaced the US as the world’s top exporter; we don’t want to see that displacement spread to other key economic indicators.

Earlier this year, The Manufacturing Institute had the distinct honor to issue a publication authored by Professor Richard Epstein, who teaches at the University of Chicago Law School. He is a pre-eminent scholar on the topic of intellectual property and his report was widely acclaimed. If you’d like to download Intellectual Property for the Technological Age, just click on the report name and it will take you to it.

Recently, the Progress & Freedom Foundation had the good sense to invite Professor Epstein to their Aspen Summit to discuss this white paper and his overall views on intellectual property. They do great work over there at PFF and we wanted to give you an opportunity to learn yet a bit more from Professor Epstein on a topic that is vital to maintaining and advancing this country’s innovation economy. Click here for the Epstein remarks.

The Thursday Wall Street Journal’s front page story was about boat building in, of all places, Turkey. Silicon Valley entrepreneur Tom Perkins had his $80 milllion clipper, The Maltese Falcon, built at shipyards in Tuzla, Turkey.

What was most interesting about this story is that Turkey is positioning itself to be a manufacturing nation, and boat-building is only part of the picture. Furniture, denim, jewelry and other skilled trades are blossoming in different parts of Turkey. These specialized niches are creating new job opportunities and transforming Turkey into more of a manufacturing and services economy. Those two sectors have eclipsed agriculture as the largest GDP contributors. Turkey is attractive not only because wages are lower there, but because they have built an infrastructure of skilled workers, including engineers, who are eager for new challenges like this.

It’s no wonder that Turkey would encourage these trends, because these new manufacturing clusters “have spawned subcontractors and suppliers around them…” We know that manufacturing has the largest mulitiplier effect of any industry and the Turks are finding this to be true as well. If you want to see what manufacturing means for the United States and the potent multiplier effect here at home, just check out our recent report, US Manufacturing Innovation At Risk (click here).

What is to wonder about is why elected officials in the U.S. don’t see these links and act on them. Congress still dawdles on extending an R&D tax credit, something that should have been made permanent long ago. The American Competitiveness Initiative, proposed by the President last winter, has yet to reach his desk. Not enough has been done to provide a more secure and lower cost energy platform for US manufacturing. Other countries are trying to steal a march on US manufacturing and they will succeed if we don’t take the right policy steps to bolster manufacturing at home.

Tack that jib!

There is almost nothing better than to start out the day with a box of just-opened corn flakes with milk. There is a freshness there that other cereals can barely match. If you are a corn flakes fan, too, you may be interested to know that Kellogg’s corn flakes were invented exactly a hundred years ago in Battle Creek, MI by W.K. Kellogg.

As you probably know, his invention was a pure accident. He was trying to making something else and someone left the drier or oven on too long and suddenly there was this new thing that turned into corn flakes (or petals de Mais in French). A whole industry was spawned and the way Americans ate breakfast was changed forever. There has always been a rooster affiliated with those Kellogg’s corn flakes for as long as I can remember and so this year we can also celebrate that corn flakes mascot, Cornelius!

By the way, it has struck me how innovations sometimes seem to come in batches. In a truly serendipitous moment, G.W. Maxwell invented the paper milk carton out in San Francisco in 1906 too. I blogged earlier about Mr. Peanut turning 100 this year. Back in 2003, we celebrated the 100th anniversary of some incredible manufacturing innovations: the first commercial air conditioning installed by Willis Carrier, the founding of Ford Motor Company, the first manned flight by the Wright Brothers and the first Harley Davidson motorcycle. Imagine that, all in one year.

“To be competitive, we have to industrialize in ways that make us more efficient. All manufactuirng, everywhere, is becoming more efficient or it is going away.” This very good insight was made by Walter Gillette, vice president of airplane development at Boeing. While his observation was made about aircraft manufacturing, it is equally true about any other kind of manufactured product you can imagine.

We learned about Mr. Gillette’s views on manufacturing in an excellent series of articles on manufacturing in the Washington Times last month. Recently, I’ve blogged on the first two installments. Today I’ll touch on the third of the four-part series that ran in April.

The only thing Sparshott missed in this piece was the role of small and medium sized manufacturers. Increasingly, the big companies are pushing the innovation down to the smaller companies. They are not just telling them what they need, they are involving them in design and planning. They should have mentioned Click Bond in this article, because they are a small company out in Nevada that makes many of the fasteners used in Boeing’s planes. Take a look at this article and learn a lot about today’s manufacutring that too many take for granted.

TImes reporter Jeffrey Sparshott interviewed some of America’s manufacturers who are household words: Boeing, John Deere, Dell and Lockheed Martin. Each company has a diffent business line of course, but their comments are similar about how they still make product here, but are globalizing their supply chain. For example, Deere’s chairman and CEO Robert Lane says, “globalization affects virtually everything we do at Deere, from supplier sourcing, to manufacturing processes, to recruiting highly skilled men and women from all over the world.”

If you want a short course in today’s manufacturing then this third installment captures it. There are fascinating descriptions of how Boeing is building its new 787 Dreamliner. Did you know that big planes like that have 300,000 hydraulic, electronic and interior parts and another 300,000 fasteners?! More important to you wonks out there, the article talks about how these companies seek a balance between what they make here and what they outsource to other US companies or abroad.

I thought this title for a movie was a little strange, but The Shipping News is actually a very interesting personal Odyssey. The title refers to the occupation that Kevin Spacey takes up in a fishing village in Newfoundland (where no one takes the work of the ships for granted), writing for the local paper.

Back here at home, shipping is invisible to most of us, unless we live near a large port. So most of us will be forgiven if we don’t know about the revolution in shipping that changed our economy. A new book by Marc Levinson, The Box, traces this technology innovation and is worth a read, especially in light of the uproar over the Dubai Ports issue.

In a nutshell, Levinson shows how one man–Malcolm McLean–thought up a more efficient way to deliver product with the trucks in his fleet. His first shot at implementing his idea came with shipping Ballantine Beer from Newark, NJ to Miami. The old-fashioned way was to load a truck, drive it to the shipping site, unload it, store it, hoist it aboard ship. Why not just have a container that could be simply lifted right on ship and eliminate all of this? He found that it was 94 percent cheaper to do it his new way.

Still, he was bucking tradition and the unions, so it wasn’t until the US government needed speed in shipping to supply the Vietnam War that his idea caught on. When it did, ports that didn’t invest and appreciate this innovation whithered and new ones arose in their place. Bye bye ports in Manhattan and Broolyn, hello ports in Newark and Port Elizabeth, both in New Jersey. London shrank while Felixstowe expanded. New ports took advantage of this efficiency and so Dubai and Pusan, Korea mushrooomed.

Check out the trailer for this flick and you’ll see a wonderful scene between Kevin Spacey and his aunt, played by Judi Dench, where, in exasperation, he asks, “What are we doing here?” and she retorts, “Making our future.” Wow, that’s what happened not ony when the container box revolutionized shipping, but what today’s manufacturers are doing with the application of technology.