Advanced Technology Program Caught in the Works of Politics : Research: Federally funded project helps companies tap scientists' expertise. But congressional leaders say that's not a role for government.

By LESLIE HELM

Nov. 26, 1995 12 AM PT

TIMES STAFF WRITER

Assembling a car body is like putting down the foundation of a house: If you don’t get it just right, nothing else fits together very well. It’s the difference between the smooth, silent ride of a Toyota Lexus and the annoying wind sounds, water leaks and rattles that have often come with cars made in Detroit.

Now Detroit auto makers are beginning to get it right, thanks to a government-backed research project that allowed the companies to tap the scientific expertise of university researchers and the practical skills of key tool suppliers.

Chrysler says warranty complaints about its auto bodies dropped 40% last year, largely because of the three-year program that ended in September. A recent study suggests the improved quality will boost Detroit’s share of the auto market and add hundreds of thousands of jobs.

“The leverage is amazing,” says David Cole, director of the University of Michigan office for the Study of Automotive Transportation. “A little money goes a long way. The body had been a serious problem” for American auto makers.

The auto body project is an example of how publicly funded technology programs can boost the competitiveness of U.S. industry. But the 5-year-old federal program that helps fund such efforts, the Advanced Technology Program, is now on the verge of extinction.

For both financial and ideological reasons, congressional Republicans are determined to get the government out of the technology development business, reversing a decade-long effort to make the nation’s $70 billion-a-year investment in research more commercially relevant. Although the ATP is not the only technology program to come under attack, it is one of the newest and most ambitious--and, in the eyes of opponents, the most philosophically objectionable.

Rep. Robert S. Walker (R-Pa.), chairman of the House Committee on Science, says the ATP “hinders economic growth and fosters dependency.” Once the flagship of the Clinton Administration’s activist technology policy, the ATP now stands to lose more than 95% of its $431-million annual budget.

Walker and other critics argue that everything except pure science should be left to the private sector. “Applied research is clearly the responsibility of business,” says Stephen Moore, director of fiscal studies at the Cato Institute, a right-wing think tank. Subsidizing high-tech companies, in this view, is wasteful corporate welfare that gets the government involved in investment decisions best left to the private sector.

Nor do these critics think much of the argument that the United States needs to counter the industrial policies of economic rivals, such as European governments’ support of the Airbus commercial aircraft consortium.

“There is no question if Europe subsidizes Airbus we will have fewer jobs here,” Moore says. “But then we get the benefit of taxpayer-subsidized planes from Europe.”

And University of California economist Paul Romer opposes the ATP program for a different reason: It “short-circuits” the university, the best established way of disseminating information.

Nonetheless, a growing body of evidence suggests that government--and the ATP program in particular--can play an important role in speeding the transfer of technology from basic research to commercialization. Although the ATP program is too new to be fully evaluated--only 14 of the projects have been completed--several projects in addition to the auto body consortium have already produced results with important commercial ramifications.

In the field of opto-electronics, where American science is far ahead but American industry lags far behind, ATP grants have promoted the commercialization of state-of-the art research. ATP projects have helped American firms catch up with the competition in areas ranging from opto-electronic components for communications products to optical data storage.

A group of industry leaders, including Texas Instruments and IBM, have received ATP money to conduct research that has helped raise the technology level of their suppliers and that offers the potential of leapfrogging over Asian rivals in the production of printed circuit boards--an area in which American competitiveness has been in steady decline.

There have been several failures, but close monitoring has enabled the program to cut off funding for those projects early on and with a minimum of lost money. Proponents say ATP grants promote collaborative research between universities and corporations, boost quality by raising the technological abilities of suppliers, and prod large corporations to do riskier, cutting-edge research.

ATP “has really demonstrated the competitive power associated with collaborative research,” says Albert Link, an economics professor at the University of North Carolina who has written case studies of several ATP projects under contract with the Department of Commerce.

Economists believe technological innovation accounts for as much as half of nation’s economic growth and is thus a major contributor to improved living standards. But of government spending on research, about half goes to defense research, and another 23% goes to energy and space--areas of little direct relevance to industry. Most of the remainder goes to basic science, with little left for applied technology.

That stands in sharp contrast to other leading industrial nations such as Japan and Germany, which allocate substantial government funds to research specifically conceived to help companies compete.

Japan, for example, spends hundreds of millions of dollars a year backing projects to boost industrial competitiveness in areas ranging from aerospace and software to semiconductors and supercomputers. Though not always successful, taken as a whole those projects have helped Japan and Germany to catch up with--or, in many cases, surpass--American technological leadership in a number of fields.

And while Japanese and German industrial giants have sharply boosted spending on applied research over the past decade, American corporate spending on R&D; has remained flat--with some of the biggest high-tech companies, including IBM, AT&T; and Kodak, cutting back substantially.

The result is a huge imbalance. Including both government and private sector efforts, Japan and Germany both spend 30% more on civilian research on a per capita basis than does the United States.

And the current budget-cutting efforts on Capitol Hill will only lead to a widening of that gap, many fear.

“Everybody assumes that if the government pulls back [from applied research], private industry will step in,” says Eric Bloch, a former director of the National Science Foundation and acting president of the Competitiveness Council. “But there is a step between basic research and the marketplace that companies won’t fill.”

America prides itself today on its wealth of Nobel Laureates. But the nation’s economic power grew from a long commitment to public spending on applied technology.

In the 1940s and ‘50s, university research in agriculture, manufacturing technology and chemical processing helped make Americanindustry leaders in these areas. In the 1960s and ‘70s, while the university community was veering toward “pure research” and away from industry problems, the defense establishment took a major role in financing technologies that now underpin the aerospace, semiconductor and computer industries.

In the 1980s, as America watched industry after industry succumb to Japanese competition, there was growing concern that America’s scientific leadership was no longer translating into economic strength. The first major effort to address the problem was the Sematech consortium, which used government money to help turn around the semiconductor industry.

The George Bush Administration later established the Advanced Technology Program in the Department of Commerce with a mandate to back the kind of shared government-industry-university research efforts that had been successful in Japan. Cooperative research programs to encourage collaboration between national laboratories and industry were launched, and the Department of Defense was encouraged to back key industrial sectors.

When President Clinton took office, he quickly expanded these efforts, establishing a new “defense conversion” program to get military technology into the private sector. And he dramatically expanded the ATP program, boosting its annual budget from $68 million in 1992, Bush’s final year, to $431 million this year.

Critics complain Clinton moved much too quickly and allocated too much money, raising the ire of universities, national research laboratories and other groups that felt left out. But now, as the ATP faces sharp cuts, evidence is trickling in that it has in fact been a successful experiment in government policy.

The auto body consortium may be the most impressive example.

The seeds of the project were sown when Sam Woo, a professor of mechanical engineering, arrived at the University of Michigan in 1989 with a determination to somehow attack the quality problems that were continuing to plague the American auto industry.

“Woo had a burning passion to take the university into the industrial setting,” says David Cole, a colleague at the university.

Woo gathered several of his best students and toured American and Japanese factories looking for the source of the industry’s problem. It wasn’t hard to spot. American auto makers and their suppliers were building parts that varied a great deal from piece to piece. No wonder they didn’t always fit together well. Basic quality control practices were absent from the plants, and graduates of top engineering schools avoided the production floor as a low-status place to work.

When universities and auto companies did collaborate, it was in the rarefied world of science, where university researchers worked with their counterparts at the laboratories of auto makers on abstract problems.

Woo changed that.

“He came to the stamping operation and said, ‘You aren’t competitive,’ ” recalls Ron Ustruck, Chrysler’s point man in the consortium.

Woo had success working on a smaller scale with General Motors and Chrysler, but he knew that to tackle the problem fully he needed the cooperation of tool makers and the full commitment of the auto companies.

“The problems were too generic,” says Jack Hu, a student of Woo who took over leadership of the university side of the research after Woo died two years ago. “No one would put out money to address a problem that would benefit everybody.” Furthermore, auto companies and suppliers were reluctant to work together for fear they might be charged with collusion.

The answer to the problem came in the form of an ATP grant. In 1992, ATP awarded $4.8 million to help fund a three-year, $11.3-million research project. Chrysler and General Motors would contribute $2.25 million. The government money would help support the participation of two universities and eight small suppliers.

The program was applied for the first time on a broad scale to Chrysler’s Grand Cherokee launch. A vendor called Perceptron worked on a new version of its machine-vision system that would use lasers to make hundreds of thousands of measurements of parts and final auto assemblies. The information was fed into a “process navigator,” a software system jointly developed by the team. The software used statistical analyses to identify variations from part to part and car to car to pinpoint the source of problems.

Researchers then went back to the source of the variations and sought ways to eliminate them. In one case they discovered that by more accurately establishing the right amount of pressure to apply when stamping metal parts, rather than using the existing trial-and-error approach, the parts were more likely to come out the same each time. Tool makers pitched in by making the necessary adjustments to the equipment.

Competitors worked in teams.

“You would have other companies, including GM, critiquing our methodology for reducing variation,” Ustruck says. “They asked some very probing questions.”

The auto companies estimate cost reductions of $75 per car resulted from the project and $100 to $300 in savings from reduced maintenance costs. More important, but more difficult to measure, are the gains from expected increases in market share against imports.

Perceptron and other tool makers say they now have leading-edge technology they can use to become world leaders in production equipment, a sector lost to Japan long ago. The consortium is also sharing its data with furniture and aerospace executives who believe the technology has applications for their industries. A new project brings in Ford and will study stamping and welding with the goal of improving quality among parts suppliers.

“We have something the Japanese don’t have. We have Ford, GM and Chrysler working side-by-side,” says K.C. Spender, a Rutgers University economist who is temporarily working with the ATP program.

There are many other success stories.

Caltech electrical engineering professor Amnon Yariv, a leader in the optical sciences, came up with a technology for boosting the capacity of optical fibers by 10 to 100 times by taking advantage of the different wavelengths at which different colors travel to send multiple signals simultaneously.

Yariv couldn’t find support among venture capitalists, but ATP saw an important public benefit in backing a technology that would boost the capacity of the nation’s communications infrastructure. With a $2-million, 3-year grant from the ATP, Yariv was able to launch Accuwave.

The Santa Monica company will begin production soon and has plans to eventually hire about 200 employees.

ATP officials say they have developed a system for choosing programs that works very well--maybe even too well. While the program is protected from political interference, it has also failed to get political patronage.

Certainly, not all the technology programs supported by the Clinton Administration have been successful. The Department of Energy’s efforts to build collaboration between national laboratories and private industry has come under criticism for financing frivolous projects--among them one that gave several hundred thousand dollars to Sandia Laboratories for its work with Walt Disney Co. in developing better fireworks.

Critics say that national laboratories, long targeted at weapons research, can’t easily shift their focus to effectively study commercial applications. The ATP, by contrast, works because projects are proposed by industry and companies are required to match government money with their own. Universities serve as subcontractors, ensuring that the work they do is relevant to industry.

“Traditionally, if you get[National Science Foundation] funding, you just write a report, they don’t check,” says Hu of the University of Michigan. “With the ATP you have to deliver results.”

What is going to be lost in the cutbacks, ATP supporters say, is not just research dollars but a sense of national purpose.

“The way we as a nation decide what is in the national interest is by where the grants come from and how the grants are set up,” says Dwight Carlson, chief executive at Perceptron. “Under Kennedy it was going to the moon. Under Reagan it was becoming a military superpower.”

If economics is the new religion, says Carlson, it should be reflected in government spending on technologies that strengthen American industry.

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ATP Projects

The Advanced Technology Program, designed to help boost the competitiveness of U.S. industry, is on the verge of being eliminated. Here are some of the main ATP projects:

Miniature Integrated Nucleic Acid Diagnostic Development

Goal: Develop a device suitable for use in hospitals, clinics and doctors’ offices to provide rapid accurate diagnosis of a wide variety of diseases by taking advantage of recent scientific breakthroughs in understanding of the human genome.

Duration: Five years from October, 1994.

Cost: $63 million; industry pays $32.5 million.

Participants: Affymetrix, Molecular Dynamics, Lawrence Livermore National Laboratory, Stanford University, UC Berkeley, Caltech.

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HDTV Broadcast Technology

Goal: Develop compression technology to allow editing and distribution of high-quality video; foster interoperability among satellite, computer and TV networks, and create software tools to browse, retrieve and view HDTV programs.

Duration: Three years from fall, 1995.

Cost: $58 million; industry pays $29.7 million.

Participants: Comark Communications, IBM, Philips Laboratories, MCI, NBC-TV, Sun Microsystems, CBS-TV, Thomson Consumer Electronics.

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Medical Practice Knowledge Banks

Goal: Create a multimedia repository for complex medical information, including details of preferred treatments, with video clips and case studies of a type that a doctor might typically get from an expert consultant.

Duration: Five years from fall, 1995.

Cost: $51 million; industry pays $30 million.

Participants: AT&T;, Insoft, Alleghany-Singer Research Institute.

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Rapid Response Manufacturing

Goal: Develop computer-integrated manufacturing system that includes production technologies for making products directly from design software.

Duration: Five years from 1992.

Cost: $46 million; industry pays $26 million.

Participants: National Center for Manufacturing Sciences, Ford Motor, General Motors, Texas Instruments and United Technologies.

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Health Care Information Technology

Goal: Develop system for health care organizations to have computerized access to various patient data, including X-rays and other images.