In our prior post we looked at some of the data revealed in a recent report by The Economist which highlights the changing complexity of manufacturing, including fewer jobs overall, muddled in part by the ways those jobs are accounted for – or often not accounted for – as we move up the manufacturing supply chain. We noted that those higher-paying manufacturing jobs in the “rich world” still account for a sizable share of nations’ GDP, and how much of the intellectual property retained by countries like the U.S., Germany and the U.K. continues to account for much of manufacturing’s overall value-add.
Still, keeping those jobs, and the future of manufacturing, are topics ripe for debate. Today we’ll finish up our two-part post with what a few of the experts think.
For one thing, we can turn manufacturing from a product into a service, as Rolls Royce pioneered in the 1980s by providing its engines, service and maintenance at a fixed price, bundled package, or “power by the hour.” The result was more stable revenues and more locked-in customers.
More recently, machines are being equipped with internet-connected sensors (the Internet of Things, or IoT, of which we’ve written before), which can gather data on how machines perform in the real world. The accumulated data provides a trove of knowledge from which manufacturers can sell additional services to clients, and entice new customers as well.
Yet another bright spot will be 3-D manufacturing. Here, we’re not speaking about creating playful little plastic widgets or toys, but rather complex manufacturing tasks in which design and manufacturing can be tightly coupled to produce things from motorbikes to high fashion.
But the real key, experts agree, lies in education. Companies who offshore assembly and production work often suffer from reduced product innovation. Opportunities to learn how to do things better on the home front are often lost. This is the natural synergy of production, where design meets reality, and the shop floor can provide feedback to designers; break that bond, and innovation suffers. But those high-value design and innovation jobs require skill, adaptability and education. These jobs will change over the lifetimes of workers, and they will not provide the mass employment of the past.
So it’s important to start with modest expectations, as is noted by James Manyika of the McKinsey Global Institute. Improved education to ensure engineers are in good supply would be a good start. A recent Bloomberg BusinessWeek article noted that nearly 75% of U.S. graduate-level advanced degrees in engineering and computer science are now going to non-American graduates.
Vocational training, where Germany proves a world-class model, and retraining programs that create new skills or refurbish current ones among displaced workers, have never been more important.
One way not to benefit manufacturing as a whole, many argue, is to disrupt global supply chains, nor will threatening companies that seek to move jobs overseas or the companies that host them. We are reminded that it’s not so much foreign nations that have replaced so many of our low-skill manufacturing jobs, but rather, the inexorable march of industrial innovation, just as it’s done for the past 200 years. Thus, policies favoring line workers over investments in automation will only make our industries less competitive.
Better to focus on the advanced manufacturing opportunities that lie ahead (i.e., 3D, IoT and manufacturing related services, to name three). Educating our young talent – and providing ongoing education and retraining for new skills – is where our best hopes lie.
The sooner our leaders figure out what our manufacturers already know, the more robust will be our manufacturing prospects in the next generation.