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High-value Manufacturing, by Jim Pinto
The age of large factories is over.
Today’s markets are consumption limited, not production limited. In the new paradigm, mass-produced components are shipped to small, widely dispersed factories that assemble finished products locally to meet custom requirements at the point of sale. Products must be delivered exactly as local tastes demand.
Manufacturing matters, not because of any intrinsic social attributes, but rather because the output has high value. A national economy begins to decline as its wealth-producing sectors shrink—including manufacturing, agriculture, and mining. Other parts of the economy—government, banking, information services, hospitality, education, insurance, health care, consumer services—maintain and use physical wealth, but do not create it. They depend on manufacturing and other wealth-producing sectors for their growth.
American manufacturing is historically responsible for the relatively higher standard of living enjoyed by Americans compared to other countries, and a thriving manufacturing base is necessary to allow that trend to continue. Manufacturing drives the engine of the U.S. economy, and is responsible annually for 90 percent of new patent applications. American manufacturing drives growth and innovation, investment in technology, new products and processes, and provides the world with some of the best consumer products ever created.
Midst confusing trends, a new American model of manufacturing organization is emerging. American companies are adding product-level innovation (research into new materials and processes, for example) in place of conventional low-skilled, high-volume, automated manufacturing. Market-creating innovative capacity is being protected in-house, while conventional production migrates to turnkey suppliers, mollifying the “destructive” aspects of innovation. Outsourcing means no longer having to carry the financial, administrative and technical burdens of fixed capital related to conventional production...
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» Feed Forward: Making A Difference, by Gary Mintchell
I laid out the plan for this issue with the idea of exploring some important trends pointing to automation’s role in the future of manufacturing.
While a science fiction vision of future manufacturing may be interesting to some, I wanted to look into some things that are real now that you can apply to help bring your manufacturing into the 21st Century.
Apart from the fact that I’m an optimist in the face of pessimism, I’d just like to offer a voice in contrast to what you read in the “mainstream” media. These outlets fixate on the idea of the death of manufacturing in America. All of these articles you see are just plain wrong. Not that there aren’t problems with the business model or with the vision of some of our manufacturing companies.
Certainly, some companies may die, but others will take their place. I was at the Yokogawa Corp. of America User Conference May 19-20, where Travelocity.com founder and former chief executive officer Terry Jones spoke on innovation. At one point, he mentioned that change and technology may not kill a business, but it will kill a business model. We are in such a period of time in automotive manufacturing. I believe that the U.S. market—the world’s largest—is saturated. The demand for quality resulted in cars that last longer. We can go several years between car purchases. Sooner or later, that had to catch up to the companies. The Chinese and Indian markets have not yet ramped up, so there is a shakeout.
Look at some changing and unchanging models in the automotive market. Typically, a transition period of technology and business models precipitates small entrepreneurial companies to spring up with new ideas, technologies and target markets. Thus, while Detroit’s Big Three and most other car companies focused on their traditional product and manufacturing models, some serious inventors decided that technology had progressed to the point that an electric car was feasible—and the Tesla was born. Toyota and Honda have jumped into the fray. Ford is making noises. GM is wishing. Chrysler is left wondering who will own it and who will be leading it...
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