Post-Globalization Drives Changes in Manufacturing

In this interview with Automation World, Advantech Co-Founder and Executive Board Director Chaney Ho discusses the trend of companies switching from outsourcing manufacturing to making products themselves—and what this means for your operations.

Chaney Ho
Chaney Ho

As one of the world’s major suppliers of industrial computers and other components used in automated systems, Taiwan-based Advantech is well-positioned to see first-hand how sweeping changes in technology and global politics are transforming where and how products are made.

In a trend called post-globalization, companies have begun to switch from outsourcing manufacturing to making products themselves. As a result, says Chaney Ho, Advantech’s co-founder and executive board director, many companies have begun returning manufacturing from China to their home countries. This requires them to take direct responsibility for the efficiency of manufacturing operations.

While global political unrest and the rise of populism in Europe and the U.S. may be influencing some of these decisions, a larger factor in de-globalization, according to Ho, is the decline of mass production and the need for a more customized product mix. “Companies need to respond faster to changing customer dynamics to stay competitive, and that requires decentralized manufacturing with flexible production lines that are closer to customers.”

The opportunities unleashed by the Internet continue to influence manufacturing decisions and the use of technologies that companies deploy to support their operations. “The technologies behind the Industrial Internet of Things (IIoT) are enabling companies to more closely monitor their manufacturing activity and to measure the productivity of their machines and factories,” explains Ho, who says Advantech first saw sales of products to connect machines begin to rise three years ago following the launch of Europe’s Industry 4.0 initiative.

“This drive for greater connectivity is coming from the top, particularly at larger companies or those with multinational operations. Smaller companies don’t yet have the budgets for it.” Ho says the highest purchase volumes are coming from machinery makers, followed by infrastructure applications such as highways and subways for an increasingly urbanized world. Manufacturing is in third place.

“The primary purpose of machine monitoring is to improve equipment performance and enable predictive maintenance to prevent downtime,” he adds. “Data collection and analytics have become essential to measuring and improving manufacturing productivity.”

There are 6 million manufacturers in China, according to Ho, contrast to 2.1 million in Europe and just 250,000 in the U.S. Despite this, U.S. share of global manufacturing was 17%, compared to 24% for China in 2015. These numbers speak to the larger size and greater productivity of U.S. manufacturers.

The next trend to emerge, predicts Ho, will be greater use of artificial intelligence (AI) and machine learning, two disruptive technologies he expects to transform business and manufacturing. “Deep learning breakthroughs will drive a boom in the use of AI for pattern analysis, image processing, and visual and speech recognition. This will require the use of larger databases, faster processors and high-speed networks. We’ll also see an exponential growth in the use of AI as a service, which will continue to drive manufacturing innovation.”

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