Chicago picked as site for Obama's manufacturing initiative

Chicago will be the site of a digital manufacturing institute backed by $70 million in government money and another $250 million of private finding, giving the city, once a factory town, a better chance to re-establish its credentials as a maker of things.

The decision, to be announced officially Tuesday, was hotly anticipated by city and state officials who recognized the opportunity to jump start high-tech manufacturing as a core component of Chicago's economic vision. The city today, while still home to some manufacturing, is better known for its financial markets and convention business.

Chicago competed against several other locations in a bidding process run by the Defense Department. The city envisions the institute would focus on such projects as the faster and cheaper production of a next-generation aircraft engine; drastically reducing the amount of scrap material associated with small manufacturing runs; and speeding the design process among geographically dispersed suppliers.

'This is clearly, without a doubt, one of the most significant things to secure Chicago's long-term economic future,' Chicago Mayor Rahm Emanuel said in a Saturday interview. 'It is the best insurance policy you can buy, which is major research capacity.'

The $70 million grant will come from the Department of Defense. But far more was at stake, as city officials and business leaders quietly raised private commitments in excess of $5 million each from General Electric, Rolls-Royce, Procter & Gamble, Siemens, Lockheed Martin and The Dow Chemical Co.

The new institute, which is proposed for a leased building on the northern end of Goose Island, would fall under the oversight of UI Labs, a nascent University of Illinois-affiliated effort focused on turning academic research into moneymaking, job-creating products. UI Labs stands for 'Universities and Industries.'

'This is not a think-tank,' said Michael Sacks, the mayor's top outside adviser, who was tasked along with Deputy Mayor Steve Koch to run the bid effort. 'This is an industry- led partnership between business and academia which will solve real manufacturing problems and deliver goods to loading docks across America faster and cheaper.'

President Barack Obama will officially announce the Chicago hub on Tuesday. The manufacturing initiative follows Obama's new playbook for dealing with an oppositional Congress unlikely to enact any part of his economic vision.

The announcement follows the President's pledge in his 2013 State of the Union address to set up three new manufacturing institutes from existing government programs. In the spring of last year, the administration launched the competition.

In addition to Chicago's 'Digital Manufacturing and Design Institute,' Obama will announce that Detroit has won an institute of its own focused on lightweight and modern metals manufacturing. The administration set up a pilot site in Youngstown, Ohio, in 2012, and a few weeks ago announced a new institute in Raleigh, N.C.

Obama has also pledged to launch four more competitions for new institutes in the coming year in hopes of setting eight institutes in motion without any action by Congress. But Obama's broader plan is to spur Congress to support the concept. His blueprint calls for a full national network of up to 45 institutes funded in part with new resources approved by lawmakers.

Manufacturing employment in the U.S. has been on a downward trend since a 1979 peak, with those losses accelerating during recessions. During the 18-month period of December 2007 to June 2009, more than 2 million manufacturing workers lost their jobs, or 15 percent of the sector's workforce, according to the U.S. Bureau of Labor Statistics.

Many economists believe those jobs are never returning, because new factories require a fraction the workforce they once did.

Chicago still has manufacturing capacity, including a Ford assembly line, but many of the factories that once defined the city are long gone.