Viewpoint -- The New Industrial Evolution

Nov. 10, 2008
America must keep its edge in manufacturing. Innovation is the answer.

At a time when America is grappling with economic difficulties, the one piece of relatively good news just might be America's export sector. While a weakened greenback has meant more expensive imports, it's been generally good news for America's export sector.

Yet that optimism may be short-lived. It's commonly accepted that the U.S. cannot compete on price, for example, against the "BRIC" countries of Brazil, Russia, India and China -- nations that barely registered any signs of world-class economic activity more than two decades ago, but are now starting to give the U.S., Europe and Japan a run for their money.

The New York Times confirmed that in a front page story not long ago detailing how China, for example, is now shifting into a higher gear for its industry, entering the same passing lane Japan and Korea have already sped down. Beijing's message: stop making high-top sneakers and start making high-tech everything. The article quotes Chinese President Hu Jintao saying: "We are ready for a fight to control the scientific high ground and earn a seat on the world's high technology board."

And that is not just rhetoric. Chinese government policies now favor ending tax breaks for low-end factories, introducing tougher labor and environmental standards, all while favoring high-tech economic zones and more R&D centers. The message is getting through. The Hong Kong Small Business Association estimates that by the end of this year, some 20,000 factories in southern China will be shuttered or leave China altogether for even lower cost countries!

It's the next generation Chinese factory and its output that should concern American industry. Our competition will be getting tougher, very soon. Where do we stand today?

In many areas, the U.S. still holds a lead in industrial technology, particularly at the high-end with solutions that are among the most productive, safest and highest quality. For example, according to the National Association of Manufacturers, "Robotics, computer-aided design, Radio-Frequency Identification (RFID) and Just-in-Time inventory control are among the many types of high-tech applications used to keep U.S. manufacturing competitive." One local example includes Sylvania's Hillsboro, N.H., manufacturing facility which produces cutting-edge LED lighting for the world automotive market.

But there's no guarantee these advantages will last forever. The message for U.S. industry is clear: As global competition gets fiercer, we must constantly stay one step ahead. One way to do that is through more integrated manufacturing across a product's entire life cycle.

For example, by integrating software and hardware technologies for design, planning and manufacture, automobile manufacturers can shorten their product launch time by up to 50%. More integrated manufacturing also means a greater ability to turn cutting-edge production on a dime. More "customized" products for consumers mean more high-value, short-run manufacturing-less waste. For example, it's estimated that by integrating all technologies, automakers will be able to offer 1,100 different models by 2015-twice as many as they offered two decades ago. This will also allow American industry to get to market faster while also meeting all regulatory requirements.

Another plus this type of manufacturing fosters is an intense atmosphere of innovation. Think of them as next-generation "incubators" which can open up totally new markets we've not yet thought of-plus the customers and revenue that follow, once again giving us an edge.

American industry had recently been given a second wind, thanks in part to a cheaper dollar. But it's no substitute for a long-term strategy. Producing smarter and more efficiently is. The good news is that America does not need a new industrial revolution to make it happen-it needs an industrial evolution. Taking what we've got, marrying it with this country's traditional entrepreneurial spirit and know-how-and doing it all smarter, faster and more efficiently.

Instead of worrying over the competitive threat from Beijing, let's focus instead on what can be done for cities and towns throughout America and for this country'' industrial base overall. Innovation is the key.

Dennis Sadlowski is President and CEO of Siemens Energy & Automation, Inc. Siemens Energy & Automation, Inc, one of Siemens' operating companies in the U.S., manufactures and markets a broad range of electrical and electronic products, systems and services to industrial and construction market customers. Its technologies range from circuit protection and energy management systems to process control, industrial software and totally integrated automation solutions. The company also has expertise in systems integration, technical services and turnkey industrial systems.

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