Automated production equipment today is smaller and cheaper, and requires fewer operators with better education and advanced skills. These operators simply don’t like to work on a time-card-punching production-line environment. They prefer the stimulating, innovative, fast-changing, adaptive atmosphere of small companies, with personal incentives and performance-based rewards.
By Jim Pinto, consultant | Feb 2016
Today, high-volume products are relatively easily outsourced to third-world countries where production-line work requires minimal training and provides upward mobility for low-skilled workers.
It’s not that foreign labor is cheap – American labor is too expensive for the kind of work that remains after manufacturing is automated. So, big production facilities are simply going out of style in advanced countries, and large manufacturing plants are becoming obsolete.
In the future, there will be millions of small- and medium-sized businesses that will benefit from new materials. 3D printers will economically produce a wide variety of products in small numbers.
For smaller companies, robots are generally too inflexible and require too much financial investment. But the next generation of robots will be cheaper and easier to set up, and will work with people rather than replace them.
Internet of Things (IoT)
The primary drive for automation IoT is to significantly reduce operating expenditures when automation devices, sensors and actuators become Internet-enabled devices. It’s the next huge leap in productivity because there are major advantages to be derived from the acquisition and organization of previously unthinkable amounts of data.
The inflection point will occur when literally everything is connected with inexpensive and easy-to-install wireless networks. Industrial IoT will become self-organizing, self-configuring, self-healing, scalable to large sizes, with very low energy consumption, low cost, simple to install and based on global standards.
China Leads in Manufacturing
What is stunning about China is that the huge country competes both with very low wages and high tech. Chinese competition offers half the price of any alternatives. This has been a big factor in the loss of about 3-5 million manufacturing jobs since 2000. If China’s growth stalls, as it is doing right now in 2015/2016, the resulting glut will turn into another export wave and disrupt American industry.
America’s industrial base has eroded to a dangerous level. U.S. companies are no longer investing in much new capacity, and the ranks of U.S. engineers are thinning. By contrast, the number of Chinese engineers is growing by over 350,000 annually. Young workers and managers are willing to put in 12-hour days and work weekends, with entrepreneurial zeal to do whatever it takes to advance.
In a survey of Chinese and U.S. manufacturers by Industry Week, 54% of Chinese companies cited innovation as one of their top objectives, while only 26% of U.S. respondents did. Chinese companies spend more on worker training and enterprise-management software. And 91% of U.S. plants are more than a decade old, vs. 54% in China.
The new buzzwords are “transformational outsourcing.” Many are discovering that outsourcing is really about corporate growth – making better use of skilled U.S. staff, and even job creation in the United States, not just cheap wages abroad. The cost savings from global outsourcing are small compared to the enormous gains in efficiency, productivity, quality and revenues that can be achieved by fully leveraging local as well as offshore talent.