In 1965, manufacturing in the United States accounted for 53 percent of the economy. For over half a century, American manufacturing dominated the globe. However by 1988, manufacturing only made up 39 percent of the American economy, today only 9 percent. What happened? Will the United States ever be the leader in manufacturing again?
The main causes of manufacturing loss were globalization, outsourcing, and a growing skills gap. The elimination of trade barriers created access to foreign markets for American manufacturers. Some businesses in the United States discovered that it was cheaper to outsource their production activities to countries overseas. In countries like China, people were willing to work around the clock for significantly less per hour than American workers.
Outsourcing manufacturing has cost Americans millions of jobs. However, this is soon about to change. With rising costs for labor overseas and development of new technologies, many American manufacturing companies are rethinking their business strategy and bringing jobs back home. In order to make the most of this shift, it is essential to ensure that American workers are highly skilled and up to date with the latest technology and tools.
Rising labor costs in foreign nations is one reason why manufacturers will return work back to the United States. In the early 1990s, labor was extremely cheap in Asia. However, as the standards of living increases, labor costs will also rise. China alone saw an increase in 10% for labor costs, and that number is predicted to surge. Add the costs for shipping and handling and it puts many businesses at an offshore disadvantage.
By reshoring manufacturing labor, production and delivery costs will decrease, allowing manufacturers to produce more. This, combined with increased quality assurance and communication, is helping manufacturing in the United States to become increasingly competitive.
With new and advanced technologies like automation and robotics, there is reduced incentive to send manufacturing work overseas. Manufacturers can find significant cost savings by investing manufacturing technology. A single machine can increase productivity by as much as 70 percent, while only costing as much as a single employee’s salary for one year.
In addition, with cloud computing and Internet of Things (IoT), digital sensors and chips can be programmed to feed information about a product’s performance back to the manufacturer in real time. Placing sensors inside machines will alert errors in processes, when parts are wearing out, ways to cut costs, and techniques to improve overall efficiency and design. 3D printing has also allowed additive manufacturing to take off. New technologies increases productivity to the extent that labor costs will not be as big of a factor as the ability to effectively utilize advanced tools. Wages are still high in the United States, but investing in education and improving skills to become an innovator economy is the future of the American manufacturing.
Innovation is the Future
What causes the skills gap? Industry veterans are beginning to retire and some college bound youth are not choosing to pursue careers in manufacturing. Some employers have stated that many of the students who do major in these fields are coming out of school with little hands-on experience, only theory. This lack of real world application can cause them to design products that aren’t manufacturable, which leads to delays, scrap, and products failing in the field.
By standardizing training and design practices, the members of your team will become more productive. Properly trained team members are free to think creatively and innovate, instead of searching YouTube for an answer to a software related problem.
Democratization of Manufacturing Through Technology
Manufacturing companies today have access to resources that were once available only to large organizations and government agencies. Makerspaces, cloud / subscription-based software tools, and crowdfunding have given small businesses & startups the opportunity to innovate and disrupt various industries, but the challenge is bringing the right talent together, and putting an emphasis on ongoing learning and continuous improvement.
President Barack Obama addressed this evolution of American manufacturing in Pittsburgh, saying:
“Part of what’s exciting is that, traditionally…manufacturing meant big factories, all kinds of smoke and fire, and a lot of heavy capital. But because of advances in technology, part of the opportunity is now to make the tools that are needed for production and prototypes are now democratized. They’re in the hands of anybody who’s got a good idea.
And what we’ve been trying to do is to encourage more and more entrepreneurs, inventors to not just take root here but also have access to the kinds of equipment and technology — whether it’s 3D printers or laser cutters — that allow them to design their own ideas, create prototypes, put them out to market, test them, tinker with them, refine them, and ultimately create brand new businesses.”
The manufacturing industry is coming full circle. Over the next decade, nearly 3.5 million manufacturing jobs will likely be needed. Ongoing learning, training, and professional development will be necessary for manufactures to stay up-to-date with the latest techniques and processes. US manufacturing is changing, are you prepared?
Tony Glockler is the CEO of SolidProfessor, an online learning company helping engineers and designers learn and improve their skills. To learn more, visit www.SolidProfessor.com.
Filed Under: 3D printing • additive manufacturing • stereolithography, Rapid prototyping