A New Era of Manufacturing

By Roberto Alvarez

The globalization of manufacturing that took place from the ’90s to the early 2000’s saw the manufacturing industry flee to Asia, and in particular, China. But now there is a new era of manufacturing revitalizing the industry across the globe, particularly in advanced economies.

This new manufacturing era is one powered by new developments in science and technology. Surveys of industry CEOs from the Global Manufacturing Competitiveness Index, authored by the Council on Competitiveness (CoC) and Deloitte, show an awareness of a rise in manufacturing competitiveness in advanced economies. As available technology continues to advance in the coming decades, the global manufacturing landscape will be completely reshaped. The realization of this coming transformation has given birth to a new variety of government and industry initiatives designed to capitalize on new technologies around the globe.

Germany created the “Industrie 4.0 Platform” and launched a series of initiatives to sustain its global leadership in manufacturing. In the United States, the Obama Administration launched the Advanced Manufacturing Partnership and conceptualized a network of advanced manufacturing centers. The Trump Administration continued such efforts, launching a new Strategy for American Leadership in Advanced Manufacturing. Following a similar path, countries such as Australia, China, Malaysia, South Korea, Sweden, the United Kingdom and others also launched manufacturing strategies, policies and programs.

The technologies driving this new manufacturing era are not limited to digital ones and applications not exclusive to manufacturing itself. In fact, this new breed of strategies and policies crosses traditional sectorial borders — manufacturing is connected with agriculture, services and beyond. This broader perspective is reflected in recent studies and reports on the impacts of technology in manufacturing: In 2014, MIT published Production in the Innovation Economy, highlighting the expected impacts of key technologies in different stages of manufacturing supply chains, and in 2017, AT Kearney released a report that organizes the technologies shaping the future of production and manufacturing in a “production technology radar” that covers 7 domains from connectivity & computing to human-machine interfaces.

The scope of the transformations in manufacturing enabled by technology are massive. Technology will transform (1) all the individual stages/steps in the flows from raw materials to final products and (2) the structures of supply and value chains in general. In this context, two important aspects are clear:

First, this new era arises not from the dissemination and adoption of one specific technology but, rather than that, from the convergence and integration of different technologies.

Second, manufacturing is increasingly combined with services and the flow of materials is inextricably linked to data and information. Industries are becoming blurred and old classifications for sectors and economic activities need to be updated.

In this new technology-enabled manufacturing era, it will be possible to improve performance across all competitive dimensions: time, quality, cost, flexibility and novelty. New technologies will transform how manufacturing operates in four different ways.

1. The way we create things. CAD systems revolutionized design in the 70’s and the whole trade is being taken to a new level by technologies such as AR/VR, computation, social networks, advanced modeling and simulation, AI. Modularization and AI-enabled CAE solutions are allowing for variety in the market to be decoupled from variety in manufacturing operations. Open innovation platforms such as Innocentive, GE’s Fuse and a variety of other digital solutions are now available for companies to mobilize design, research and engineering capabilities outside company boundaries. AI and HPC make it possible to test products in virtual environments, before they exist physically. Technology has also made it possible to design materials from the most fundamental level — atoms and molecules — with a variety of software solutions are available to model nanostructures & biological entities — proteins, RNA, DNA.

2. What we are able to create. 3D printing, allows us to create shapes that were not possible via subtractive manufacturing technologies. This advent has unleashed creativity and empowered innovators and manufacturers around the globe. 3DP has already become an integral element of manufacturing operations. GE is using 3DP to manufacture components for jet engines — the soon-in-the-market Boeing 777X engine has 30–35% of its components 3D printed. Working in partnership with Oak Ridge National Lab and Cincinnati Incorporate, Local Motors created the word’s first 3D printed car in 2014. As feats in 3D printing continue, companies such as Desktop Metal are also introducing new technologies that could address two of the main challenges faced by 3D technologies: achieving high levels of structural strength for metal parts and speed in manufacturing processes. Programable matter is expected to further expand the boundaries of what is possible to be manufactured.

3. How efficiently we produce, move and transform things. Flexible and collaborative robots still are in their early days, but are already capable of performing multiple complex tasks in tandem and work side by side with humans. Robots have been traditionally applied in manufacturing in hazardous and quality-critical operations, like welding. Now, they are becoming more reliable and cost competitive in other environments and can be ‘programmed’ in new and quick ways, improving flexibility. Data availability coupled with networks enables the visualization of flows and events via manufacturing execution systems. 3DP cuts the use of raw materials and reduces the waste in storage and transportation and has the potential to simplify and speed up the manufacturing of complex products. AI is a major tool powering predictive maintenance, making it possible for companies to reduce downtimes and costs, while increasing assets utilization and reliability. Technology-enabled efficiency gains are happening in the utilization of all inputs (raw materials, energy, water, air etc.) and in the use of all manufacturing assets (people, machines, vehicles, facilities etc.)

4. How manufacturing is configured. Powered by technology, adaptive, urban and distributed manufacturing are emerging. In the world’s top innovation hotspot, Silicon Valley, an Urban Manufacturing Initiative was launched and urban manufacturing is on the rise. These new models mean that transformations are not limited to manufacturing and supply chain operations and processes, but actually have a much broader reach in the economy and society. Futurist Peter Diamandis published a blog post in which he envisions a future in which manufacturing tools are widely available across geographies, inventors are empowered and a new economy emerges. Building on that trend, it can be imagined that the production will become increasingly localized and the “amount of physical stuff moving around the world will peak and begin to decline”, as GFCC fellow Banning Garret wrote. Manufacturing and production will be different in the future.

The developments in manufacturing technologies, processes, business models and configuration will have far reaching implications to the global economy. Companies and governments will need to quickly and continuously adapt in order to maximize the upside of such manufacturing transformation, while minimizing its downside. To maximize impact, there are two crucial aspects to consider.

First, it is necessary to see beyond the hype and develop a solid understanding of manufacturing technologies, processes and economics — an understanding that articulates the micro and macro levels, technology and business, company performance and national policies. Second, companies and governments need to think and act strategically.

We will simultaneously see the appearance of new manufacturing players and concepts in the market and the transformation of existing companies and industries. Technology penetration will vary from industry to industry, country to country and company to company. Economics is chief, and timing is critical in seizing the technology opportunity for manufacturing.

Both manufacturers and technology providers have struggled with properly seizing these new opportunities. Tesla, a company known for pushing the limits of what is possible, has recently been at the center of a huge debate about the limits of automation. Wall Street analysts have criticized the company’s approach towards automation and Elon Musk himself acknowledged that “excessive automation at Tesla was a mistake.” Technology provider Rethink Robotics, which had taken to the market an acclaimed user-friendly suite of collaborative robots, abruptly shut down in October 2018, when it ran out of cash and a potential takeover deal fell apart. Later, information surfaced on the limitations and poor performance of its products. The message is clear: hardware is tough and it is hard to make machines truly smart. But despite setbacks, Rethink Robotics technology still is alive — the Germany-based Hanh Group took over its assets — and the market for industrial robots is growing at a fast pace.

What the cases of Tesla and Rethink Robotics highlights is that the introduction of new manufacturing technologies is hard to execute. It needs to be acknowledged that automation technology is growing exponentially, but still is not capable of doing things that are trivial for human workers — in many use cases, robots have not yet transitioned from deceptive to disruptive. To make things even more complex, strategic decisions in manufacturing must consider more than costs (quality, flexibility, speed, reliability, innovativeness) and companies that compete in global markets follow a rationale not dictated by local economies.

In spite of the complexity of the manufacturing equation and the short-term uncertainties, there is no room for doubt: manufacturing and the global economy will be transformed by technology growth and the new processes and businesses models it will enable. Nations around the globe are actively working to position themselves in the new global manufacturing landscape that is emerging.

Having technology at its core, contemporary manufacturing strategies and policies are increasingly mixed with those related to innovation, science and technology. In general, they all combine focuses on traditional (e.g.: apparel) and emerging (e.g.: biomanufacturing of human organs) manufacturing areas. The logic is simple: use new and advanced technologies to upgrade and transform existing industries, and build new ones.

In pursuing this path, countries need to calibrate policy mixes based on their existing assets and future ambitions. Two main policy goals are normally in play:

1. Accelerate the adoption of advanced manufacturing technologies and business models, raising productivity levels economy-wide. This goal is the most common, but manifests differently for different countries, as the level of maturity (and productivity) of manufacturing companies varies greatly from emerging to advanced economies. Technology is increasingly available and accessible, but emerging economies can face other limitations such as access to capital, market conditions, and management expertise. Governments can do many things to accelerate manufacturing transformation: train workers and managers, create incentives, invest in shared infrastructures, disseminate knowledge, catalyze connections and even directly supply capital. Partnerships with private sector organizations are always an option and the more advanced economies are, the less direct government action tends to be needed . For instance, in the UK, GFCC member The Centre for Competitiveness provides services that help companies improve their strategies, processes and operations.

2. Develop dominance in key technology domains of advanced manufacturing, to secure a foothold in future global markets. This is a more complex goal, and is where the ‘real competition’ for future manufacturing dominance lies. The success of these endeavors will heavily rely on investments in science and technology, and public sector investment in particular will be of great importance.

This new manufacturing era creates opportunities for countries to further develop and grow. As global competition increases, speed will a key attribute for success and nations will be required to use new models and tools to accelerate innovation. They will be required to swiftly build consensus on their ambitions and priorities, adapt regulatory frameworks and coordinate policy and strategy efforts.

The tricky thing is that technology grows exponentially but human institutions evolve linearly. Institutions, mindsets and human built systems are the real constraints for growth when policy meets tech in this new manufacturing era. An important part of the solution for the much aimed transformation — our topic for the 2019 GFCC Global Innovation Summit — in the manufacturing landscape can be achieved through new partnership models, at the local and global scale. Technology is definitely not in short supply.

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A recognized expert in international development and innovation, Roberto Alvarez is the Executive Director of the Global Federation of Competitiveness Councils (GFCC), a global network leaders and organizations from more than 35 countries across the globe devoted to accelerating global competitiveness and prosperity.