Henry Ford revolutionized American industry by standardizing manufacturing with very efficient processes using start-of-the art equipment and with workers enjoying the highest wages of the time.
There is a commonly held misconception that the revolution started by Ford is over and manufacturing is in a long decline. It remains a heated topic and major theme of the last presidential election. The reality is far different from the rhetoric. American manufacturing is not in decline but actually growing in some interesting ways. It’s continued growth and long-term success will require rethinking some of its core assumptions and long-held beliefs.
Some fun facts around the resurgence in manufacturing:
- Over the past 25 years, American-manufactured exports have quadrupled to $1.403 trillion in 2014 (Source: U.S. Commerce Department)
- Direct foreign direct investment in US manufacturing has doubled in the last 10 years to over $1.2 trillion in 2015. (Source: Bureau of Economic Analysis)
By itself, US manufacturing would rank as the ninth largest global economy. (Source: Bureau of Economic Analysis, International Monetary Fund)
- For every $1.00 spent in manufacturing, another $1.81 is added to the economy. That is the highest multiplier effect of any economic sector.
- US manufacturers are among the “leanest” in the world with average hourly output growing by 2.5 times since 1987.
- For every one worker in manufacturing, there are another four employees hired elsewhere.
To continue the resurgence and remain globally competitive, American manufacturers will need to address a major skills gap needed to fill 3.4 million higher-skilled manufacturing jobs needed in the next 10 years. Interestingly, over 80% of executives indicated their willingness to pay higher than market rates to attract and retain talent. (Source: Manufacturing Institute, “The Skills Gap in U.S. Manufacturing: 2015 and Beyond”)
A great deal of today’s discussions seems to center around the significant change coming will be the opportunities and challenges presented by the Industrial Internet of Things (IIoT)
- NAM President and CEO Jay Timmons has noted, “The IIoT is infused into virtually everything in our lives and, in turn, is transforming today’s manufacturing—from processes to products.”
- The IIoT has become the definitive technological thrust of our time, but the challenge will come in how to best use it to transform businesses to achieve a competitive advantage.
- “The IIoT fundamentally changes the relationship between manufacturers and their customers. It creates new opportunities, markets and value,” said David Yarnold, CEO of ServiceMax.
However, successful manufacturers will need to not only embrace the opportunities of the IIoT, but also re-evaluate the role their workforce can and should play in improving their competitiveness. A factory’s workers are the smartest “things” in the building, and in many cases their capacity to drive & deliver continuous improvement is terribly under-utilized. Finding ways to leverage new technology to empower your workforce is equally, if not more, important than embracing IIoT. These two sea changes in the manufacturing world should be leveraged together for maximum impact on the bottom line.
In summary, American manufacturing is thriving but faces challenges with key labor/skill shortages, in how to best use the IIoT with its inter-connected technology, and how to better leverage the capabilities of their existing workforce. IIoT can provide much improved data and analysis leading to greater productivity and quality along with lower costs. For the first time, the digitization of operational data will offer the ability to connect workers, machines, and materials in a painless manner. Ford would indeed be jealous of what is possible for the next generation of manufacturing heroes.
1. National Association of Manufacturers, “Top 20 Facts About Manufacturing,” http://www.nam.org/Newsroom/Top-20-Facts-About-Manufacturing/
2. Jennifer Drogus, “Manufacturing Leaders Partner to Discuss Impact of Industrial Internet of Things,” NAM, March 16, 2016, http://www.nam.org/Newsroom/Press-Releases/2016/03/Manufacturing-Leaders-Partner-to-Discuss-Impact-of-Industrial-Internet-of-Things/