Steven Chu does not mince words about U.S. competitiveness in manufacturing.

“In all of the areas where we compete, we are failing,” the former Secretary of Energy told an audience of science leaders in Santa Barbara on May 1.

“We cannot succeed if we are only buying and not selling,” said Chu, making his first extended remarks in public since stepping down as head of the Energy Department in late April.

He spoke at the UC Santa Barbara Summit on Energy Efficiency, whose focus for 2013 was on materials for sustainable energy.

Chu said the announced sale of Camarillo-based Power One to Swiss firm ABB is one example of how America’s industrial prowess has undergone a stunning reversal of fortune. “It used to be that the buyers were U.S. companies,” he said in response to a question from the Business Times.

Chu, who counts himself the first scientist to be appointed to a U.S. cabinet post, said research shows the U.S. has squandered its lead in growing so-called tradable jobs during the past two decades. While the U.S. still leads in research, Chu said, America will continue to fall behind if it only produces jobs in non-tradable industries such as retail, health care and hospitality.

In a question and answer session with Oracle Corp. Chairman and UC Santa Barbara supporter Jeff Henley, Chu said that the solution is for the federal government to fund more basic research and provide less generous subsidies for private enterprises. He said a relatively small incremental investment of $100 million to $200 million a year “buys a lot of research” and could pay big dividends.

However, he cautioned that getting money out of Congress could be difficult. “The countervailing push is that elected representatives like to cut ribbons in front of TV cameras,” said Chu, who will continue his research efforts in an new post at Stanford University.

Perhaps alluding to the much publicized and highly controversial failures of some government-guaranteed loans to solar firms including Solyndra and Abound Solar, he said it is a mistake for government to take too big a role in private financing. He suggested the federal government limit itself to providing 30 percent of the capital for new ventures.

Chu said that distributed industrial scale systems, such as those emerging in Ventura County — where energy comes from a methane fuel cell at Gills Onions, composting at Agromin and Gold Coast Recycling, and solar production at lemon producer Limoneira — can be replicated and can help communities achieve energy efficiency. But, he said, distributed industrial systems work best in areas where electric costs are high or in countries that place a tax on carbon. In places where electricity is available at low cost and carbon taxes don’t exist, the benefits are not as obvious, he said.

During his talk, Chu cited advances in titanium manufacturing, steelmaking and carbon fiber that could dramatically lower costs and improve the energy efficiency of cars, airliners and jet engines. He said that improvements in the design of power stations could greatly improve the efficiency of power conversion and make it much easier to charge plug-in hybrids and other devices.

He made a defense of the current natural gas boom, saying that new rules can make fracking safer and citing natural gas as an important transition fuel that should not threaten increasingly cost competitive renewables.

But the Nobel Prize winner and Stanford faculty member said that the biggest challenge for the U.S. remains how to successfully commercialize the revolutionary new materials emerging from research laboratories with plants built in Oxnard, Milwaukee or Dallas and not in Beijing or Bangalore.

“Do not separate materials from manufacturing and design,” he admonished the summit audience. “Innovation in America doesn’t stay in America,” he said. “We cannot merely invent things. We need to make them.

• Contact Editor Henry Dubroff at hdubroff@pacbiztimes.com.