There won't be one single roadmap for manufacturing growth in the future, predicts ARC Advisory Group in its new report on "The Future of Manufacturing." The world is too complex and diverse for such a simple outlook.
While some regions will grow based on natural resources or low wages, North America's manufacturing sector is expected to be fueled by innovation.
ARC forecasts continued investment (3% compound annual growth rate) in North American manufacturing well into the future. ARC categorizes the continent as having an "innovation-driven" economy and notes that "manufacturing has gained high priority as a source of social and economic development."
ARC predicts that a flood of new production processes and technologies will be employed to manufacture more sophisticated products. A driving force for this investment will be sustainability, which ARC says will be "less and less ideological and driven more by necessity and scarcity."
Happily, facing the twin forces of necessity and scarcity doesn't mean that manufacturers have to assume a future with less opportunity. In fact, says David Cooperrider, a business professor at Case Western Reserve University, embracing a more sustainable future could be the key to developing a company that not just survives but flourishes.
For many companies, sustainability has been a kind of bolt-on activity that was not central to their strategic direction, product development or operational values. That is changing, says Cooperrider, as companies discover that in "doing good in the world -- environmentally, socially -- they were also becoming more innovative and profitable."
Embracing a more sustainable future could be the key to developing a company that not just survives but flourishes.
For example, by 2011, Honda (IW 1000/30) had zero waste to landfill streams at 10 of its 14 North American auto plants. In 2001, Honda averaged 26.2 kilograms of landfill waste per auto produced. Last year, that figure had dropped to 1.4 kilograms. In the first 10 years of its Green Factory initiative, Honda reported it prevented 4.4 billion pounds of waste material from being sent to landfills. Cooperrider said Honda realized it could not just reduce waste but turn "waste into profit."
Household products manufacturer SC Johnson installed its first cogeneration turbine in 2003 at its Waxdale facility in Mt. Pleasant, Wis. The turbine used methane gas from a public landfill nearby to produce 3,200 kilowatts of electricity and 19,000 pounds of steam per hour. In 2012, the company installed two wind turbines at the facility, which is now self-sufficient for electrical energy.
"SC Johnson is seen as a great corporate citizen, but they are also lowering business costs," notes Cooperrider. "And they are developing a culture where people feel pride in their company."
At Fairmount Santrol (formerly Fairmount Minerals), which produces sand and sand products for oil and gas exploration and other markets, Cooperrider in 2005 conducted an Appreciative Inquiry exercise with more than 225 employees as well as external stakeholders such as customers and community leaders. Appreciative inquiry is an approach to organizational change that is based on discovering the strengths and aspirations of the organization through collaborative exercises involving large groups of stakeholders. That led to the development of Fairmount's sustainable development ideals and guiding principles.
"Our strength as a business is inherently linked to our sustainability strategy," said Chuck Fowler, a former Fairmount CEO and now a director. "Fairmount Santrol's ability to proactively manage social and environmental risks and extract value from sustainability opportunities helped to position our organization as an attractive investment."
In fact, Fairmount on August 20 announced it was considering an IPO, which Reuters reported could value the company at more than $6 billion.
"Every social and global issue of our day is an opportunity to ignite industry-leading innovation, eco-entrepreneurship and new sources of value," says Cooperrider. And he emphasizes that a key element in taking on these challenges of innovation and more profitable production is an engaged workforce. Companies that embrace sustainability will flourish, says Cooperrider, because their business goals and activities produce "a sense of pride and purpose and inspiration in the workforce. They are on fire. They love their company."
Look for IndustryWeek’s reports from “Flourish & Prosper: The Third Global Forum for Business as an Agent of World Benefit,” which will be held Oct. 15-17 at the Weatherhead School of Management at Case Western Reserve University.