In today’s post, we take some time to reflect on the history of American manufacturing innovations and the trends that will define the future of our industry.
Before we get into the history portion, let’s take a quick look at the current state and what trends we see on the horizon.
The hype of 3D Printing hit the proverbial fan around 2013. It seemed as though the future was here and now and that soon we would have a 3D printer on every desk in the coming years. While the hype may have been a bit overexaggerated, the potential for 3D printing was not. That was 2013. The question on everyone’s mind now is, “But where are we now?” Well, we’re improving. As technology in this field improves, we are seeing costs decrease across the board making it more available to individuals instead of larger manufacturers and we see production times dropping. We still have a long way to go, but this industry deserves a google alert on the ole’ browser.
The term “Internet of Things,” coined in 1999, has come a long way since then. At the time, it was more of a daydream or something you would see in the next sci-fi movie. The technology just was there yet. And then 2015 showed up. It was the year that the IoT market finally gained its legitimacy. As the internet permanently permeates our culture with the introduction of smartphones, tablets, wearable devices like Google Glass and the Apple Watch, it was only a matter of time before businesses started seeing the benefits to their company’s overall efficiency and integrating the technology into their business. If a company wants to stay competitive, they already have this squarely on their radar.
What the IoT should help us with next is more access to real-time analytics and business intelligence. Which leads us to our third topic:
The cornerstone and unsung hero of the entire business intelligence and predictive analytics world. Big data is here and here to stay. As with 3D printing and IoT, the reason this is such a big deal is that technology has finally caught up with the daydream. Data warehouses now have the ability to store the amount of data that large companies need and database management software like SAP HANA can compile and organize the data at extremely quick speeds.
It doesn’t take much to see that the big picture has American manufacturing innovations going in a slightly different direction than we have in the past. To some, this is exciting and allows young makers and innovators to transform the future of our great nation and the world. But what about today? For those that can’t see the big picture, you might be worried about lost jobs and blaming trade deals and weak tax laws on companies relocating facilities to other countries. The problem is that the industry, along with technology, is changing: AND THATS A GOOD THING! It is up to us as an American people to educate ourselves and focus on the increasing skill gap in our industry. The technologies create all sorts of jobs; we just need to learn the skills that qualify us for those jobs.
Our goal at Cerasis is to not only talk about how our customers can make transportation management more effective through our blog articles about technology and best practices but also to inform them about their own industry and how they might use this information to better their companies and history is a huge part of that. To quote Winston Churchill, “The farther backward you can look, the farther forward you are likely to see.” With that in mind, the following is a timeline of key American Manufacturing Innovations & Moments up to present day.
I have been following the Marlin Steel blog and the company for quite some time. They are a great company and very representative of the pride of American Manufacturing. Marlin Steel President Drew Greenblatt is on the Advisory Board of the National Alliance for Jobs and Innovation (NAFJI). We are featuring two of their quick blog posts below that are relevant to the state of American Manufacturing today: the real facts about the industry and why someone should work in manufacturing.
In February, the company, founded in 1968 in Brooklyn and later moved to Baltimore by Greenblatt, announced a new expansion. And in June of 2013, Fast Company, a magazine about innovation, featured Marlin Steel in an article titled “The Road To Resilience: How Unscientific Innovation Saved Marlin Steel.” The subtitle reads like an article in Industry Week, and countless other magazines, touting the renaissance or resurgence of American Manufacturing: “A Little Maker Of Metal Baskets Shows How U.S. Manufacturers Can Thrive Against All Comers.” Here is an excerpt from the article about Marlin Steel:
Within five years of buying Marlin, Greenblatt was getting killed. Chinese factories suddenly started making bagel baskets. Marlin sold its baskets for $12 apiece and with 36 baskets to equip a typical bagel shop made $450 when a company added a location. Chinese factories were selling baskets for $6 each. Marlin’s customers were switching to save $200 a store. And Marlin would never be able to match its Chinese competitors on price. “My steel was costing me $7 a basket,” says Greenblatt. “We were going to go extinct.” It would have been smarter for him to buy bagel baskets from China for $6 each and sell them for $6.50.
Marlin’s crisis came at an interesting moment in the history of making stuff. The bad news about U.S. manufacturing has been stark and recited relentlessly. The United States has 6 million fewer factory jobs today than in 1998, a decline of one-third in 15 years to just 12 million, the fewest since May 1941. Yet U.S. manufacturing is not dead or even moribund. Indeed, part of the job loss springs from growth in productivity. U.S. factories are relentless efficiency machines. The typical American factory worker today produces one-third more than in 2000, which is why manufacturers have been able to increase output while cutting employees. The United States still makes more stuff, by dollar value, than any nation in the world except China, which moved into the top spot only in 2010.
Marlin saved itself by facing a truth that few threatened manufacturers can stomach: It was failing because it had gotten everything wrong. It had the wrong customers; it had the wrong products; it had the wrong prices. Greenblatt realized—just in time—that even wire baskets could be innovative. The simplicity of Marlin’s technology is not what we typically associate with innovation—there’s no algorithm, no microchip, no touch screen. Instead, Marlin learned how its products could help its customers, providing the quiet innovation that can give a fellow U.S. factory a critical edge and help keep jobs in the United States.
So what saved Marlin Steel? Well, I don’t want to give away the story, so use the link above to read the full article, but simply…..it was Innovation.
As we have said in another blog post in the past, it is Innovation that will save and sustain American Manufacturing. We are already seeing such innovations put in place with Manufacturing turning away from it’s “dirty” past and looking more and more like the high tech companies we have come to know out of Silicon Valley.
To foster this innovation in Manufacturing, the federal government stepped up with it’s program to build innovation hubs throughout the United States earlier this year. Surely, the future of manufacturing is an exciting place and we are all living in that place now. No, there will not be as many jobs, unfortunately, in the manufacturing industry (with just today a report released about how by 2025 we will see more than 800,000 manufacturing jobs disappear even further than the peak in 1979) in the future. But, jobs are not the only indicator of success. As The Manufacturing Institute said on Twitter:
For every $1 spent in #manufacturing, another $1.33 is added to the economy – the largest multiplier of any sector. https://t.co/Ypo8ivqyet
— TheMfgInstitute (@TheMfgInstitute) December 11, 2015
Despite the loss in jobs, each job will be more strategic, value producing and will require more skills, as there is also a large manufacturing jobs skills gap looming for 2025.
With all of that said, let’s get into some information to help continue to spread awareness around manufacturing.
So that brings us back to Marlin Steel. They publish a fantastic blog, that many the industry should read. The following is a blog post they published recently about 5 Facts of American Manufacturing originally published here.
It’s no secret that the American manufacturing industry has been on the mend in the last couple of years. With the cost of doing business overseas increasing steadily as wages and other operating costs continue to rise, many companies are reshoring their production capacity to the U.S.A.
So, what is the impact of American manufacturing on the economy? Why is manufacturing important to the U.S.?
The answers to these questions about manufacturing could be best answered by taking a look at some important statistics about the manufacturing industry in the U.S.:
According to the Bureau of Labor Statistics, the manufacturing industry employed roughly 12,317,000 Americans in the month of October 2015. This figure takes into account all employees that work in the manufacturing industry, which may include purchasing agents, testers, inspectors, and other workers who don’t directly manufacture goods.
This is an enormous part of the American workforce. Even if you restrict the definition of a manufacturing worker strictly to just production and nonsupervisory employees, the manufacturing sector still employed more than 8.5 million Americans in October 2015.
One of the major issues in America is that many entry-level jobs simply don’t pay a living wage.
For example, according to the Bureau of Labor Statistics, the median wage for workers in the combined food preparation and serving industry, which includes fast food workers, was $18,410 a year in 2014, or $8,85 an hour.
Compare this to the median wage for machinists in the manufacturing industry, which was $39,930 a year in 2014, or $19.20 an hour. Here at Marlin Steel, however, employees make closer to $77,000 a year, depending on job performance and what skills they’ve mastered.
This gives manufacturing workers a better shot at being able to provide for their families and set aside money for retirement later in life.
Statistics from the World Bank show that, in 2013, the manufacturing industry accounted for roughly 12% of the U.S.’s Gross Domestic Product (GDP). In that year, the GDP for the United States of America was $16,768,053,000,000.
This means that the manufacturing industry in the U.S. was worth roughly $2 trillion dollars in 2013. To put this in perspective, the GDP of Canada, our neighbor to the north, was less than $1.9 trillion in that same year.
Just this one section of America’s economy produces more value in a year than the entire GDP of an entire developed nation.
As the National Association of Manufacturers puts it, “taken alone, manufacturing in the United States would be the ninth-largest economy in the world.”
According to a report by CBS news, the average American manufacturing worker produces $104,606 of value” in a year while a “Chinese industrial worker produces $12,642 of output” in that same time frame.
This means that an American manufacturing employee creates eight times as much value in a year as their Chinese counterparts.
Much of this disparity in the productivity of American workers to Chinese laborers can be attributed to the use of manufacturing automation in American factories. Why? Here are a couple of reasons, using wire bending as an example:
While these examples are specific to wire bending, production automation can provide similar speed and consistency benefits in a number of manufacturing industries.
According to statistics cited by the NAM, “manufacturers in the United States perform more than three-quarters of all private-sector R&D in the nation.”
From product research to the development of new manufacturing techniques and technologies, manufacturers do more to drive innovation in the U.S. than any other sector of the American economy.
This results in the creation of new intellectual properties and innovations that help to change the lives of Americans in both major and minor ways. In a way, the constant search for improvement by manufacturers is the lifeblood of innovation.
In many ways, the American manufacturing industry is incredibly remarkable. It provides well-paying jobs to millions of American taxpayers; jobs that build the middle class.
And speaking of manufacturing jobs, Marlin Steel also wants you to know why you should work in manufacturing, so they put together this quick blog post, originally posted here, about why someone should work in manufacturing.
A long time ago, the manufacturing industry was infamous for cramped, dirty work conditions and low pay. Dozens of low-skilled workers would be crammed into work spaces just barely large enough to fit them and perform repetitive, sometimes backbreaking tasks day in and out.
For decades, the preconception that manufacturing is hard, dirty, dangerous, and unrewarding work has haunted the American manufacturing industry. This preconception has kept many Americans from actively pursuing a career in manufacturing.
However, American manufacturing has gone through many transformations in the decades since the start of the industrial revolution. New innovations in manufacturing processes and technology have forever changed the manufacturing workplace for the better.
In fact, now is probably one of the best times in the history of America to begin a career in manufacturing.
“Why,” you ask?
Well, here are some of the top reasons that you should begin a career in manufacturing:
For a long time, manufacturing work had a high level of risk, particularly in jobs where strong chemicals or heavy parts assembly was involved. Doing this work manually meant that workers would always be up close and exposed to various work hazards, even when strong safety protocols were in place.
The introduction of manufacturing automation has changed this.
Now, manufacturing workers can program and supervise manufacturing robots that do the heavy lifting. This keeps workers well away from hazardous materials and processes that can result in injuries.
In fact, since adopting manufacturing automation and enacting several key workplace safety programs, Marlin Steel has gone over 2,500 consecutive days without a major safety incident. Marlin Steel was even awarded with OSHA’s SHARP designation, one of only 5 businesses in the state of Maryland to earn the distinction.
Manufacturers in the U.S. need skilled workers. To fill business-critical job positions in the manufacturing industry, manufacturers will pay well. Some manufacturers even offer bonuses and other incentives to acquire personnel with the skills they need.
For example, Marlin Steel uses a job skills matrix to track all of the skills each employee has. Each new skill that a worker masters is rewarded with a permanent pay increase. The more difficult the skill is to learn, the higher the raise.
Marlin also offers bonuses for meeting or beating aggressive production goals every pay period, not just once a season or year. If you can meet a tough production goal, you get a bonus on your next paycheck, not at some nebulous point in the distant future.
If you have the skills, a career in manufacturing can help pay your bills. With the right company, a career in manufacturing can put you on the road to financial stability and independence. It sure beats a dead-end job flipping burgers.
Another major change in modern manufacturing brought about by the use of manufacturing automation is that there is a greater emphasis on using your mind instead of your muscles.
Thanks to the introduction of robotic assembly techniques, workers on the production line can focus on tasks such as finding ways to speed up production or reduce waste rather than on tedious manual labor.
In modern manufacturing, knowing how to optimize a design or process counts for more than how much you can lift. American manufacturing companies now look for people who can program and maintain robotic assembly machines in top condition.
So, if you’re looking for a job where you get to use your smarts, and aren’t afraid of a little hard work, a career in manufacturing might just suit you perfectly.
American manufacturing has changed greatly in the last few decades. With the improvements in safety, pay, educational opportunities, and other benefits, there’s never been a better time to begin a career in manufacturing.
This phrase: “Reinvigorating American Manufacturing” and many many more like it (such as Renaissance, Recovery, Resurgence and more) have popped up all around the manufacturing community this year in media, by politicians, economists, and those working in and around the industry. Just yesterday, 8 days before the general election, the Obama Administration announces another push towards the support of the re-invigoration of American manufacturing with an executive order to put $300 Million towards American Manufacturing:
“U.S. manufacturing is central to the foundation of our economy, and the U.S. manufacturing sector is as competitive as it has been in decades for new jobs and investment. Since February 2010, U.S. manufacturing has added more than 700,000 jobs, the fastest pace of job growth since the 1990s.
Today, to continue to build on this momentum, the President will unveil new executive actions to strengthen U.S. advanced manufacturing, spur innovation, and continue to take steps to make the U.S. a magnet for new jobs and investment. At an event this afternoon, the President will thank the Advanced Manufacturing Partnership (AMP) Steering Committee, a working group of the President’s Council of Advisors in Science and Technology, for their efforts to develop advanced manufacturing across the U.S. The final AMP, Accelerating U.S. Advanced Manufacturing, is now available.
In response to an earlier report of the Advanced Manufacturing Partnership, which began in June 2011, the President has already launched four manufacturing innovation institutes with four more on the way; invested nearly $1 billion to upgrade our community colleges to train workers for advanced manufacturing jobs; expanded investments in applied research for emerging, cross-cutting manufacturing technologies; and launched a new initiative to deploy the talent of returning veterans to in-demand jobs, including in advanced manufacturing.
The final AMP report makes recommendations addressing three key pillars that support American manufacturing: 1) enabling innovation, 2) securing the talent pipeline, and 3) improving the business climate. The executive actions announced today align with the report’s recommendations by making investments in emerging, cross-cutting manufacturing technologies, training our workforce with the skills for middle-class jobs in manufacturing, and equipping small manufacturers to adopt cutting-edge technologies.”
As we stated in an earlier blog post titled “Manufacturers: The Great Innovators & Why Government Involvement is Appreciated, But Not Needed” we stated that although support, whether it be monetarily, by policy, or by general marketing and brand awareness of the American Manufacturing industry by the government is appreciated, the real focus for manufacturers is one of creating a culture and philosophy of business centered around innovation.
In our usual morning ritual of reading industry articles and monitoring the “#Manufacturing” search term on twitter for great twitter users and content in the space, we came across a twitter user who tweeted out his most recent article he published on LinkedIn, called “Reinvigorating American Manufacturing”. The writer is Braden Kelley, an experienced innovation speaker, trainer, content marketing strategist, and innovation culture and infrastructure specialist, who is also author of the book, “Stoking Your Innovation Bonfire.” He has been advising companies on how to increase their revenue and cut their costs since 1996. Below you will find the article which is republished with permission from Braden. We encourage you to follow him on Twitter, with his awesome twitter username @Innovate.
Make sure you read to the end, as Mr. Kelley’s request of the Obama administration and government is seemingly heading in the direction of that request. In fact, we hope Obama was paying attention to innovation execution when Braden sent an open letter to the President 3 and half years ago. It was if Mr. Kelley was fortune telling when he penned in that letter:
Innovation in America, especially in the short term, is not achieved by pumping huge sums of money into government-sponsored research and development efforts. Yes, many successful innovations have resulted from government research investments, but we need to take a more strategic approach to these efforts. The focus on research and capital projects by the Obama administration also begs the question of whether long-term investments be our only approach to innovation.
With yesterday’s monetary push from the Obama administration and other initiatives, we are cautiously optimistic, but excited for the future of American Manufacturing. Make sure you read the ENTIRE White House Press release on how the money will be spent. I bet Braden might be excited that in part, the money will go to support teaching youth about what manufacturing is today and what it is not.
Back in 2012 I wrote about how as wages and shipping costs rise abroad, unemployment stays high at home, and strategic discontent with offshoring grows, American Manufacturing finds itself facing its best chance at staging a comeback.
American companies are considering a reversal of offshoring and outsourcing to reduce risk, improve agility, shorten product development cycle, and improve their ability to simplify increasingly complex supply chain management.
Missing from this list is innovation, but US companies that commit to engaging American workers in their innovation efforts may also increase their ability to justify manufacturing their products at home.
Moreover, Chinese workers are now three-to-five times more expensive than some other Asian workers, leading American firms to reconsider their sites of production.
One such firm is Nike, whose innovative Flyknit technology could allow it to make shoes easily anywhere in the world by having a machine make the most labor-intensive parts of the shoe. To bring production back to the United States allows Nike to react faster to competitors or to increase the speed of scheduled product launches. In the fashion industry, speed is crucial, and onshore production could create a competitive advantage.
Other firms are taking a second look at their reliance on contract manufacturers in China and elsewhere. Companies that once saw contract manufacturing as a strategic or economic necessity are questioning the wisdom of the arrangement as they watch original design manufacturers like HTC move up-market and strengthen their brands to compete with Apple, Motorola and others.
Adding fuel to the fire are rumors of workers at plants like Foxconn smuggling out plans and components to sell to pirates to make a little cash on the side.
But more importantly, an almost religious focus on cost and increased use of standard components across whole industries has made it more difficult for one brand to differentiate their products from another in the industry – increasing price competition and squeezing margins for all.
As a result, companies like Apple are now looking to reverse some elements of their standardization and outsourcing strategy and instead become more vertically integrated. Apple has acquired a chip design firm — and even their own chip fabrication plant (fab) — in its quest to differentiate itself and control some of its basic inputs and it may still acquire another fab to continue this strategic direction. Not to be outdone, Google is acquiring Motorola, and Nokia and Microsoft are working together closer than before.
It is possible for companies to manufacture their products in the United States and make a profit. When you invest in your workers, engage their hearts and minds and involve them in the innovation process, you can not only optimize your manufacturing processes but also uncover new growth opportunities that no contract manufacturer will ever bring to you.
Companies like New Balance, Snapper Mowers, American Apparel, Caterpillar, Syntax-Brillian (Olevia TV’s), Case IH, American Bicycle Group and many others have been working hard to keep making their products in the United States.
Now is the time for the Obama administration and state and local governments to step up their encouragement of American manufacturing. In these difficult economic times, Americans would love nothing more than to stroll down the aisles of their local Walmart, Target, or independent retailer and find more products on the shelves that say Made in the USA.
NOTE: To get more great posts like this, be sure and follow me and check out my archive of 150+ posts so far.
This article originally appeared on The Atlantic
Braden Kelley is the author of Stoking Your Innovation Bonfire from John Wiley & Sons. Braden is also the founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy, and an Innovation Excellence co-Founder. Follow him here on Linkedin or on Twitter.
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