Manufacturing’s Next Act

The global manufacturing industry is always changing, and today, that very simple truth has given the United States an unprecedented opportunity to reclaim global leadership in manufacturing for the remainder of the 21st century.

The United States has been second in world manufacturing output since 2010, when China officially ended America’s long reign as the world leader in making things, which began at the turn of the 20th century.

While the decline in US manufacturing has led to the closure of more than 65,000 factories, and widespread economic devastation across this country, it’s time to dry your tears and roll up your sleeves. Because the rules of the global manufacturing game are changing before your eyes.

With every passing day, the race to the bottom of the pay scale in manufacturing is coming to an end–thanks to a host of smart new manufacturing technologies and how they are being integrated together like never before. That means new factors are increasingly driving decisions about where to locate manufacturing facilities. Tops among them: talent that knows how to program, operate, maintain and integrate a raft of new technologies.

The Fourth Industrial Revolution is underway.

What does that mean? Essentially, the digital revolution that has transformed so many industries–from music and books to shopping, travel and banking–has just begun to make inroads in manufacturing with plug-and-play new machine tools and technologies that are already beginning to reinvigorate the US manufacturing sector and the ecosystem of knowledge it takes to make all the complicated products that we enjoy, and that protect us.

It’s not just us at SME who think so either. In launching our new Smart Manufacturing magazine, we surveyed more than 800 manufacturing professionals representing a wide range of company sizes, industries and job titles about their attitudes, current practices and plans for this new digital revolution in manufacturing.

We asked them when they believed manufacturing would see significant changes because of this merger of the physical and cyber worlds, and 43% said within the next 12 months or: “It’s happening now.”

Another 44% said these changes would happen in the next 1-5 years. Only 13% said the change would take six years or more.

The fact that we have launched a new magazine, Smart Manufacturing, speaks to our belief at SME that this change is, in fact, happening now.

If you don’t know much about what this smart manufacturing era means for you and your business, don’t worry. You are not alone. Our research shows that a little over one-third of companies are behind in this area, and 42% are just keeping up with all the changes. Only 22% of those surveyed believe their companies are leading in this area.

If you are a manufacturer, don’t be surprised if you feel a little unsettled about what’s coming either. While most of those surveyed said they were excited and eager to learn more, a little less than half reported feeling concerned and anxious about what this change might mean for themselves and their company.

Regardless of where you find yourself on this spectrum, please do not bury your head in the sand. You don’t want to be that travel agent from, say, 1996 who didn’t think the Internet would impact their business, or that newspaper executive who believed reading stories on a computer was a fad or even the head of a big department store who thought customers would never buy clothing online.

This isn’t all about optimizing production within your existing shop or factory either. The day is coming when manufacturers might buy their million-dollar machine tools online–maybe they’ll just simulate a production run rather than do a real one–where shops might share machining capacity over an asset-sharing service online (not unlike Uber or Airbnb), or when you can control a factory from a smartphone.

What’s more, big OEMs like Boeing or GM might someday want, or demand, to see all of their suppliers’ live production data coming off their machines so they can have complete digital transparency through their supply chain.

The kind of change that’s coming to manufacturing has the potential to be just as disruptive and meaningful as it was to other complex sectors of the economy.

But everyone involved in manufacturing today is in a better position than those other sectors were because we can learn from their examples about what changes are likely to come and what may or may not work.

The goal of the new Smart Manufacturing magazine is to educate manufacturers about this oncoming digital revolution in manufacturing, bring them actual examples of shops and factories making investments and inroads in this area, and to provide real data about the productivity gains, the costs and the steps manufacturers need to consider to move forward.

We already have a little news to share in this regard: Of those surveyed who have begun to implement smart manufacturing technologies, fewer than 10% reported that the technologies did not meet expectations. More than half reported an array of benefits, such as greater access to data, increased productivity, increased competitiveness and improved operational efficiencies. There were also some unforeseen benefits, too, such as 60% who reported an increased ability to attract younger talent.

We will have a full report on this survey in the second issue of Smart Manufacturing, which will be published this summer.

If manufacturers can do one thing between now and then to make sure business isn’t falling behind, it is this: Put somebody with authority in charge of smart manufacturing. Our research shows that–between the corporate office, engineering, production and IT–there’s a lot of confusion about who should be in charge. Which makes sense, given that this is where virtually everything intersects. But now is the time to ensure somebody is responsible for understanding what’s going on and ensuring you remain competitive.

And remember: this change means potentially great things for America’s manufacturing future. In fact, the 2016 Global Manufacturing Competitiveness Index from Deloitte Touche Tohmatsu Limited forecasts that the US will bump China from its No. 1 spot by 2020. Have doubts? The US has already bounced back from No. 4 in 2010 to No. 2.

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