As anyone working in the industry knows, manufacturing is going through a period of significant upheaval. Outsourcing and automation threaten current manufacturing processes, and as plants continue to close in places like Michigan and Ohio, many people on the frontlines are worried about their futures.
The Path Forward for Manufacturing — Won’t Include Going Backward
The industry also has a severe issue with a labor shortage. Job openings are at a 17-year high, according to the Federal Reserve Bank of St. Louis. Skilled-manufacturing employees are retiring, and there aren’t enough people in the pipeline to replace them. When there are not enough people to fill all of the jobs in the first place, this, in turn, leads to more outsourcing and more uncertainty.
For some companies, this has led to desperate attempts to stabilize the status quo by finding new ways to bring back old jobs. Some are looking to find ways to incentivize companies to bring low-paying manufacturing positions to the United States.
These attempts at protectionism are understandable — but if the manufacturing industry hopes to stand a chance — it has to stop clinging to the past. Instead, manufacturing companies need to embrace a future in which automation plays a significant role — and they need to do it now.
The Problem With the Status Quo
Alongside a labor shortage, productivity has been declining in nearly every area of manufacturing. According to a Boston Consulting Group analysis of the industry, pharmaceutical productivity growth declined by a median 2.8 percent each year from 2011 to 2015 — while electronics and capital equipment didn’t fare much better. In nearly every industry outside of automotive and consumer goods, productivity growth is slowing.
While companies might need to make tweaks here and there to improve productivity growth, at some point the speed at which people can produce will hit a wall. Competitors that have invested in automation and robotics will be leaps and bounds ahead by then.
Not having enough readily available workers to fill jobs is especially troubling with the prospect of a trade war looming and barriers to trade increasing.
The export market will become increasingly competitive, and only those who can scale products and offer the products at the best price will be able to compete. The companies that make it to the top will have run toward automation, not from it.
Other countries are already taking proactive steps to gain the automation edge. In 2017, with the backing of the government, Chinese manufacturers increased robot installations by 60 percent, with plans to make 100,000 new robots a year by 2020. If the U.S. isn’t willing to take automation seriously, China is ready and willing to pick up the slack.
To compete in a global economy, automation can no longer remain in the theoretical realm.
The industry needs to take real strides toward widespread implementation. Only then can it step into a new era in which the U.S. remains a major player.
Automation Is the Key to a Better Future
It’s estimated that a factory outfitted entirely for automation can triple production compared with a factory with only a handful of systems in place. A machine not only has the ability to work faster, but it can work outside the confines of an eight-hour workday and can be regularly upgraded to be even more efficient without sacrificing quality. Automation is the key to true lean manufacturing, pushing costs down and profits up.
Automation doesn’t mean that integrating automation into the manufacturing process will usher in some dystopian landscape where machines replace all humans and everyone is out of a job.
It’s true that the jobs that exist today may go away, but they’ll be replaced by other positions that require unique human insight and skills. Automation systems will still need personal guides and maintenance; employees can be trained in new areas that are less dangerous, less wearing, and (in many cases) higher-paying.
You can already see the benefits that automation has brought to companies willing to adopt it.
Matt Tyler, president, and CEO of Vickers Engineering, specifically cites automation as the reason his auto parts business is ahead of its global competitors. He also credits automation for the creation of new jobs in Michigan. As Vickers beat out competitors in places like Japan and Mexico, more work (and therefore more jobs) came to the U.S.
The manufacturing sector should view automation adoption the same way NASA viewed the space race. Companies in the U.S. can no longer afford to be uncertain about adopting end-to-end automation — they need to be aggressive. They need to get there first.
Where to Begin to fix the Manufacturing Conundrum
Saying something needs to be done and doing it are very different things. The transition between a human-led factory floor and a machine-run one won’t necessarily be smooth, but it doesn’t have to be as difficult as many may think. Here are a few action steps to embrace when moving deeper into the realm of automation:
1. Look at every obstacle through the lens of automation.
In a manufacturing business, you tend to deal with the same set of variables, the major ones being quality, yield ratio, cycle time, and productivity. The questions, too, are similar: How do we improve quality? How can we reduce cycle time? And so on. The problem is, many people look at these variables only through the current way of operating. Automation is usually not top of mind when thinking about these issues.
For sustainable improvement, automation is often the best answer.
Business leaders need to train themselves to look at these issues with automation in mind as a solution, rather than seeing it as a separate entity.”An automated culture directly impacts profitability in various ways,” Tyler explains. “It leads to global competitiveness from a cost-of-labor perspective.
Automation tends to mitigate the most significant commodity of low-cost countries, which is their competitive workforce.
“Speed and predictability of throughput improve, sometimes dramatically. Quality also improves when the human element is removed and automated gauges perform verifications. Safety is addressed when you move humans further from the manual action of a process, and higher wages are available due to increased margins and the need for less labor.”
In some ways, this is similar to how a company should look at diversity.
You might believe you have the best people, but if you don’t have a diverse workforce and a diverse management team, you’ll always miss out on valuable perspectives. Diversity needs to be brought into the equation when it comes to hiring. Likewise, automation should be brought into every manufacturing equation. Keep this question in mind: How can we get this process automated?
2. Change your approach to training.
Of course, if machines are coming in to replace jobs, what happens with the people working for you? Going forward; there needs to be a concerted effort to change how — and for what tasks — people are trained.
These new forms of training can be seen in Manufacturing USA Institutes, government-backed institutions that have worked with both the public and private centers to create new curricula for the latest technological advances in manufacturing.
Employees shouldn’t be kept in a holding pattern, waiting for their jobs to be replaced.
Create training programs, or offer to pay for existing pieces of training, that will allow loyal employees to take the next step into the future alongside you and to help run your newly automated factory floors.
“For OEM plants to be successful, their supply chains need to be world-class,” Tyler says. “Mid- and small-market suppliers have a tremendous need for automation; robots and integration are now affordable for smaller players. Cost, delivery, and quality can be world-class with automated suppliers. If we can provide capital and training related to automation, we can impact economic development in our communities.”
The ultimate goal of automation is to create new opportunities.
Without the right training, many workers will be left out in the cold; labor shortages, which shouldn’t be an issue in an automated world, could still plague the industry.
3. Look toward the education sector.
Manufacturing USA also points to another essential element of automation implementation in the private sector: academia. Universities have long been rich centers for progress and can offer solutions for problems that businesses have neither time nor resources to research.
Just as manufacturing is undergoing a paradigm shift, the entire educational system is struggling to figure out its place in an ever-advancing society.
Partnering with manufacturing companies in order to problem-solve could offer a path forward for both sectors. Given the right incentive, schools could compete to be the top automation school in the way they compete to be the top medical school or business school today.
Some colleges have already begun to take advantage of the opportunities that automation R&D provides. Lawrence Technological University near Detroit, for instance, recently launched an accelerator program designed to offer small manufacturing help with sustainability and long-term growth.
“Many business users are becoming more active in local community colleges to ensure robotics and other skills are being taught to the upcoming workforce,” Tyler says. “Lake Michigan College in Benton Harbor recently built a state-of-the-art advanced manufacturing facility in the middle of its campus — a beautiful building that is exposing more kids to manufacturing careers than ever before. A large portion of the funds for the facility were donations from local businesses.”
Business schools will enter these debates, bringing fresh ideas from the new generation of business leaders.
On a larger scale, The Ohio State University — recognizing that 17 percent of the state’s GDP comes from manufacturing — partnered with more than 200 manufacturers and encouraged people in the industry to bring their problems to its doorstep. More manufacturing partners mean more funding for the university, which means more solutions for manufacturers. A win-win situation, to be sure.
Automation has the potential to not only advance the industry for progress’ sake, but also to create a sustainable path forward that benefits businesses, employees, and customers. Tariffs and tax incentives may slow the bleeding, but without aggressive moves toward new technology and automated solutions, manufacturing in America will continue its slow decline.
Automation is crucial to attracting new employees and bringing in new customers as we propel into the future. It’s time to take a page from companies like Vickers Engineering and take bold steps into this brave new world.
