“Manufacturing is back. Governments, media, and manufacturers themselves are changing their minds about the industry, with a renewed awareness of the role it can play in achieving a strong economy. With a better business outlook expected in 2014, the manufacturing industry is undergoing a renaissance. To harness the momentum created by the manufacturing renaissance, manufacturers will need to transform today’s challenges into opportunities”.
The above is the lead paragraph of a February, 2014, white paper from IDC Manufacturing Insights, a global service provider. While this paper dealt primarily with IT and ERP developments, there were a number of useful points that appear to apply to all manufacturing.
As we all know, manufacturing is a powerful influence in the overall economy. Over the past 20 years we, along with other countries, have outsourced a good deal of their manufacturing activity, primarily to China. As we now also know, this trend is reversing. Not only has China become relatively more expensive, but other shortcomings there have resulted in growing reshoring momentum.
We explored the question of where to manufacture in a previous article, which is now on our website here. While there, please scroll around the website—we would like you to find a capability that would help, and here’s the place to shop: https://proficientsourcing.com/disciplines/.
The IDC white paper points out several friction points in the advancement of manufacturing generally. The central message is that growth in manufacturing WILL occur, but success will require capitalizing on the opportunities the friction points present. Among the friction point/opportunities are these:
- Overall shortage of skilled workers. Most of the companies we know have been concerned about maintaining a stock of high quality workers. Locally we have seen some efforts to re-establish “trade school” type education facilities. Recently we saw some advertisement for careers in machining operations, pointing out the wage potential over a lifetime. So while this problem may be a serious one, there seem to be actions to remedy the shortages. Time will tell. Protecting against competitive labor raids and staffing shortfalls are important strategies moving forward.
- Scarcity of Natural Resources: Most are aware that China controls the current world supply of most rare earth minerals. These minerals are essential for a vast array of industrial products. Many of these minerals are present elsewhere, but apparently for now the Chinese have a virtual monopoly on their availability. Those who rely on the Chinese supply may have to invest time and money to develop alternatives.
- With Amazon and Facebook, along with all the other internet resources, companies are finding customers less tolerant of wait times. Since it is now relatively easy to discover alternatives and pricing information, OEM’s are finding it necessary to focus on ensuring customers are kept happy. Nimble customer responses are the order of the day. This suggests increasing efforts to localize suppliers (Proficient Sourcing can help!). IDC opines that successful companies will find it necessary to focus less on efficiency and more on addressing customer needs quickly.
- Finally there is the promise of additive manufacturing. If the future means OEM’s need to be much more closely attuned to their individual customers, then the ability to generate a fast custom item would seem to be an important advantage. We at Proficient Sourcing have seen a multiplication in 3D printing capable companies, and it appears to be here to stay.
We would be very interested in your comments about these factors, along with other thoughts on changes required as we grow and move forward in manufacturing.