Four Tech Trends Changing the Face of Manufacturing

November 7, 2013
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It has been more than 20 years since the release of a groundbreaking Massachusetts Institute of Technology (MIT) report highlighting the precipitous decline in domestic industrial productivity. That study’s sobering conclusion: lackluster industrial output was the primary obstacle to building globally competitive companies in the United States.

My how things have changed. Fast forward to Q4 2013, and we find a new set of reports, two years in the making, following up on MIT’s now-antiquated “Made in America” report. Productivity levels have skyrocketed since the late ’80s, but over time a new set of challenges has taken root. The scholars leading MIT’s most recent research projects have identified what they have described as “missing pieces” and even a few “gaping holes” in the industrial ecosystem—gaps that could trigger irreparable damage to our position as a worldwide leader in innovation.

MIT’s engineers, management experts, and social scientists interviewed and visited more than 250 industrial businesses in China, Germany, and the United States in an effort to benchmark trends in leading manufacturing nations. The conclusions are laid out in a new book, Making in America.

“What we tried to do is sort of stand back and say what’s changed,” says Elisabeth Reynolds, Executive Director of MIT’s Industrial Performance Center in a recent Fast Company interview. “We know we’re strong in innovation in this country—and the question is how important is production to that strength? What we found is that it’s critical.”

As the interviews captured stories of manufacturing operations sent abroad, it was clear that offshoring was a reality for both large multinationals and startups working to scale up new ideas. This comfort level is just one reason why a growing number of industrial stakeholders are concentrating on incubating the technologies deemed critical to keeping manufacturing in the United States. Ultimately, it goes beyond basic job numbers, conveying a sense of urgency to the national conversation surrounding manufacturing in the United States.

MIT’s Reynolds, along with Associate Provost and Professor of Electrical Engineering Martin Schmidt (both leaders in the study), went on to recognize four trends they believe will be crucial for convincing innovative companies to keep making products in the United States. Those trends were posted in a recent issue of Fast Company, and they are excerpted here:

1: THE COST OF HUMAN LABOR

Highly adaptive, low-cost robotics are making manufacturing operations less sensitive to the cost of human labor. As labor costs in China rise with wages and higher standards of living, and as advanced economies develop more automation capabilities, the practice of “offshoring” for the purposes of accessing cheap labor may fall out of vogue.

2: THE COST OF CAPITAL INVESTMENTS

In years past, a company would invest hundreds of thousands of dollars to build a production line before making their first widget. Now, thanks to Additive Manufacturing (a term which includes 3D printing technologies), companies can start to design distributed manufacturing operations that “scale with the market they serve,” Schmidt says. Making things “at the point of use or point of need” will help small companies that make products in the United States stay competitive.

3: THE COST OF ENERGY

Manufacturers in energy-intensive industries like cement and chemicals have celebrated the shale gas revolution, which has brought cheap domestic energy and lowered their operating costs. But it’s not just brute-force drilling that could change the energy calculus for many companies. New biological methods of manufacturing materials or compounds could lower the amount of energy required in the first place in some sectors, according to Schmidt.

4: THE NEED FOR SPEED

“Anything we can do from a technology perspective that accelerates that time from invention to production is a winner,” Schmidt adds. Pharmaceutical companies like Novartis, for example, are experimenting with “continuous manufacturing” processes that replace the need to synthesize drugs in discrete, costly, and inefficient batches.

These ideas are sure to spark controversy, and that type of attention is long overdue. Manufacturing in the United States deserves a national conversation around the possibilities that exist right here on our soil.

It is increasingly clear that we are on the eve of a new manufacturing calculus, one where the collective sum of man, machine, and materials will yield a complicated balance of efficiencies, innovation, and mass customization. If managed properly, the outcome could prove to be a perfect fit for the tenacious small and midsized American businesses.