Three Megatrends Transforming Manufacturing

Three Megatrends Transforming Manufacturing

By mid-century, emerging technologies, Big Data and demographics will combine to create a U.S. manufacturing footprint dramatically different than today.

We’re entering a new industrial age driven by digitalization, customization, and miniaturization that is transforming the nature of work in manufacturing. Since the turn of the millennium, the sector has evolved faster and more thoroughly than at any other time in history.

Several megatrends are driving these changes and will inevitably become even more influential in the coming decades. While manufacturing will continue to generate economic growth and transform lifestyles and living standards, by mid-century the U.S. manufacturing footprint will look dramatically different than today.

The recent Manufacturers Alliance for Productivity and Innovation (MAPI) Executive Summit undertook a closer examination of three of the most important megatrends, revealing fascinating insights.

Technology’s Promise and Peril. We live in a time of exponential growth in technology, with manufacturers leading the way. It was a half-century ago when Intel co-founder Gordon Moore accurately predicted that the number of transistors in an integrated circuit would double approximately every two years. After years of exponential growth, today’s smartphones possess computing power that is a million times cheaper, a hundred thousand times smaller, and a thousand times more powerful than what was possible in the mid-1960s.

Such dynamic, continuous change can be highly disruptive, threatening whole industries and the workers they employ. It’s happened before, to weavers, carriage makers, and producers of camera film. But such change also leads to fresh processes and business models that generate new economic growth. For example, the Industrial Internet will create smarter factory floors and integrated supply chains that improve productivity. More broadly speaking, the Internet of Everything will connect machines, people, and data across society, leading to such benefits as a self-correcting electrical grid, better traffic flows, and reduced household energy consumption. 3D printing will enable smaller firms to simultaneously mass-produce and customize. Nanotechnology is leading to more durable, safer products and is generating medical breakthroughs that were once the domain of sci-fi writers.

Of course, with the rewards of technology come significant risks. Cybersecurity threats have become a top concern for manufacturers. As an expert from Siemens observed at the Executive Summit, there are two types of companies: those that have been hacked and those that don’t know they’ve been hacked. And as former CIA Director Michael Hayden explains, private industry can’t expect the government to come to its rescue—businesses must take responsibility for the safety and security of their systems and data.

Big Data and Information as the New Currency. The ability to collect and analyze large volumes of data in economic transactions has revolutionized customer care in the retail and finance sectors. In manufacturing, Big Data will accelerate the integration of IT, manufacturing and operational systems on the shop floor and lead to better forecasting and understanding of plant performance. Caterpillar is taking this a step farther, tracking the performance of its products in the field after purchase and offering maintenance and repair services based on real-time assessments.

Manufacturers are providing new services for a more effective total customer experience and helping customers become more knowledgeable about the total cost of ownership. Big Data, enabled by open platforms and crowdsourcing that allow a quantity and quality of interaction never before possible, will over the coming decades radically alter how manufacturers design, distribute and service their products.

The New Workforce. Demographics are reshaping labor markets. Start with the fact that the workforce is rapidly aging—about 10,000 baby boomers retire each day. In manufacturing, this loss of institutional knowledge is exacerbated by millennials’ lack of interest in industrial careers (one survey shows only 37% of U.S. adults would encourage their children to enter the sector).

Of course, manufacturers’ labor needs are changing as well: companies now rely on more automation and require fewer employees, and those they hire must demonstrate higher science, technological and math skills. Fortunately, the millennial generation—as large as the baby boomer generation—is more technologically sophisticated. And, as the manufacturing workforce has diversified over time, manufacturers are working to continually foster more inclusive environments. To remain competitive, U.S. manufacturers will have to equip a new generation of employees with the skills to succeed on the 21st-century shop floor.

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