What U.S. Manufacturers Can Learn from Europe—One Reporter’s Perspective
On March 29 MIT arranged a round table seminar entitled “The Future of Manufacturing Innovation—Advanced Technologies.” The seminar focused on technological advances that could spur manufacturing in the U.S.
MIT president Susan Hockfield opened the afternoon by reflecting on the status of the U.S. as a manufacturing nation. “Many Americans tend to believe that hardly anything is made in the U.S. anymore, and that all manufacturing has moved to China or other countries with low wages,” she said. ”But by reinventing manufacturing capabilities and processes, the U.S. could create 17 to 20 million new jobs.”
Is this realistic? Can Western countries with high-paid jobs really compete with countries like China and India where the cost of labor is lower?
“Yes. Just look at Germany and Japan,” Hockfield said.
Coming from Sweden with a background in engineering, and having covered European industry for many years for publications such as VerkstadsForum, Verkstäderna, and Automation, I believe that Hockfield may be right, but that the United States has much to do in order stay competitive. Just look at the figures: in 2009 the U.S had a trade deficit of almost $227 billion with China alone, according to the U.S. Census Bureau’s foreign trade statistics. Over the last three years, 10 percent of the U.S. manufacturing workforce was laid off, MIT political scientist Suzanne Berger pointed out at the seminar.
While I don’t mean to sound like a preachy outsider, a number of practices that I’ve observed from my time covering European manufacturers, particularly in my native Scandinavia, could be useful as the United States seeks to rebuild or reinforce its own manufacturing infrastructure.
Consistent information handling during a product’s entire lifecycle is an often underestimated but vital component if we want to keep manufacturing profitable. Being able to master small batch production, even of complex and high-tech goods, in order to meet individual customers needs, is another key to staying competitive. This is easier said than done. America is adapted to economies of scale, a tradition dating back to the days of Henry Ford. Certainly the U.S. has a huge home market, but this has probably delayed the adoption of small, efficient batch manufacturing essential in smaller countries and markets, such as the Nordic ones.
Once that is mastered, customization becomes, if not easy, at least more achievable. Customization, in turn, demands consistent information, with software solutions holding and updating product data correctly, through the product’s entire life cycle. Systems that can do this must give people—in production, invoicing, manufacturing, after-market, service and eventually dismantling—the right information when they need it, efficiently, or profit will vanish.
Simulation is often used as a tool to move successfully down this road. Being able to model different possibilities for design, production, cycle times, and so forth, in a computing environment speeds up time to market and reduces the need for costly and time consuming prototypes. Volvo Cars in Gothenburg, Sweden, for instance, simulates its entire production line, down to every tool, before any new model or change is applied. This, combined with just-in-time-production, makes it possible for the company to let customers configure their own personal car to a high degree.
In order to succeed with customization workers need to be plugged in to the information flow, which calls for an educated work force. Without skills in handling and interpreting complex information on all levels, customization will simply be too slow and costly.
In Germany, ordinary manufacturing workers are paid more than in the U.S. The same holds true for many other countries in Europe, as well as Japan. My impression is that while there are excellent universities and many skilled engineers in America, the majority of the workforce here is too poorly educated to meet the demands of today’s industry.
Finally, recycling may not be crucial today, but it will be. I believe customers will ask continually not only for personalized but also environmentally friendly products. Government regulations will also mandate recycling. The usual product-development process must thus steer away from a linear approach to a more circular one that moves materials from their origins back to their sources. How to recycle and dismantle individual components in a product must be considered early in the design phase—which calls, in turn, for skills in advanced information handling.
In short, if U.S. manufacturing industries expect to succeed in creating millions of new jobs, they have some homework to do.