Many people view the manufacturing industry in the US as one that is untouched by technological changes. This skepticism has led to some questioning whether the manufacturing industry is making a profit in this era.
Addressing concerns on the decline of the manufacturing industry in the US
The manufacturing industry experienced a major hitch during the recession, with more than 5.8 million workers losing their jobs between the years 2000 and 2010. While the 2007-08 recession played a major role, many attributed this to the automation and the introduction of robotics in the manufacturing industry, some thought that this was a sign of the slow growth of the US economy and that the US was losing its grip to support its population.
According to the IMF, the decline does not necessarily indicate a shift in the industry’s size. Instead, sector inequality is what is bringing about this concern. In a recent IMF report, Bertrand Gruss stated that “the decline in manufacturing need not be a source of concern as long as the policy mix is right.”
Though the industry has gone through dark times in the recent past, data from the US Census Bureau shows that it is making profits, with the first quarter of 2018 having a $154 billion, up from the $117.6 billion that had been realized in the last quarter of 2017.
Manufacturing trends behind the industry’s current profits
Labor automation
The use of CNC manufacturing has played a major role in the success of this industry. While this is no magic wand, it has made manufacturing companies more competitive. Automation of processes and the use of digital machines has led to increased productivity as tasks that were done manually at higher costs, and less accuracy are now automated. This has led to a significant drop in manufacturing jobs, but its benefits far outweighs the challenges. Through an efficient production process manufacturers realize an increased output which ultimately leads to increased profits.
Machine outsourcing and leasing
Automation has not come without its fair share of challenges. These human-capacity-saving machinery in most cases have extremely high upfront costs. However, any company can now walk into an Original Equipment Manufacturer and lease any machine. This, coupled with the many financing options has given the industry a major boost. Finance companies are offering to settle not only the machine’s cost but other soft costs such as its installation and freight.
Rising demand
The US remains to be a lucrative market for manufactured items. This has continued to lure both local and international manufacturers to open companies in the US. The streamlining of global logistics has opened up this industry to the world. Technological innovations have made the moving of products and services faster, cheaper, and easier. As such, manufacturers have increased their visibility to potential clients not only in the US but all over the globe. This has seen the demand soar especially in emerging economies. With the increased demand, manufacturers have doubled their output capacity, which explains their profit story over the last few years.
Further, the rise in global demand has led to US manufacturers seeking international allies. In most instances, the US manufacturer works on the design and the products’ functionality while the international partner manages distribution in the country they are in. This has also enabled the manufacturers to widen their global reach and maximize their revenues.
The rise in industry technologies
Manufacturers can now efficiently source for raw materials or deliver their finished products anywhere in the world. They can now have multiple facilities all over the globe, as opposed to the past where facilities were set up depending on the raw materials’ proximity. Through cloud connectivity, such facilities can sync data which is accessed by each facility in real-time.
Evolution in the precision manufacturing sector has made manufacturers maximize their production output, increase the machine’s running times, and reduce downtimes. Through design and simulation tools, manufacturers can validate the products’ design before the final production. This results in the production of perfect products and reduced design time.
Increased diversification to service provision
The integration of automated systems in the production process has necessitated that there be a constant support for optimal efficiency. Case in point is IBM, which actually sells more services than goods. Many Denver manufacturing shops also offer services that are meant to help companies maintain and upgrade their machines. This has led to diversification and eventual realization of profits.
The future of the manufacturing industry in the US
Concerns on whether the US will be able to recoup its position as a leader in the manufacturing industry continue to be a significant bone of contention. The US population is also waiting to see whether the current administration will deliver its promise, that is, ensure that the low and middle-class workers get their manufacturing jobs back. Besides, everyone wonders what impact increased manufacturing automation have on the workforce in the long run.
All indicators show that the manufacturing industry is experiencing a resurgence, and focus is shifting to policies that will accelerate this growth. Policies such fewer government regulations and investment in infrastructure geared towards enhancing manufacturing are expected.
While manufacturing jobs are returning to the US, it will be necessary for any machine shop Denver, to employ the same skills that were applicable a few years ago. As a result, we will see more efforts from government agencies and corporates to bridge the skills gap. The curriculum also has to be adjusted and relevant programs introduced to ensure more skilled labor is available.
Also, no CNC machinist is going out of business as technological innovations lead to production efficiency and the production of high-quality products. Undeniably, we can only expect more automated processes. This will further be influenced by the evolution of the Internet of Things. We can expect advancement in M2M applications, 3-D printing, and AI equipment. It is hard to find a custom machine shop that is not making use of such technological innovations for products with multiple customization options and fewer flaws.
The manufacturing industry plays a major role in the US economy. Increase in efficiency due to automation will ultimately lead to increased production, time-saving, reduced downtimes due to the use of smart machines will all lead to higher profit amounts and a healthier economy. While these changes are welcome, they will lead to changes in the workforce and better products.