What’s Driving The Record Growth Of U.S. Manufacturing?

In the broader picture, manufacturing is booming because of the same factor that has fueled industry for centuries: advancing technology.

American manufacturing is experiencing a remarkable period of growth. In September 2017, the Institute for Supply Management recorded a 13-year high, with its national factory index climbing to 60.8. (In October, the index dipped slightly to 58.7, although any reading higher than 50 indicates industry growth.)

This upward trend is nothing new. In fact, with a few monthly exceptions, U.S. manufacturing has been growing steadily following the recession recovery that began in mid-2013. But the manufacturing industry’s health is impacted by many more factors than just the American economic climate. In reality, there are a variety other reasons for this record growth.

In the short term, September’s success came much as a result of hurricanes Harvey and Irma, which caused factory activity to increase and raw material prices to rise. Industry experts say the weaker U.S. dollar has also made American products more appealing for export and is another reason for the 13-year high.

But these causes are short-term. In the broader picture, manufacturing is booming because of the same factor that has fueled industry for centuries: advancing technology.

The Innovations Changing US Manufacturing

Technology, in one form or another, has always been at the forefront of manufacturing developments. Since the Industrial Revolution, innovations such as the railroad, the modern assembly line, the automobile, and the internet have all shaken up manufacturing as we know it.

Today is no different. The disruptive manufacturing innovations of 2017 break into three main categories: the Internet of Things (IoT), machine learning, and enterprise resource planning (ERP) technologies.

The Internet of Things

Our digital devices are more interconnected than ever before, and that includes those used in manufacturing. The industry is catching on fast: manufacturing companies are expected to spend 10 percent more on IoT initiatives in 2018, and the trend is being called the advent of a fourth industrial revolution, or Industry 4.0.

Similar to machine learning, IoT can help with predictive maintenance and advanced supply chain foresight. But one of the most valuable ways that IoT devices are helping grow the manufacturing industry is by breaking down the silos that exist between manufacturers, suppliers, logistics teams, and end customers. This is key to the continued growth of the industry, especially as manufacturing companies manage more factories across the globe.

As an example, airline manufacturer Airbus uses interconnected devices on its factory floors, making it easier for engineers to locate tools in the factory and then send that information to a connected robotic device so it can complete a task. Airbus says it currently has a 10-year backlog on airplane orders, and IoT has helped them gain a clear picture of that backlog — as well as offer them a tool to help clear it and grow the company.

Machine Learning

While machine learning is a type of artificial intelligence, the goal is not to have factories entirely run by robots. Through the use of built-in algorithms, machine learning is the ability of a system to intelligently adapt based on historical data and trends. In other words, not only is machine learning a better way to gather data about your business operations, but it’s a more efficient way of actually using that data to make adjustments that will grow your bottom line.

Take service part price optimization, for example. Large manufacturing managers know that it can be a nightmare to track costing models and sales across the country and adapt pricing based on season, demand, and other factors. Machine learning gathers regional trends, quickly analyzes the information, and makes data-based recommendations that will impact your supply chain. Also, a manufacturing company that has incorporated machine learning technology can better predict demand for specific parts and products, which can increase production capacity by up to 20 percent.

General Electric is just one company that has managed to use machine learning to create a leaner, more intelligent business. The company uses AI to create digital duplicates of its aircraft engines, wind turbines, and other technologies. Those digital renderings then track wear and tear using data sensors which can predict failures before they happen, while increasing productivity and decreasing carbon emissions.

ERP Solutions

An ERP solution provides the basic infrastructure for operations that incorporate machine learning and IoT on the factory floor. ERP software ties the best agile technology processes to the bottom line, helping a company interlink aspects of its manufacturing for a more unified oversight of the entire process.

One of the elements of this approaching industrial revolution is transparency, and ERP will allow companies to connect and communicate through every step of the supply chain, all while improving reporting. Having a centralized, bird’s-eye view through ERP will help manufacturing companies streamline productivity, enhance data-based decision-making, and maximize efficiency. This is what will continue to drive the growth of American manufacturing.

As long as American manufacturing companies continue to ride the wave of cutting-edge technology and embrace innovation, there is no reason to believe the industry will slow down. Technology helps connect the global factories of today. It makes manufacturing in the US more appealing, as it helps reduce what have traditionally been the downfalls of American manufacturing: high production costs and a lack of skilled workers.

What technologies are helping your business grow? Leave a comment below.

Aaron Continelli is president of Cre8tive Technology and Design.

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