To automate, or not to automate. To re-shore, near-shore, or off-shore. To insource, or to outsource.
Those are just a few of the strategic decisions that manufacturers face today. And each can have a major financial impact.
Automation is a multi-faceted question, with multifaceted answers for most of you. Not everyone needs robots, but many of you can benefit greatly. Safety and precision are two leading reasons to automate. Supporting workers is the third most common. Eliminating labor was a short-sighted reason that guided discussion of the “lights out factory” decades ago. Robots continue to become less expensive to buy, but operating them is far from free. If you don’t have internal expertise, develop it before you start purchasing equipment.
Most of you must become invested in the Internet of Things (IoT) at some point before 2020. Whether it’s machine-to-machine, machine-to-human, or machine-to-the-internet-for-data-use, machine-generated data will soon be fundamental to how we do business. It’s time to introduce your organization to the basics, if nothing more. It’s time to develop data capture, maintenance, and analytics capabilities.
If you think IoT won’t impact your industry, you’re wrong. Just like EDI, barcoding, RFID and ERP became basic, IoT will leverage those and quickly bypass them in terms of valuable information.
Protectionism is spreading, which means the advantages and disadvantages of import and export are changing. Related strategy reviews began a few years ago. GE’s Jeff Immelt announced that due to world-wide increases in protectionism, GE is changing its globalization strategy. Instead of specialized production centers and world-wide exporting, it will transition further towards localized self-contained production.
Over the past seven years General Motors has in-sourced a significant number of IT, production, and professional jobs while investing more than $20 billion in infrastructure. But few of you are GM or GE. Their strategies make sense for them, but not necessarily for anyone else.
Jason Wolfe, CEO of NovaLink — a U.S.-based near shore manufacturing solution with three manufacturing facilities in Mexico and one distribution center in the United States — suggests that near-shoring continues as a viable option for U.S. manufacturers. Wolfe says, “ Even if a 20 percent tariff is put in place, the labor rates in the U.S. will remain approximately five times higher than the labor rates available in Mexico and elsewhere. Additionally, as the dollar continues to strengthen against the peso, as it has over the last six months, the impact of a tariff goes increasingly unnoticed.”
Wolfe continues: “Minor changes to NAFTA would be logical and beneficial, but ultimately Mexico is the United States’ greatest asset in manufacturing. While relocation to the United States makes sense for some companies already positioned to invest in automation and receive the benefits being offered, the sub-assembly producers and small to mid-sized businesses have to remain competitive to survive. A lot of companies are unable to invest billions of dollars on capital improvement and automation, so Mexico must continue to play a large role in supplying competitive markets of labor and reinforcing the U.S. manufacturing base.”
Four rules to keep in mind
How should the average mid-sized manufacturer answer the automation, shoring, and sourcing questions? Here are four rules to keep in mind while deciding:
The first rule: To not decide is to decide.
The second rule: Make vs. buy is old but sturdy.
By adding competitive contribution to the old calculation, it still applies. Supply-chain management should always be aware of potential suppliers that improve your competitive position. As the needs of your customers and your business change, SCM can follow standard processes for evaluating alternatives.
The third rule: remember that Kodak was still hiring chemical engineers when digital was exploding.
Your technical resources should support the business you’ll be in in five years, not what you were five years ago. That means something different to each of you, but I hope no one is saying those are one and the same.
The fourth rule: If you don’t know where you’re going, any road will get you there.
Manufacturing leaders will make these decisions soon. Each can be optimized with reasonable analysis and an operations strategy that supports your business vision. The four together can also be optimized as part of your operations and product management strategies. But if you have no real vision and no real business strategy… well, now’s the time to fix that problem.
Manufacturing businesses ranging from $100 million to $1 billion in annual sales value the advice of operations strategist Becky Morgan and her Finish Strong thinking. With more than 25 years consulting with manufacturers, preceded by 14 years of hands-on executive responsibilities, Morgan has contributed to the success of aerospace, food, machining, assembly, electronics, tool and die, jewelry, and process industry businesses. Morgan speaks with audiences typically ranging from 35-150 attendees.
For Safariland’s Jacksonville manufacturing site, focusing more on making military products was a big change.
After acquiring Mustang Survival in 2013 and manufacturing that line in West Virginia, they found it was a difficult, remote location to get to, especially with added military personnel from different branches frequenting the facility to test and inspect products.
Jacksonville was just the opposite. There was already infrastructure in place from the company’s headquarters, so no brick-and-mortar expansion was necessary. Throughout 10 months, Safariland shifted forensics and firearms productions from their Jacksonville headquarters to their facility on Faye Road where they already manufacture holsters and moved in the Mustang Survival line to the freed up space.
Now, $1.9 million and 108 new jobs later the Mustang Survival line–consisting of personal flotation devices, dry suits and gravity suits–is running at 85 percent efficiency six months after its installation.
But getting everything running has been a process, said Blake Brown, vice president of manufacturing for Safariland. Dealing more with the military has been a lot to get used to: the products are more specialized and they’re designed as a “joint effort” between the military and Safariland.
“Just learning how to manage in a military contract world, it’s not the norm for us,” Brown said. “Not that we don’t do military products, but doing it like this is different. This is heavy gauge military contract business is what this is.”
Staffing the new line in Jacksonville also proved to be a challenge at first. When they moved the Mustang Survival line out of West Virginia, Safariland offered 70 employees relocation, said PJ Wilson, supervisor of Safariland’s human resources. Of those 70, only eight chose to relocate to Jacksonville which meant to staff the new line in Jacksonville, more people would need to be hired and some workers from other parts of the factory would need to be retrained on the Mustang Survival line.
Wilson said each person who needed to be trained would cost the company $10,000 to $12,000 per person. But with help from grants from CareerSource Northeast Florida and the city, they were able to offset some of the costs of training.
“You bring someone off the street, it takes six months to train,” Brown said. “If you bring someone who’s been sewing for 20 years over [to the Mustang Survival line], it’s harder sewing but they’re accustomed to industrial sewing so they got used to it quicker.”
Part of the extra cost in training stems from the difficulty and complexity of manufacturing the dry suits and gravity suits. Brown said the gravity suits are “the most complicated product we have to build.”
Fighter pilots wear gravity suits, which have air pumped into the legs of the suit when the pilot hits G-force speeds to pump the blood that rushes into their legs back into the brain to keep them from passing out.
The dry suit production required “a specialized skill that we did not have,” Brown said. Dry suits are used by mainly the Air Force, Navy and Coast Guard and keep its user dry and warm in the event they go into the water, especially in colder waters.
“It’s not a product you want to fail on you,” Brown said. “In the North Atlantic, you don’t want any leaks, the cold water will cause your blood to do weird things. It’ll shut your system down.”
The dry suits are sealed with hot tape to ensure no leaks occur and the product is tested until they show they don’t have any leaks. Safariland brought in help from their British Columbia plant, where Mustang Survival production is based, to help train and refine the skills of those sealing the suits to maximize their efficiency down the line.
Adapting to new changes in the company, however, is something those at Safariland are accustomed to doing. Brown said the company expands primarily by acquisition of similar, smaller companies and with every acquisition, there’s a “plateau” period where the company needs to “stabilize” and figure out the logistics of their new acquisitions.
But it won’t be too long before more acquisitions come along, Brown said. And when they do, it’s possible Jacksonville may be the place for them.
“We do have another lot next door [to the Jacksonville corporate headquarters], so we do have expandable space, and we do have a little more land over at the operation at Faye Road,” Brown said. “So we have some room in Jacksonville, so we will see what happens.”
By Brian Kingston, MC Assembly – Courtesy of SMT Magazine
Perhaps more important than the technology and tools a manufacturing company has are its people. People are what make a company truly great and the process of recruiting talented, skilled, dedicated employees and training them properly for success is an important aspect of any manufacturing company.
At MC Assembly, we are very involved in the local community and make an emphasis on volunteering and helping with CareerOneStop, American Job Center or what we locally call CareerSource Brevard. This active involvement allows us to network with other professionals and meet a local candidate pool that one will not be able to find on job boards or through a recruiting agency. We also participate in internship programs in hopes the intern will succeed and we will be able to hire them full time.
Some other ways we find candidates include employee referral programs, partnering with the local community, participating in job fairs, and working with and volunteering at the local high school and vocational school. Community outreach initiatives are also very important when finding new candidates.
In today’s market, it’s not only about what the candidate can contribute to the company, but what can the company contribute to the candidate: “Do you allow room for advancement?” “How is your on-the-job training program?” “Do you have tuition reimbursement?” “Do you contribute or volunteer with a cause the candidate is passionate about?” All these methods are very important in finding people.
Right now, one of the biggest challenges facing manufacturing companies is recruiting millennial talent. There is an outdated mentality that with manufacturing, you do not have autonomy, that it’s challenging work and there’s no opportunity for individualism or advancement. At MC Assembly, we counter that by giving employees an opportunity to voice their thoughts and take ownership over their work, by voicing how they think things should or shouldn’t be done. It really gives us an upper hand honing in on our manufacturing process and making it the best we can. It’s critical for our future that we be able to bring in younger talent. We’ve also introduced a lot of incentives like tuition reimbursement and on the job training that can help us attract and retain that talent.
The use of social media sounds cliché, but in manufacturing it is critical to reach millennial talent. Recent statistics show that over 85% of millennials have smartphones and touch them more than 45 times per day. Five out of six millennials connect with companies via social media networks. If your company is not active and does not invest in social media today, you are simply not visible to this generation and missing out on this talent pipeline.
Another challenge facing many manufacturing companies today is finding candidates with the right skill sets to fill specific jobs. There is a real gap of skilled manufacturing talent, largely because many schools have not been teaching manufacturing skills for nearly two decades.
About 20 years ago, many high school just stopped teaching manufacturing-related skills. There was no more wood shop, no more automotive, no more welding or electronics classes. Students were convinced that they needed to go to college for advanced degrees and manufacturing was no longer looked at as a long-term career. This all happened around the time of the dotcom boom. The new trend started to shift towards internet and computer-related jobs and teaching.
Today, we find ourselves with a serious skill gap; in some places, finding skilled soldering and SMT operators can present a real challenge. Overall, manufacturing finds some of the largest gaps in welding, CNC machining and electronics.
According to the Deloitte and The Manufacturing Institute, over the next 10 years we will need to fill 3.5 million manufacturing jobs – the current skills gap will result in 2 million of those jobs going unfilled.
Recently, we have seen a huge push to start teaching manufacturing at the high school level again with a dedicated focus on STEM. Seeing this need, MC Assembly has participated in a local effort called Advancing in Manufacturing (AIM), created
by CareerSource Brevard. Funded by a two-year DOL National Emergency Grant, the program is making efforts to expand training and early education opportunities in the Brevard area to address immediate employment skills needs and build a pipeline of talent for the future.
I serve as a volunteer member of the AIM committee. Over the last two years we’ve demonstrated effective results in expanding training, educational and internship opportunities. We believe that our approach is a logical and effective solution to help address the skills gap in our area and serves as a model for a successful sector strategy. Through the AIM internship initiative, MC Assembly will host two high school seniors this summer. This is a great way for students to learn about the great benefits a manufacturing career offers, and it’s also a way for us to give back and become a bigger part of our community.
At the same time, we have developed a robust new hire training program. On the first day, we start new hires with a safety and quality training. This allows employees to learn safety tips, who to call, where to go and how to work in a safe way. It also stresses the most important aspect to our business, that quality as our number one priority. This happens well before an employee walks on to the production floor and works on our customers’ products. On-the-job training follows the safety and quality training. New hires are identified on the production floor with a different colored smock and are assigned a mentor.
Once the supervisor and mentor believe the OTJ is complete and the employee is ready to be on their own our quality manager will assess their skill and what they learned and confirm the employees is ready to perform the job on their own. This process is very involved and usually takes 1-2 weeks, this helps new hire get up to speed quickly and have the confidence they are able to complete their assigned tasks.
The skills we look for in candidates are the “soft skills,” which are essential. Every resume you look at will tell you whether a candidate qualifies for the job based on their work skills, work experience and education. The one variable that cannot be determined from reading a resume are the soft skills. Communication, problem solving, adaptability, teamwork, self-motivation and emotional intelligence are just as important, if not more, than the technical skills to do the job. The six soft skills are hard to identify in an interview setting, behavior based interview questions are asked during our interview process to help identify these skills in each candidate. I believe you should always hire character and train skill.
This article was originally published in the May 2017 issue of SMT Magazine.
Increasing the fleet from 274 ships to 350, as Trump plans to do, might provide a revenue boost to the likes of General Dynamics. But it also entails some “operational risk,” according to a Thursday report from credit analyst firm Moody’s Investors Service Inc. The reason? “A build-up (let alone of such magnitude) has not occurred for many decades.”
I spoke with Bruce Herskovics, a senior analyst at Moody’s, about the big challenges the nation’s two shipbuilders will face in meeting Trump’s quota, and he said it largely comes down to the labor force.
Naval shipbuilding has slowed down so much in recent years that it even prompted Huntington Ingalls to close its shipyard in Avondale, Louisiana, in October 2014. That lends fewer resources to a larger job.
“It’s a big industrial manpower effort when you’re going to build a large number of ships coming off of a low base level,” Herskovics said. “You need to have a whole supply chain of labor that extends from high schools all the way to trained tradespeople willing to step up the volume.”
Navy ships are massive undertakings involving a lot of skilled labor. In the time it takes to build a single project, big chunks of the workforce can move on, and shipbuilders didn’t need to replace them given they were working on increasingly fewer ships. Now shipbuilders must ask themselves, “How do we get the supply chain of our labor force back to a level it needs to be at so we can meet this uptick in work?” Herskovics said.
Couple that with Trump’s plans to aggressively cut costs on the actual ships — and higher labor costs at a lower product price could be a tough calculus for shipbuilders.
“We’ve gotta get a good deal,” Trump told workers at Huntington Ingalls’ Newport News shipyards during a visit Thursday. “If we don’t make a good deal we’re not doing our job. The same boat for less money. The same ship for less money. The same airplanes for less money. … It means we’re going to get more of them and we can use them.”
Herskovics agreed any increase in shipbuilding is likely going to involve multiyear, fixed-price contracts that lock in contractors.
“An administration that’s new that’s seeking to ramp up the build rate is likely looking to buy the ships at a price that is reasonable, so the Navy is going to be smart about what it pays for,” he said. “For the contractor, they have to be careful when they’re ramping up the workforce that they can make sure that they meet the cost that they baked into the bids that they put forward.”
Shipbuilders are already preparing for potentially lower margins. Huntington Ingalls, for example, plans to invest $1.5 billion in the next five years to help contain costs.
“We are focused on reducing costs in all of our shipbuilding programs,” Huntington Ingalls spokeswoman Beci Brenton wrote to me in an email. “We see the most progress in reducing costs in those programs that are mature and where we are have stable requirements, can leverage the economic advantages of block buys, and are in serial production.”
“These yards have the ability, even in their existing facility and footprint, to dial up the production rate,” General Dynamics CFO Jason Aiken told investors last month at Barclays Industrial Select Conference in Miami.
American aviation is also stretching beyond our atmosphere with private sector companies innovating and pushing the boundaries of space travel. The United Launch Alliance regularly launches satellites for NASA and the U.S. military, and Elon Musk’s SpaceX supplies the International Space Station white striving for a bigger goal: Mars.
There’s much that policymakers can do to support the continued health of this vibrant, innovative industry.
Airports are a key component to our infrastructure, so investing in improvements and modernizing the roads connecting them with cities and communities will ease the movement of both passengers and cargo. Any infrastructure-improvement legislation should include improving air travel.
In addition, later this year, Congress will need to pass legislation reauthorizing the FAA. This legislation needs to continue work toward a modernized Air Traffic Control System, and it should continue to grow Airport Improvement Program investment to meet infrastructure needs.
Doing these things will make air transportation more reliable, safe, and secure, and it will ensure that aviation continues lift our economy into the future.
A Brazilian plastic bottle recycler has signed a lease for 100,000 square feet in Jacksonville to open its first U.S. facility, according to JaxUSA Partnership.
Mike Breen, a senior director with a focus on international projects for JaxUSA Partnership, said Clodam do Brasil signed the 100,000-square-foot lease at a warehouse at 5220 New Kings Road in Northwest Jacksonville.
The company will invest $7 million in the facility and hire 30 people to operate it.
The company will operate under the facility as Florida Plastic Recycling LLC.
“They have brought in two gigantic machines they purchased in Germany,” he said. “Those are the ones that do the cleaning, sorting, chopping up and production of plastic flakes.”
Breen said the company did not seek public incentives and was attracted to Jacksonville because of the transportation infrastructure in place. Specifically, Breen cited access to Jacksonville’s port and the interstate system.
“One of the key factors was the logistical location where they could easily reach their customers,” he said. “It wasn’t just Jacksonville as a region. The port, the interstates and the rail was very important. … They can bring plastic in by rail, road and ship.”
Clodam do Brasil plans to ship in plastic bottles to the Northwest Jacksonville site, where the company will then produce plastic chips to be used by other companies.
JaxUSA Partnership worked with Clodam do Brasil for about a year. He said the company was looking across Northeast Florida and South Georgia for an appropriate facility.
Jacksonville was also picked, he said, because of workforce availability in technology fields. He said the fact that Jacksonville is a city that recycles also helped attract the company.
The main questions that company officials had for JaxUSA Partnership centered around navigating the city’s bureaucracy, Breen said. He said the company officials did not encounter difficulties once they were directed to the right resources.
“They were very pleasantly surprised about how easily it was to work through that process,” he said.
BALTIMORE — The patter of automated machinery fills the air inside wire-basket manufacturer Marlin Steel’s bustling factory in a rugged industrial section of this city.
Maxi Cifarelli, 25, of Baltimore, peers through safety goggles at a flat screen, her left knee bent and heel resting on her chair.
Two years after earning a fine arts degree from Towson University with a specialty in interdisciplinary object design, she now spends her work days working with a personality-free machine with a name to match: a computer numerical control, or CNC, router.
With automation poised to sweep through the economy, some fear that it will kill more jobs than it creates.
But Cifarelli’s experience is the opposite. She befriended automation, instead of fighting it, and she has a job because of it.
“I haven’t named it,” she said, peering over at the robotic machinery. “I should name it.”
Cifarelli is one of 33 employees at Marlin Steel, which has undergone a transformation. Employees used to make wire baskets by hand. Now automation has taken over. High-tech machines do most of the work — and the plant needs workers willing to adapt their skill sets to survive in a rapidly changing economy.
Automation has allowed Marlin Steel to thrive, but across the country, workers feel threatened. Donald Trump catapulted into the White House by giving voice to those fears and promising to save American factories and jobs by rewriting trade deals, taxing imports and removing regulations.
Futurists have warned for years that automation will take your job. Now it’s happening, albeit in pockets, at manufacturers, warehouses and even some labor-intensive white-collar professions.
As the political debate rages over how to inject fresh energy into the American economy with Trump taking office, automation presents perhaps the greatest threat to the American economy.
But it may also reflect its greatest opportunity if workers take the Cifarelli route and embrace robotics, artificial intelligence and automation. Either way, it’s poised to accelerate — and if not here, then in foreign countries that will reap the benefits while the American economy suffers a competitive disadvantage.
About 49% of worker activities can be turned over to some sort of machine or robot, increasingly helped along by artificial-intelligence software, according to consultancy McKinsey.
As artificial intelligence programs proliferate, automation won’t be confined to the factory floor. Positions that involve a substantial amount of predictable work, such as data processing, could succumb to automated software and artificial intelligence.
McKinsey counted more than 70 entire professions in which at least 90% of activities can be automated, ranging from mail clerks to ophthalmic lab technicians, tire-repairers, butchers, food preparers and bakers.
But many Americans don’t think they need to adapt, with 80% saying their job definitely or probably will exist in its current form in 50 years, according to the Pew Research Center.
“We often think about automation as applying to front-line, low-wage, low-skill activities and jobs — and what we’ve discovered is there are some activities that are high-wage, high-skill that are actually very susceptible to automation,” said Michael Chui, a McKinsey Global Institute partner in San Francisco who studies the issue. “Almost every job in the economy has a significant percentage of activities that can be automated.”
The professional service robot industry expects to sell a third more units from 2016 through 2019 — 333,200 in all — than it sold in the past 17 years, says the International Federation of Robotics. They could be used in place of professionals, whether it’s medicine, agriculture, hospitality or even the supermarket down the street.
—Restaurant workers. In fast-food, San Francisco-based Momentum Machines already makes a hamburger-flipping robot. Several chains are gradually introducing self-ordering stations.
—Shelf stockers. In stores, San Francisco-based Bossa Nova Robotics has developed a robot that is checking shelf inventory in a test at Lowe’s, the home-improvement chain.
—Journalists. Automated Insights has created a software suite called WordSmith that writes thousands of automated stories every month, including Minor League Baseball game accounts and earnings reports for the Associated Press, basketball game recaps for Yahoo! Sports and financial content for dozens of other clients.
—Bookkeepers. Accountants — perceived as a steady 9-to-5 job with an average salary of $67,190 in 2015, according to the Bureau of Labor Statistics — are poised for a total makeover. About one in five people in the finance and insurance sector primarily perform data processing — and about 85% of that work can be automated, McKinsey estimates.
“The basic gist of it is the more certainty your job entails the more likely is to be automated out,” said Mary (Missy) Cummings, a Duke University professor and director of the Humans and Autonomy Lab.
In other words, the more predictable your daily routine is, the more likely your job is to go away.
It’s already happening. Walmart announced plans in September to cut 7,000 bookkeeping and store accounting positions as it automates cash management and centralizes the process at its headquarters.
In accounting, nimble firms will transition their focus to advising clients based on insights gleaned from automated data. Audits may go from an annual process to a continuous action. Software will increasingly handle the “high-volume, routine, non-judgmental” activities in real time, said Bill Brennan, audit transformation leader for PricewaterhouseCoopers.
PwC is now hiring employees for its auditing business with backgrounds in science, technology and engineering.
“We need those individuals to help us as we get into data analysis, analytics, data security, cloud computing. The future employee is going to have a combination of those skills,” Brennan said.
Cifarelli knows. At Marlin Steel, her college-level education pays off in production work. Pecking periodically at a computer mouse, she delivers detailed instructions, programming the machine to carve small canyons in wood to hold wire that is later welded together with automated equipment to make precision wire baskets, accurate to within 2/1000ths of an inch.
She’s bonded with her CNC, which she has come to think of as a robot companion.
“I need the robot to ensure consistency,” Cifarelli said. “Over the past year, I’ve become really accustomed to the sounds and the movements of it. I can really predict what’s gonna happen. We’re kind of a team.”
For Marlin Steel, the problem was straightforward: Automate or die. In the early 2000s, factory workers at the 48-year-old company were forming the big metal baskets typically seen in bagel shops by hand-bending wire at a rate of 300 bends per hour in a grueling manual process.
“They all had huge right arms,” Marlin Steel CEO and owner Drew Greenblatt said.
When emerging overseas competitors swooped in and undercut the company on labor costs, producing baskets for less than $6 each to Marlin’s $12, sales cratered.
“Our entire business model blew up and we were hemorrhaging,” Greenblatt said. “China was exporting baskets into Manhattan for cheaper than I could buy the steel.”
To fight back, the company purchased robotic wire-forming machines and other automated equipment to manufacture precision wire baskets and other metal products for customers that required a higher-quality product, such as Boeing, General Motors, Harley-Davidson and Disney.
Because of automation, Marlin Steel nearly doubled its workforce over the last decade to 33 employees and boosted pay from minimum wage when Greenblatt acquired the company to at least $15 per hour today, with some employees making more than $30.
“It’s only viable because my employees are like on steroids,” Greenblatt said. “All of a sudden they’re super productive and it’s because we’ve given them the tools — it’s robotics and automation. Thank God for robots. If it wasn’t for robots, these guys would be unemployed.”
Marlin Steel may have been ahead of its time.
Industrial robots have hit an inflection point — powered by cost reductions and technological improvements in visioning, sensing and gripping — and are poised to accelerate. Although they only perform 10% of tasks in manufacturing today, they will perform 25% by 2025, according to a study by Boston Consulting Group.
In one tangible sign of increased automation, those technological improvements have ushered in the dawn of the “collaborative robot,” unleashing automation from protective cages and placing the machinery right next to humans, with sensors protecting the worker and ensuring efficiency. Barclays analysts estimate that global sales of so-called “cobots” will balloon from 4,100 units and $120 million in 2015 to 701,000 and $12 billion in 2025.And it’s happening globally. China, for example, is not wasting any time. Amid all the political consternation over alleged currency manipulation and global trade advantages, China is expected to double its installation of industrial robots from 75,000 in 2015 to 150,000 in 2018, nearly four times the rate of North America, according to the International Federation of Robotics.
Trump has repeatedly pledged to bring manufacturing back to the U.S., even suggesting that Apple’s iPhone could be made here and exhorting Apple CEO Tim Cook to do so. But that might not be possible without massive automation to make it cost-effective to manufacture in the U.S.
As automation advances, globalization will enter a new chapter in which low-cost labor becomes increasingly irrelevant. Unlike humans, robots don’t get paid an hourly wage. So it’s not much more expensive to operate a machine in a developed economy than it is in the developing world.
That could be good news for America because it may slow the outflow of investment to other countries.
“The fastest growing robotics user in the world is China because they understand that they want a lot of this manufacturing based on low-cost labor, but that’s not the whole game,” said Jeff Burnstein, president of the Association for Advancing Automation. “The game now more than ever is quality, speed and flexibility — and low-cost labor alone is not gonna do it.”
Automation is a double-edged sword, though. Take the example of family-owned Ramsey, Minn.-based injection molder Dynamic Group.
The company recently boosted its production by 400% after installing robotic arms made by Universal Robots.
Automation bolstered the company’s capability to produce lower-volume, highly complex products that would otherwise not be profitable because the company could not afford to hire workers to craft and manufacture devices with limited commercial appeal.
“It’s really hard to be able to be competitive nation- and worldwide coming from this market and having to do that type of labor,” said Joe McGillivray, CEO of Dynamic Group, whose father co-founded the company in 1977. “We’re able to do more work, which will allow us to make more money and pay you better.”
Still, the downsides of automation are impossible to ignore. As advanced manufacturing companies adopt more automation, many workers won’t be needed.
McGillivray said that by installing robots, Dynamic Group expects to reduce its reliance on temporary workers. In the past, the company had occasionally hired up to 20 temp workers to aid its permanent staff of 106 workers.
If automation evokes imagery of robots replacing humans, then its close relative, artificial intelligence, conjures fears of computers taking dominion over humans.
But those fears, while perhaps not unfounded in the distant future, fail to reflect AI’s emerging role as an assistant to people in the workplace.
At Boston-based start-up Lola, two executives who were almost single-handedly responsible for replacing travel agents with computers — that is, one of automation’s most obvious examples of displacement — are reviving the travel agent through artificial intelligence.
The 50-person company has developed an AI-based system — which basically just means a bunch of software algorithms — to aid human travel agents in making recommendations to travelers, booking accommodations and addressing itinerary hiccups.
“We think most travelers would rather talk to a human because the human will understand them 100% of the time, so we use the bots to back them up,” said Lola CEO Paul English, who co-founded travel listings site Kayak.com and served as the company’s chief technology officer. “If we’re successful we’ll have thousands of travel agents, perhaps tens of thousands of travel agents working exclusively for Lola.”
The AI, which English affectionately refers to as a bot, can crawl through a user’s email inbox, for example, to identify travel preferences and scheduling quirks. Those insights are translated into intelligence that the travel agents use to improve their customer’s experience.
For Lola Chairman Barney Harford, former CEO of travel booking site Orbitz and former executive at Expedia, it’s a sharp turn from his previous life ushering in the age of do-it-yourself travel.
“We are bringing humans back into the picture,” Harford said.
(ORLANDO, FL) Sept. 30, 2016 – A new study conducted in rural areas of Florida reveals that wages earned by those working in the manufacturing sector were among the highest locally compared to other industries and were almost 33 percent higher than average earnings in 2015. The finding was part of a study conducted by FloridaMakes, the state’s national manufacturing extension partnership program, under a grant from the Florida Department of Economic Opportunity (DEO), to assess opportunities for retention and/or expansion of existing manufacturing firms in rural communities.
“This study provides new insight on the impact that manufacturing has in Florida’s three Rural Areas of Opportunities, as well as an analysis of the industry clusters that currently exist in those areas,” said Kevin Carr, FloridaMakes CEO. “The results of this study will enable FloridaMakes and DEO to identify strategies and services to support manufacturing and further economic growth opportunities for these regions.”
The State of Florida has designated three Rural Areas of Opportunity as priority regions for the Rural Economic Development Initiative. The Rural Areas of Opportunity are defined as areas that have “been hurt by an extraordinary economic event, severe or chronic distress, or a natural disaster or that present a unique economic development opportunity of regional impact.” Florida Rural Areas of Opportunity, all of which were included in the study, are:
Northwest Rural Area of Opportunity (Calhoun, Franklin, Gadsden, Gulf, Holmes, Jackson, Liberty, Wakulla, and Washington counties; and the City of Freeport in Walton County);
North Central Rural Area of Opportunity (Baker, Bradford, Columbia, Dixie, Gilchrist, Hamilton, Jefferson, Lafayette, Levy, Madison, Putnam, Suwannee, Taylor, and Union counties); and
South Central Rural Area of Opportunity (DeSoto, Glades, Hardee, Hendry, Highlands, and Okeechobee counties; cities of Pahokee, Belle Glade, and South Bay-Palm Beach County, and Immokalee in Collier County.
Manufacturing from the three rural regions contributes nearly $1.8 billion to Florida’s economic output and represents 8 percent of the region’s total Gross Domestic Product. In addition to supporting more than 16,000 jobs that pay over $800 million in earnings, manufacturers in these regions also pay $70 million a year in production taxes, generating a large impact on the regions in which they reside.
Manufacturing companies also purchase significant inputs from many other sectors including agricultural products and other production inputs, materials and supplies, professional services, and transportation services. And because manufacturing is a large exporter, it attracts outside dollars to the region while providing jobs and economic growth to those communities.
Among the study findings:
Each region has a high percentage of very small manufacturers, with fewer than five employees.
The North Central region is the most industrialized with more companies and more workers in manufacturing.
The wood products industry is significant in both the Northwest and the North Central regions. Products derived from the yellow pine forests in northern Florida comprise the most important industries, including commodity product sawmills and pulp and paper mills, as well as higher value products such as trusses, millwork, and cabinets.
The chemical industry is important to all three regions. More than 80 percent of the chemical firms have fewer than 50 employees.
Transport equipment, mostly boat building and servicing in the north, life rafts and airboats in the south, is also relatively important.
Cement and concrete products include blocks, bricks, roof tiles, septic tanks, and other finished products that pose more manufacturing challenges than ready-mix are important in the South Central region.
The full report, Rural Area Manufacturing Study: An Assessment of Manufacturing in Florida’s Rural Areas and the Opportunities for Growth and Expansion, can be accessed on www.FloridaMakes.com and click on ManuFacts.
For information about FloridaMakes and its services for manufacturers, visit www.floridamakes.com or call (407) 450-7206.
JACKSONVILLE, Fla. – Florida State College at Jacksonville (FSCJ) was awarded the America’s Promise Grant from the U.S. Department of Labor to strengthen and expand job training partnerships for the community. The only college in Florida to receive this grant, FSCJ will use the $1,804,656 award to support the School of Science, Technology, Engineering, and Mathematics through advanced manufacturing training opportunities, specifically in mechatronics and welding technologies.
The grant was inspired by President Obama’s America’s College Promise plan to allow two free years of community college for responsible students. Designed to accelerate the development and expansion of workforce partnerships that provide a pipeline of skilled workers in specific, in-demand sectors, the grant requires partnerships that include industry leaders, senior-level leadership from workforce and economic development organizations, secondary and postsecondary education institutions, elected officials and other community stakeholders.
FSCJ’s regional workforce partners include Anheuser-Busch, First Coast Manufacturers Association, Kaman, FabTech Supply, Now Hiring Heroes, Pal-King, Remedy Staffing, Florida Advanced Technological Education Center of Excellence, Ameri-Force, NOVA, CareerSource Northeast Florida (First Coast Workforce Development), JAX Chamber, JAXUSA Partnership, United Way of Northeast Florida, Early Learning Coalition, City of Jacksonville Military Affairs and Veterans Department, Fresh Ministries, FSCJ’s Adult General Education Program and State of Florida Vocational Rehabilitation.
The grant award allows for a project that aims to develop and implement:
An accelerated 10-week core fundamentals boot camp focused on building essential manufacturing workforce skills as identified by employer partners;
A Core+ upskilling training component that can be customized to employer needs;
An America’s Promise Manufacturing Open Lab featuring effective hands-on and simulation skills assessment; and
Skills attainment through Work & Learn paid internships.
Over the four-year project period, FSCJ will serve a minimum of 250 participants from various populations, including low-income individuals, unemployed and underemployed workers, individuals with limited English proficiency, individuals with disabilities, military veterans and their spouses, and disadvantaged and underrepresented populations with barriers to employment. Credentials to be awarded include: OSHA 10, OSHA 30, MSSC-CPT, NIMS Level 1, Autodesk Certified User-AutoCAD, Autodesk Certified Professional-AutoCAD and AWS Basic Welder.
Already one of the most affordable options in the nation, FSCJ is working toward reducing students’ dependence on loans by offering many low- and no-cost options such as dual enrollment and scholarship opportunities for qualified candidates, developing paid internship and apprenticeship opportunities in key areas of employment to assist with paying down student loans and providing career mentorship programs translating to higher job placement and satisfaction.
“FSCJ is committed to providing access to the education and training necessary that enriches both the lives of our students and the communities we serve,” said FSCJ President Dr. Cynthia Bioteau. “To be the only college in Florida recognized in this way reinforces the need to continue working alongside our tremendous partners to create valuable and affordable learning opportunities that elevates the workforce of tomorrow and generates a secure, prosperous future for all.”
Caterpillar Inc. announced Wednesday it is considering moving as many as 800 production jobs from its Aurora, Illinois-area plant to facilities in Decatur, Illinois and North Little Rock, Arkansas.
If completed, the move would put an end to manufacturing operations at the suburban Chicago plant, which is actually located in Montgomery despite its Aurora name.
Production of large wheel loaders and compactors would shift to downstate Decatur and medium-wheel loaders to North Little Rock.
The Peoria, Illinois-based heavy equipment maker has struggled in recent years, beat up by tough emerging market conditions, drops in commodity prices, and unfavorable foreign exchange rates. All of those headwinds have combined to sap demand for Caterpillar’s products, forcing the company to lay off thousands of workers domestically and overseas.
“Faced with lower demand, we continue to evaluate our global manufacturing capacity,” Denise Johnson, Caterpillar’s resource industries group president, said in a news release. “We must use our existing space in the most efficient way possible while maintaining the ability to meet demand when it returns.”
Local officials expressed concern over the possible loss of jobs and offered to work with Caterpillar on the issue, the Aurora Beacon-News reported.
“We want to engage them as much as we can,” Aurora Mayor Robert O’Connor told the Beacon-News. “We value the jobs, and the presence the company has had in the community all these years.”