Manufacturing Update – Jan 2017
Welcome to 2017—a year that looks to bring as much change, challenge, and opportunity as the one that’s just passed.
Current indicators are strong: the Institute for Supply Management’s December manufacturing survey hit its highest reading in two years, representing four consecutive months that the index has moved higher. Manufacturing job numbers increased at both the national and state levels, and on-line manufacturing job postings remain strong regionally. Plus, the Philadelphia Fed’s January Business Outlook survey posted another positive month with a strong 6-month outlook!
While we’re off to a great start, this is no time for complacency. The pace of change and technological innovation will continue to accelerate, with new opportunities for business growth and investment. As the Boston Consulting Group’s authors note in our referenced article Industry 4.0—Sprinting to Value, ‘Companies that take a wait-and-see approach to adoption of these new technologies do so at their peril.’ At the DVIRC, we are accelerating our own learning curve and now have established an Advanced Manufacturing Technology Committee as a standing committee of the DVIRC board. We’ll continue to share what we learn and, as always, welcome any comments and suggestions.
Federal Reserve Bank of Philadelphia – Business Outlook Survey—January
“Economic conditions continue to improve”
- Indexes for general activity, new orders, and employment were all positive and increased from their readings last month
- Shipments index remained at a high reading
- Firms reported an increase in manufacturing employment
- More firms reported increases in prices paid for inputs
- Future indexes for growth over the next six months, including employment, continued to improve
Advanced Manufacturing Technology
The value created by Industry 4.0 vastly exceeds the low-single-digit cost savings that many manufacturers pursue today. The new technologies promise to revolutionize manufacturing, thereby shifting the competitive balance among countries and transforming the industrial workforce.
A recent Boston Consulting Group survey shows that “implementation [of Industry 4.0] is underway but the pace is uneven across technologies.”
The December 2016 BCG report Sprinting to Value in Industry 4.0 notes that most companies have implemented one or two aspects of Industry 4.0, but that the real impact comes when multiple aspects are combined in a comprehensive program.
While survey respondents expect 4.0 to create value from productivity and cost improvements, and not from revenue growth, the BCG said companies should focus on both as potential sources of value.
BCG says companies should avoid trying to do everything at once, suggesting they learn about the technologies, define a strategy and then create a team to “conduct bold experiments, iterate quickly, and scale up” when validated.
Click here for the complete article.
Statewide Jobs Numbers
- Total nonfarm jobs decreased by 1,200 from November to December
- Manufacturing employment increased by 5,400 from November to December
Source: PA Department of Labor & Industry—PA Monthly Workstats. Click here: Current Employment Statistics.
National Jobs Numbers
- Total nonfarm payroll employment increased by 156,000 in December
- Manufacturing employment “edged up” in December, increasing by 17,000