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Manufacturing

Re-emergence of western manufacturing

Manufacturing once meant legions of workers and crowded shop floors. In the US, the industry was an economic mainstay that gave rise to an international superpower. Today, things are different.

In 2017, manufacturing might is a function of surgical precision and technology-driven efficiency. As the global economy changes, smart Western manufacturers are largely turning to technology and innovation to keep their businesses running, as they cannot easily compete on a purely price basis with the massive, low-wage workforces active overseas.

In other words, Industry 4.0 has arrived and for those manufacturers rolling out the welcome mat, it’s breathing new life into their business.

Manufacturing a global power

American manufacturing, historically the gold for Western industry, grew from humble beginnings in the late 18th century when Samuel Slater built the first textiles factory in Rhode Island, kicking off a revolution. Having taken over farms as the backbone of the economy, factories manufactured materials such as steel, cotton, wool, and tin, and later finished goods.

A century later, the U.S was on the rise as a preeminent global power, riding the wave of its fully-industrialised economic base. From the Panama Canal to the beaches of Normandy, America’s foreign influence grew out of its superior manufacturing might. The American middle class thrived on decent paying industrial jobs, creating a deep-pocketed consumer society.

Today, though, as globalisation has reached unprecedented heights, traditional manufacturing has become an anachronism. The successes that led to high wages and standards of living drove factory owners to seek lower wage labor in more remote markets. Jobs were outsourced or automated to the point that the American economy has shed 5 million manufacturing jobs since the year 2000.

While the number of jobs in manufacturing might have seen a slight uptick in the past few years, it remains significantly lower than at its peak. This is not atypical of the wealthy Western nations; Western European automakers, for example, have shifted production to Eastern Europe and China, where wages are lower. Other companies are considering outsourcing to India, where the average manufacturing wage is roughly $1 per hour.

Still, some Western economies are not reeling from the loss of traditional manufacturing jobs. Take the German model, for example. Nearly 25% of German economic growth comes from its manufacturing base in a day and age when offshoring and downsizing is extremely common.

By harnessing public-private partnerships, grants and the latest technology, the German manufacturing economy has leveraged the digital revolution to remake its manufacturing sector into a high-quality powerhouse.

Automation and technological development have led German manufacturers to adapt to more advanced uses not so easily replicated in countries like China or India. For example, in the textiles industry, German companies are focusing on developing carbon fiber textiles for advanced uses in the automotive and aerospace sectors.

This level of production requires advanced machinery and highly-educated operators, keeping Germany’s textile industry competitive when other Western nations have allowed their industrial sectors to virtually collapse under the weight of wage competition.

Embracing a new age of western manufacturing might

The U.S. appears to be catching on. If innovation and lean operation is the name of the game, manufacturers are investing heavily. Robotics investment increased 32% in the first quarter of 2017, demonstrating an industry commitment to technological innovation. And yes, automation and robotics means less conventional manufacturing jobs, but it also means many many more high-paying, highly trained positions in areas like data science and engineering. A boom in the demand for such a workforce means that the public will dually benefit from better paying jobs and better quality products than the German model.

For example, implementation of the Internet of Things (IoT) and machine learning as a means of monitoring and managing operations on simultaneously granular and panoptic levels is becoming a must for manufacturers – and indeed all companies. Maintaining and leveraging these solutions requires educated workers in jobs that didn’t necessarily exist before.

Another example underscoring the emergence of a new golden age in Western manufacturing can be seen in the industrial adoption of 3D printing technology. Such high technology, typical of the so-called Fourth Industrial Revolution, offers the promise to scale at rate previously unimaginable, while achieving incredible efficiencies that can never be matched by the massive force of low wage labor economics.

Infographic showing evolution of manufacturing.

Increasingly, manufacturing is moving towards a more boutique model. With the right skills, the right technology and the right market niche, it can be done anywhere at anytime. No need for a huge workforce. No need for a huge facility. In this model, success is a matter of extreme efficiency meeting intelligent strategy, intelligent business structuring, and intelligent processes.

For the worker preparing for employment in this new, rising industry, it’s important to develop an appropriate skill set. For this rising tide of intelligent automation to lift all boats, the workforce will need educational opportunities in predictive maintenance, logistics and operations, facility, energy, and supply chain management.

Of course, this means universities and technical schools will need to adapt to the new economy. Without a thorough embrace of these technologies and the skills involved in their management, there will be no labor force to support this new model of manufacturing. To support a full-fledged industrial renaissance, the pace of adoption will need to accelerate. That said, we’re off to a good start. In the U.S. at least, the course seems set for radical reemergence. It’s not yet set in stone, but it give it some time. Maybe it will be 3D printed.

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