2016: A Manufacturing Year to Remember

William Krueger / Dec. 29, 2016

Throughout the ages there have always been years that, for lack of a better phrase, go down in history. 476 was such a year — that’s when the Germanic leader Odoacer overthrew Emperor Romulus, and the Roman Empire came to an end. In 1492 Columbus sailed the ocean blue, and a “new” world and its people felt the weight of colonial Europe’s ambitions. In 1504 Michelangelo completed the sculpture best known as “Michelangelo’s David.” 1776 was memorable thanks to the Declaration of Independence made by 13 British colonies and the American Revolution that followed.

1809 brought us the births of Abraham Lincoln, Charles Darwin and Edgar Allan Poe. The first numerical controlled machine came into being in 1952, setting the stage for all the amazing CNC machines that have since followed. The world elected its first female head of state in 1960 in trailblazing Sri Lanka. Humans walked on the moon for the first time in 1969. The World Wide Web came online in 1991, and the Boston Red Sox reversed the curse by winning the World Series after an 86-year drought in 2004.

The list of super-important years is long — like — really long. While what passes as a noteworthy year depends on many factors (e.g. your perspective, your homeland, the degree to which a particular year’s events affected you, your ancestors or those you consider your allies or countrymen), some years alter world history to such a degree no one disputes their importance. 1939 was such a year. It brought about the start of World War II and ushered in another year of infamy: 1945. Not just the year the war finally ended, it was also the year we dropped The Bomb — not once, but twice.

While it’s too early to say for sure, 2016 bears all the marks of being a year that also goes down in history. From the seemingly unlikely election of Donald Trump to the presidency to Brexit, self-driving cars and the death of Fidel Castro, this past year has seen happenings that have major consequences for billions of people. Even when you narrow the focus to just manufacturing and CNC machining, 2016 has been a doozy — some of it good, some of it bad. Here’s a brief rundown of a handful of themes and events that dominated manufacturers’ attention, making 2016 a manufacturing year to remember.

Industry 4.0 Finally Arrived ... Right?

When 2016 first shot out of the gates, talk about Industry 4.0 (also called the Fourth Industrial Revolution) had been at a fever pitch for a couple of years. McKinsey’s always-revealing survey of global manufacturing experts showed an ongoing optimism about further implementation of advanced technologies. However, that optimism was tempered with a weariness regarding what many referred to as Industry 4.0 “hype.”

What the McKinsey researchers found was that manufacturers still hadn’t shifted their inertia. Only 16 percent of those surveyed had developed broad Industry 4.0 strategies, and less than one-fourth had clear directives regarding implementation. The upside, however, was that progress looked imminent, inevitable even. No longer marked by tossing a few buzzwords back and forth, many manufacturers seemed on the cusp of honing in on high-value applications suited to their very specific business needs.

Well, a year has passed, is Industry 4.0 adoption and implementation, such as the Industrial Internet of Things, the biggest story of 2016? Are we living and working in the future?

Not exactly.

2016 Manufacturing Year in Review code

While manufacturers have pulled in some advanced technologies, like big data and robots, comprehensive adoption of Industry 4.0 tech still lags. The reasons why are laid out, at least in part, by a telling year-end report by BCG. The trouble? Many manufacturers remain of two minds about the new technologies. It sounds a little like this:

Yes, we are making Industry 4.0 adoption a priority. No, we aren’t spending much money on it. Actually, we feel pretty ambivalent about how it’s supposed to help us beyond cutting costs, and if we have to invest money to do that, is it really worth it?

This double-mindedness is troubling for a number of reasons. First, for those of us swinging for the fence on behalf of U.S. manufacturing, the reticence many of our nation’s executives and managers show in fully embracing Industry 4.0 technologies looks like lost opportunity. After all, a vibrant manufacturing sector remains a primary cornerstone of the American economy. Losing any ground in today’s highly competitive global marketplace isn’t advisable. Why come from behind when you have the tools to stay in the lead?

Secondly, the availability of jobs in manufacturing remains a source of major concern, and that concern isn’t going away. The hard reality is that adoption of Industry 4.0 technologies will likely hasten the dismantling of traditional manufacturing jobs already underway (more on this below). Delaying adoption, however, will also lead to job loss, without adding any new jobs created by new technologies. Workers need manufacturers to invest in Industry 4.0 tech and an Industry 4.0-ready workforce so displaced workers can be reskilled.

Lastly, given the fact that our deep affection for low-cost outsourcing has watered down our Industrial Commons and collective ability to innovate, hesitating in the face of new tech will only settle us more firmly back on our heels. Industry 4.0 is a foregone conclusion, but who will leverage it best and to the greatest advantage is still undecided.

2016 could have been the year U.S. manufacturing charged full speed ahead, armed with the most powerful technologies the world has ever seen. Let’s hope it happens over the next short while, or 2016 may well be looked back upon as the year we let the a new Golden Manufacturing Age slip away.

A Supply Chain Nightmare Before Christmas

Supply chain news alone could have made the case for 2016 being a manufacturing year to remember, especially given the ongoing transformation via tech. Everything from how we get CNC machined parts to where manufacturers store their inventory and how they retrieve it to the ways in which individual supply chains are made more visible and more secure seemed to get a facelift. Even old supply chain standbys like the Panama Canal were radically altered this year thanks to the heavy lifting that could be accomplished with new technologies.

The biggest supply chain story of the year, however, didn’t end up being tech-centered at all. It ended up being about good, old-fashioned cash.

Hanjin, the world’s seventh largest shipping line, declared bankruptcy back in September, and supply chains far and wide fell down as a result. Ports around the world refused to let Hanjin ships dock for fear they wouldn’t be paid to unload. Some 500,000 containers and $14 billion in goods were stranded at sea.

As far as supply chain nightmares go, it came at the worst possible time: right before the holiday shopping season. Samsung had some $38 million in goods stuck at sea, and American Weber Grill had $800,000 worth of BBQ awesomeness adrift on the water instead of stocked in stores, ready to be sold. Hanjin’s failure became a cautionary tale in a supply chain environment that was already looking for ways to become more cautious.

2016 Manufacturing Year in Review Drone

Amazon’s approach this past year was to continue working feverishly toward vertical integration. The company built their own fleet of commercial aircraft — including drones — invested heavily in self-driving truck technology and Uber-like apps for booking freight and even showed interest in starting an ocean shipping line to drop costs when shipping freight from China to the U.S.

Vertical integration wasn’t the only option, though. The clear alternative to Amazon’s “control everything” tactic is a distributed model. In many ways, 2016 proved successful in furthering the industry’s thinking about how a distributed supply ecosystem could result in a more robust and reliable supply chain strategy. Instead of just trying to mitigate supply chain risk, why not build or make use of one nimble enough to quickly adjust should a failure occur?

Rather than relying on one large factory far away, this year encouraged more manufacturers to see the wisdom in utilizing multiple smaller factories located closer to their customers. That way, if one factory making CNC milled or injection molded parts faltered, others could be relied upon to quickly close the gap — especially if the distributed factories or shops were also part of a digital and cloud-based supply network. Given the success of many distributed models this past year, it’s likely the trend will gain further footing in 2017.

Robots. Cobots. No Bots.

Another reason 2016 has been a manufacturing year to remember? It will likely be looked back upon as the industrial robotics tipping point in manufacturing — not just in the U.S. — but around the world. While robots and cobots have been slowly increasing in number for decades, 2016 was the first year we had an increased number of orders for robots in North America combined with a decrease in how much those robots cost.

It’s always been a truism of the Digital Age that, as a new technology becomes more and more ubiquitous, it’s price also drops leading to near-universal use. 2016 has brought us to that point in industrial automation and the use of robots in manufacturing. What happens next will be quick and widespread adoption, from your mom and pop CNC machine shop to your tier one supplier.

While this increased use of robots and cobots will undoubtedly lead to increased productivity and lower costs for manufacturers — another truism of tech adoption in the Digital Age — it’s also likely to hustle in significant anxiety, stress and social unrest. Why? Two reasons: the loss of “traditional” manufacturing jobs and the absence of trained workers to fill the new ones.

Much of the national conversation over the past year or two regarding manufacturing employment has centered on the ways in which outsourcing has left American workers in the lurch. While there is a lot of data — and more importantly, individual stories — to back up that claim, the oft-proposed solution to just bring those jobs back oversimplifies how fast manufacturing work is changing.

Yes, it sounds nice to say we should reshore our lost jobs, but as Chinese super-factory Foxconn proved this past year by firing 60,000 people and replacing them with robots in a single day, the jobs we shipped away over the past few decades no longer exist in the same form. There is no getting back those jobs. Robots are doing them now.

Before you’re tempted to grab your pitchfork and torch and go hunting for robots, however, consider this: There is a true dearth of workers trained to work in what’s an increasingly advanced manufacturing setting. More and more, working in manufacturing is going to require a solid STEM education as well as a diverse skillset that includes everything from coding and programming to being able to work with and repair cobots and robots.

2016 Manufacturing Year in Review Drill Bits

The problem of job loss, if we play our cards right, can be solved with reskilling, upskilling and making sure public schools, technical colleges and community colleges have the funds and support they need to provide solid STEM educations. While the way forward won’t be without growing pains, it still seems likely that the jobs replaced by technology will yield new ones. For U.S. manufacturing to press forward and compete, it’s absolutely essential that skilled workers and advanced tech be part of our future.

The influx of robotics into manufacturing isn’t something anyone can stop. If you’re a worker drawing a paycheck in a factory where the work you do is repetitive, that’s not good news. There is a silver lining, though. Industrial automation and robotics are about to make chasing cheap labor overseas a losing proposition for U.S. manufacturers, which means manufacturing companies are going to stop doing it in order to shorten and streamline their supply chains.

Reshoring is about to get a massive boost. No, it won’t mean we regain the 7 million or so manufacturing jobs we’ve lost since 1979, but it does mean more complex, well-paying jobs are making their way back here. If you’re a worker who doesn’t want to be left behind, it’s time to start prepping for your future. If you’re a manufacturer who doesn’t want to be left behind, it’s time to start prepping for yours by making sure the workers you need are here and that they have the necessary training to keep you competitive.

Manufacturing is Dead. Long Live Manufacturing.

The rhetoric surrounding the supposed death of American manufacturing reached its loudest volume this past year. From the backlash against longstanding and newly made trade deals, to the cry for a return of manufacturing jobs from overseas, U.S. manufacturing was hounded all year long as being all but dead.

Those of us working in manufacturing, online CNC machining, steel production and logistics know better. The rhetoric was mostly an oversimplification. U.S. manufacturing is, relatively speaking, doing well. Productivity (the amount of work done relative to employment) has returned to near 2007 pre-Great Recession levels, and manufacturers are looking to hire upwards of 3 million people over the next 5 years. The industry is not without its challenges. Transitioning more fully into Industry 4.0 is going to put a real squeeze on some of us, manufacturer and worker alike. Change is often hard.

Take heart. U.S. manufacturing, like rock and roll, will never die. It’s too vital to our economy and to our interests at home and abroad. 2016 was a game-changing year for manufacturing. Next year will be, too. All that’s left for us all to do in light of those realities, is better prepare so we can win the game as it changes.

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