Monday, April 23, 2012

Manufacturing Is Going Digital

An article in The Economist this week reminds us that the first industrial revolution began in Britain in the 18th century as weavers’ cottages were combined into a cotton mill. The second industrial revolution began with Henry Ford’s moving assemble line early in the twentieth century.

An Economist report argues that digital manufacturing is the third industrial revolution and that it will change economies. Digital manufacturing will combine clever software, new materials, new robots and new ways of manufacturing, particularly three-dimensional printing, with a range of web-based services. Unlike a Ford factory churning out thousands of identical products, the new system will tailor each product to customer desires with technological advances providing for falling production costs.

Instead of parts being screwed or welded together, a computer-designed product will be printed in three dimensions, built up layer by layer. The design can be customized with a few mouse clicks.

If something is needed, the design can be downloaded and printed. If a part is missing, it can be printed locally instead of ordered and waited for. Carbon fiber will be used more and steel and aluminum will be used less often. Nanotechnology will improve features – bandages that help heal wounds, engines that run with greater efficiency, pots and pans that are easier to clean. Huge capital requirements for building large factories will become the exception rather than the rule.

As cotton mills ended hand looms and the Model T ended the work of farriers, digital manufacturing will be a revolution and changes the workforce. Many factories will be squeaky clean and manned by designers, engineers, IT experts, logistics personnel, marketing staff and others. There will be few, if any, riveters.

Labor costs as a percentage of total manufacturing costs are often shrinking for high tech products. Therefore outsourcing to offshore factories may be reversed by digital manufacturing where changes in demand can be implemented, especially for products that are sophisticated in ways that make it advisable to have the designers and manufacturers in the same location. The Economist notes that The Boston Consulting Group estimates that for transport, computers, fabricated metals and machinery, ten to thirty percent of currently imported goods may be made instead in America by 2020.

The Economist sees customers adapting quickly to new and better products that are delivered quickly. But governments may balk – "Their instinct is to protect industries and companies that already exist, not the upstarts that would destroy them." They rain down benefits on old factories and try to cherry pick the technologies they guess will prevail. "And they cling to a romantic belief that manufacturing is superior to services, let alone finance." The magazine recommends that government stick to the basics – better schools so the workforce will have higher skills, clear rules and a (legally and economically) level playing field.  Beyond that, "Leave the rest to the revolutionaries."

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