UPATE 2-Obama launches technology partnership to spur jobs

* Speeding development of U.S.-made high-tech products

* Inventing it here, manufacturing it here (Updates with Dow Chemical CEO remarks)

By Laura MacInnis

PITTSBURGH, June 24 (Reuters) - President Barack Obama on Friday launched an initiative to develop new U.S. manufacturing jobs by teaming up government with companies and universities to invest more than $500 million in advanced technologies.

Obama, who must ease high U.S. unemployment to be confident of winning a second White House term next year, visited Carnegie Mellon University in Pittsburgh to launch the Advanced Manufacturing Partnership, aimed at fostering a new generation of U.S.-made high-technology products.

"This partnership is about new cutting-edge ideas to create new jobs, spark new breakthroughs, reinvigorate American manufacturing today. Right now," the Democratic president told an audience of around 200 in a robotics laboratory.

The initiative does not involve new government spending and Obama, who is fighting Republicans to raise the U.S. borrowing limit, emphasized the need to curb the country's deficit and debt, while investing in its future.

"If we want a robust growing economy we need a robust growing manufacturing sector," he said. "I ran for president to get us back to where we need to be. I have a larger vision for America."

The White House says major new technologies in the past were commercialized into vast industries with the help of government-university-company partnerships, including telephones, jet engines and the Internet.

It hopes for similar achievements by speeding development of new technologies such as next-generation robotics, advanced composite materials and bio-manufacturing.

The program will leverage existing federal funds and future federal departmental budgets to invest with industry some $300 million to jump-start domestic manufacturing capabilities seen as critical to U.S. national security. Initial public-private investment areas include batteries, composites, metal fabrication, biotechnology and alternative energy.

STRUGGLING ECONOMY

Obama is rolling out the initiative as the U.S. unemployment rate remains at a stubbornly high 9.1 percent and initial claims for state unemployment benefits are ticking higher after months of decline.

The U.S. economy is struggling to gain traction against high energy prices, a still-depressed housing market, tight credit conditions and headwinds from Europe's debt crisis.

Until recently, one of the economy's brightest spots had been manufacturing, which powered the recovery from the 2007-2009 recession, the country's longest and deepest since the 1930s. Manufacturers have added about 129,000 jobs so far this year.

But manufacturing no longer has a dominant role in the U.S. economy, accounting for about 11.7 percent of gross domestic product and roughly 9 percent of total employment.

"We have not run out of stuff to make. We've just got to reinvigorate our manufacturing sector so it leads the world like it always has," Obama said. "We've launched an all-hands-on-deck effort."

The Advanced Manufacturing Partnership, to be led by Dow Chemical Co (DOW.N) Chairman and CEO Andrew Liveris and Massachusetts Institute of Technology President Susan Hockfield, also aims to invest more than $100 million to help enable U.S. companies to discover, develop, manufacture and deploy advanced materials twice as fast as they are capable of today.

Liveris, an Australian native, said U.S. manufacturing policy has long been marked by "benign neglect and atrophy."

"You have to work with government to understand what's really causing us to be noncompetitive in certain sectors," Liveris told Reuters.

The jobs initiative will focus on ways to streamline regulation, tax and energy policy, and foreign trade, Liveris said.

Dow is hiring in Michigan and Indiana to develop solar, battery and agricultural products. The company, the largest U.S.-based chemical maker, is also building new propylene and ethylene plants in Texas.

Still, its Chinese revenue is growing faster than its American revenue. Liveris has long said he will invest in countries with favorable regulations.

"We need policy certainty and we need to understand what the rules are," he said.

Other manufacturers initially involved in the program will be Allegheny Technologies Inc (ATI.N), Caterpillar Inc (CAT.N), Ford Motor Co (F.N), Corning Inc (GLW.N), Honeywell (HON.N), Intel (INTC.O), Johnson and Johnson (JNJ.N), Northrop Grumman (NOC.N), Procter and Gamble (PG.N), and Stryker Corp (SYK.N).

(Additional reporting by Lucia Mutikani and Ernest Scheyder in New York; writing by David Lawder; Editing by Mohammad Zargham and Paul Simao)