National Summit’s message: U.S. faces tough challenges to compete globally

Opportunities for growth exist in alternative energy and the modernization of infrastructure, but America’s waning ability to compete in the global economy must be bolstered.

And collaboration may be the way to get there.

That’s the message that came through loud and clear from the Detroit Economic Club’s three-day National Summit, held last week in Detroit.

The ambitious conference brought speakers from across the country to discuss a national economic agenda, focusing on technology, energy, the environment and manufacturing.

Executives from Detroit’s automotive industry treaded a fine line between thanking the federal government for aiding General Motors Corp., Chrysler L.L.C. and the supply base, and lambasting the conditions under which America’s industrial firms operate.

U.S. manufacturers have a greater than 17 percent structural cost disadvantage — because of labor practices, tax policy and other factors — compared to the nation’s nine-largest trade partners, Richard E. Dauch, CEO of Detroit-based American Axle & Manufacturing Holdings Inc., said during a panel.

Still, Dauch called for collaboration between industry, government, academia and labor to find a solution.

“The current U.S. business model is driving a massive deficit — the current business model must be fixed,” he said.

“Businesses are at a competitive disadvantage because of the U.S. tax structure — the transformation in the United States, from a world-leading producing and manufacturing nation, to a world-leading consuming nation, coincides with what some have called the dumbing-down of our society over the last 20 years.”

Maybe it was the setting, with Detroit’s idle factories in the back of the collective mindset, but manufacturing was repeatedly dubbed a critical component of the nation’s economic recovery during the conference.

A clear vision for the role and position of manufacturing within the U.S. economy is needed, said James Quigley, CEO of Deloitte Touche Tohmatsu.

Emily DeRocco, president of The Manufacturing Institute, says the key to moving manufacturing forward is a skilled, talented and educated workforce — something that is currently in short supply.

“If we develop the talent, we can return high-quality, middle-class jobs,” she said during a Monday panel.

But holding back manufacturing is an education system that, if “judged as a business... its product is often inferior,” DeRocco said.

Just as America’s manufacturing sector was deemed uncompetitive, so was the nation’s education system.

The U.S. education system, including K-12 education and higher education funding, “has lagged the rest of the world in a way that is truly alarming,” said Jay Noren, president of Wayne State University.

Declining emphasis on basic math and science skills in primary schools and shrinking funding for higher education damaged the ability of a wide swath of U.S.-educated students to compete globally in growing business fields that require high levels of technical training.

Foreign nations like China, India and other countries, even those a fraction the size of the U.S. are producing more math and science savvy students at a rate of four- or five-to-one, said James Shelton III, assistant deputy secretary of innovation and improvement in the U.S. Department of Education.

“We have to radically transform the productivity of our education structure,” he said.

The crux of the issue is that there simply aren’t enough tax dollars to go around, Noren said to reporters after his Tuesday remarks, adding the tax base must be increased if education is going to improve.

Mary Sue Coleman, University of Michigan president, who also spoke at the conference, said moving the nation’s educational model forward comes down to political will and funding, but she is optimistic.

“I do think that the nation is reaching a critical turning point and I think we’re getting great leadership out of Washington (D.C.) right now to sort of tell the nation what the issues are and, (but) it’s not going to be easy,” Coleman told Crain’s.

Panelists also said the U.S. lacks in human capital, research and development and innovation incubation.

Panels discussing the environment and innovation struck a more hopeful note.

In session after session, talk turned to green sector potential, even when the stated topic wasn’t an exact fit.

If you’re not familiar with the term “smart grid,” well, don’t plan to make that claim for long.

One of President Barack Obama’s stated priorities, the smart grid concept, is part of a massive overhaul of the country’s compartmentalized electrical grid.

A smart grid would allow users to eliminate waste from the system, and could also have the capacity to support plug-in electric vehicles — an innovation all speakers, from GM CEO Fritz Henderson on down, say are coming.

Innovation is America’s secret weapon, said Citigroup Inc. CEO Vikram Pandit, one of the summit’s keynote speakers.

Each period of American economic stagnation has led to innovation, Pandit said, followed by economic growth.

The benefits of advanced technology infrastructure often came to the forefront.

Take “cloud computing.” You may never have heard of it, but you’ve probably used it, if you’ve ever logged on to a site like Facebook.

As Edward Lu, program manager in advanced projects at Google Inc., explained during a session on clean technology, cloud computing means that a computer’s infrastructure isn’t stored locally, but kept on a remote server.

Companies like Google and Amazon.com have begun to offer users the ability to “rent” computing infrastructure online — a tool that can eliminate a lot of startup business costs, said panelists like Lu and Eva Chen, co-founder of TrendMicro Inc.

Technology companies also touted the value of collaboration over competition.

Google’s view is that any work that expands the space in which it operates is valuable to the company, Lu said.

Google dominates the search engine market, but the code on which it’s based is open source, he said, allowing infinite capacity for innovation.

Talk of public-private partnerships also dominated the conference, with panelist Ian Bremmer, president of the New York-based Eurasia Group, saying that financial activity around the world has centered in government capitals.

Public and private investment must pair to drive innovation and economic growth, said Microsoft CEO Steve Ballmer, who spoke on the summit’s final day.