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Illinois has experienced job loss in the manufacturing sector over the past year.

Manufacturing hub may mean smarter workers, not more jobs

by Donna Mary Mahoney and Alex Norman
Feb 27, 2014

President Obama's announcement earlier this week of a $70 million grant to create a digital manufacturing institute in Chicago is welcome news to a state that lost 4,700 manufacturing jobs last year. But don't look for it to spur job growth just yet, some experts say.

Illinois is the fourth-largest employer of manufacturers in the U.S., behind California, Texas and Ohio and of those, is the only state to lose manufacturing jobs last year, according to preliminary estimates by the Bureau of Labor Statistics.

“While these jobs won’t be replaced immediately, it may mean a higher-skilled workforce in the future,” said John Harris of UI Labs, the research lab that spearheaded Illinois’ grant proposal. “This is about retraining people to be more efficient and more profitable in their businesses. The jobs that they have will be more technical than hard core manufacturing.”

The $320 million public-private institute, one of several regional hubs that will be launched nationwide this year, is part of an initiative to bring high quality manufacturing jobs for the middle class. UI Labs will oversee the institute, which will be located in Goose Island, and hire an initial staff of 80-100 people, according to lab officials.

The new institute will develop software and software tools that can be used at universities and provide on-the-job training in new methods of manufacturing. This means that companies won’t have to put in as much overhead for expensive assembly lines to create pilot runs of new products.

Companies and universities that participate in the program will have complete access to the software developed at the institute. “Our philosophy with this is to be open-sourced, no different than Facebook is open-sourced to everybody,” Harris said.

The manufacturing hubs announced by Obama are part of a growing trend: Computerization in the industry. These hubs will provide the type of training that major Illinois manufacturers like Boeing Co., Deere & Co. and Caterpillar Inc. need to establish a smarter workforce—one equipped to handle high-skilled manufacturing jobs.

Some experts say the grant won’t necessarily boost prospects for these large manufacturers in the short term.

“Deere is a $31 billion dollar company, and ITW is a $35 billion dollar company—seventy million bucks doesn’t matter,” said Joel Tiss, an analyst for BMO Capital Markets Corp.

The Department of Defense funds the institute, which may suggest defense contractors stand to gain. But Boeing spokesman Daryl Stephenson says the grant won't necessarily mean the second-largest defense contractor in the U.S. will be hiring.

“I don’t really think it would have a specific effect on jobs for us,” said Stephenson. “The main thing we would get out of it, is if they would find some technologies that could help us shorten the time it takes to get technologies to market. It would certainly make us more competitive.”

Six of the top 20 engineering schools in the country, including Northwestern University and the University of Illinois--Urbana Champaign, plan to take advantage of the software at the new institute.
UI Labs hopes to open the institute by the end of this year and expects to receive seed money from the defense department within next 90 days, so it can proceed.

“Up through Memorial day we’ll be boots on the ground,” Harris said.