The Changing Face of Manufacturing – And the Potential for SCM

Virtual manufacturing

Graphic 3D Virtual Manufacturing

We are on the verge of a third Industrial Revolution, and it is in that change that the Western economies can find unlimited opportunities in the field of manufacturing.

It is true that a significant number of manufacturing-related jobs have migrated from the United States to lower-cost jurisdictions such as China, India, and Indonesia. America is no longer King-of-the-Hill in production, although it remains a very powerful force on the world stage, with output in dollar terms roughly equivalent to that of China. And America accomplishes this with approximately 10% of the labor force that is engaged by the Chinese. That means productivity.

It is the change in the nature of manufacturing itself that provides the potential for new, and possibly far more fulfilling, employment.  These opportunities are further intensified by the post-2008 global recession, which is motivating Western governments to look for ways to encourage repatriation – “reshoring” – of manufacturing in order to bolster domestic employment.

The production floor will become the domain of a highly-skilled labor force, who have developed the technological capabilities through education and training that will allow them to operate the tools of the trade. Manufacturing will be about creativity, ideas, design, quality, research, sustainability, and rapid, yet cost-effective, product development. Western economies need to be prepared to surf the oncoming wave.

Last week, the Supply Chain Almanac drew our readers attention to a Special Report that was published in April of this year by The Economist magazine, which examined the issue of digital manufacturing. In a second article in that Special Report, The Economist discusses the future look of production with  experts Susan Helper of Case Western Reserve University, Cleveland, and the Brookings Institution, Susan Hockfield, president of the Massachusetts Institute of Technology (MIT) and co-chair of President Barack Obama’s Advanced Manufacturing Partnership, among others.

It is a compelling and encouraging read, titled “Back to Making Stuff”:

FOR OVER 100 YEARS America was the world’s leading manufacturer, but now it is neck-and-neck with China (see chart 1). In the decade to 2010 the number of manufacturing jobs in America fell by about a third. The rise of outsourcing and offshoring and the growth of sophisticated supply chains has enabled companies the world over to use China, India and other lower-wage countries as workshops. Prompted by the global financial crisis, some Western policymakers now reckon it is about time their countries returned to making stuff in order to create jobs and prevent more manufacturing skills from being exported. That supposes two things: that manufacturing is important to a nation and its economy, and that these new forms of manufacturing will create new jobs.

 

 

There has been plenty of research to show that manufacturing is good for economies, but in recent years some economists have argued that there is nothing special about making things and that service industries can be just as productive and innovative. It is people and companies, not countries, that design, manufacture and sell products, and there are good and bad jobs in both manufacturing and services. But on average manufacturing workers do earn more, according to a report by Susan Helper of Case Western Reserve University, Cleveland, for the Brookings Institution, a think-tank in Washington, DC.

Manufacturing firms are also more likely than other companies to introduce new and innovative products. Manufacturing makes up only about 11% of America’s GDP, but it is responsible for 68% of domestic spending on research and development. According to Ms Helper, it provides better-paid jobs, on average, than service industries, is a big source of innovation, helps to reduce trade deficits and creates opportunities in the growing “clean” economy, such as recycling and green energy. These are all good reasons for a country to engage in it. (Read more…)

 

Your thoughts and comments are appreciated.





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