November 1, 2016 / continuous improvement, industry news, maintaining talent, operator training, resource allocation, ROI, skills gap, strategic planning
Although recent reports paint a brighter picture of U.S. industrial manufacturing, many companies are still unsure of what the future will bring—and how to prepare for it.
The first half of 2016 didn’t start off strong for industrial manufacturing. Industrial production was essentially unchanged in the first quarter of 2016 and then fell at a 1% annual rate in the second quarter. However, conditions made a turn in the right direction in third quarter when industrial production rose at an annual rate of 1.8 percent—the first quarterly increase since the third quarter of 2015.
Recent data continue to show good overall conditions. The Institute for Supply Management’s Report On Business, for example, states that activity in the manufacturing sector expanded in October, and the overall economy grew for the 89th consecutive month. Specifically, the October PMI registered 51.9 percent (a reading of 50 or higher indicates growth), an increase from the September reading of 51.5 percent.
Unfortunately, ISM’s report wasn’t all good news, especially for the metals sector. Just like in September, both the Primary Metals and Fabricated Metal Products sectors reported contraction in October, although one survey respondent from the Fabricated Metals Products sector stated, “Business is much better.”
With the year drawing to close, what does all of this mean for industrial metal-cutting companies? As executives evaluate performance and look to strategize for the future, the question of whether or not to invest in information and technology advancements will likely be at the forefront of discussion. With terms like “machine-to-machine communication” and “Internet of Things” flying around, many companies are trying to discern whether or not these ideas are truly worth the investment, or if they are nothing more than “buzz words.”
As stated in the white paper, Tackling the Top 5 Challenges In Today’s Metal-Cutting Industry, today’s uncertain market requires managers to carefully and strategically determine whether or not allocating resources to automation and technology will offer a true return on investment. Based on some recent reports from industry experts, technological investments are not only worth it, but necessary for future success, regardless of economic conditions.
A recent article from PwC put it this way:
“Manufacturing may be facing some headwinds, but it’s undeniably in the midst of a technological renaissance that is transforming the look, systems, and processes of the modern factory. Despite the risks — and despite recent history — industrial manufacturing companies cannot afford to ignore these advances. By embracing them now, they can improve productivity in their own plants, compete against rivals, and maintain an edge with customers who are seeking their own gains from innovation.”
Of course, this type of transition is easier said than done. There is a lot to consider before companies start planning, strategizing, and investing in what many are calling “Manufacturing 4.0.” To help give companies a little perspective, the Manufacturing Leadership Council has identified six critical Issues facing the manufacturing industry as it undertakes the journey toward an information-based future. Described in detail here, these issues include the following:
- Factories of the Future. Large and small manufacturers, in both process and discrete manufacturing, must now understand and embrace the potential of new and evolving production models, materials and technologies along the journey towards Manufacturing 4.0 to help them create more autonomous, flexible, connected, automated, intelligent, reconfigurable, and sustainable factories and production models for the future.
- The Integrated Manufacturing Enterprise. To maximize the potential of Manufacturing 4.0, manufacturers of all sizes need to actively transform traditional, inhibitive functional silos to create more integrated, cross-functional, collaborative enterprise structures, both within and beyond their organizations. These structures must be supported by new digital thread technologies that stretch across the value chain from ideation, to product end of use.
- Innovation in Manufacturing. Manufacturers must now successfully develop and manage rapid, continuous, collaborative, and often disruptive innovation processes across the enterprise to drive growth, new products and services, operational efficiencies, and competitive success in the world of Manufacturing 4.0.
- Transformative Technologies. Manufacturers must learn how to identify, adopt, and scale the most promising M4.0-enabling technologies in order to achieve greater agility and competitiveness and to drive innovative new business models and better customer experiences.
- Next-Generation Manufacturing Leadership & the Changing Workforce. Manufacturing 4.0 requires manufacturing leaders and their teams to become more collaborative, innovative, and responsive and to make decisions based on a greater understanding of manufacturing’s role in company strategy. That means leaders must embrace new behaviors, structures, and strategies. And they must transition the talent within their organizations by identifying, attracting, developing and retaining the next generation of people and skills.
- Cybersecurity. In the face of increasing vulnerability to external cyber threats and potential internal disruption, manufacturing companies must identify the most effective cybersecurity processes and technologies and create a culture that will ensure operational continuity, data security, and IP protection.
While the industry still has a way to go before Manufacturing 4.0 becomes mainstream, there is no question that technology is changing the manufacturing landscape. Today’s economic conditions may be uncertain, but industrial metal-cutting companies need to ask themselves if they’re willing to do what it takes to prepare for whatever the future holds.