The following article appears in the December 2014 issue of Expansion Solutionsmagazine. It was co-authored by Jim Damicis, Christa Franzi, and Ian Flatt.
Despite transformations within the industry, including outsourcing and automation, manufacturing is alive and well in the United States. Over the past several decades, the industry has shed jobs, devastating communities and regions that relied on these employers to provide well paid employment. However, even as the industry was cutting jobs over this period, manufacturing output and productivity were increasing dramatically, representing new investments in technology and skilled workers. Recently, the rate of job loss has begun to decrease and the manufacturing sector is projected to add jobs over the next several years. In regions across the country, gains in the manufacturing sector have been an important part of the economic recovery.
Despite its diminished employment footprint, the manufacturing industry continues to be a major driver of economic output in the US. The sector is closely tied to research and development (R&D), innovation, technology, and exports and typically pays higher wages than other sectors, further driving the economy. In recent years, American manufacturing has been undergoing what some have called a renaissance, capitalizing on a range of new opportunities:
- The declining price of computer power allows small companies to be players in the global market;
- 3D printing makes small-batch, custom manufacturing possible, allowing smaller companies to compete and grow;
- Technology is creating new opportunities in niche manufacturing sectors that are at cross sections of manufacturing and other industry sectors such as advanced materials and composites, nanotechnology, and bio-related and biotech manufacturing.
- On-shoring and near-shoring, driven by:
- Increasing labor costs in China;
- Reduced value of the U.S. dollar;
- Cost of transportation and logistics to get products to end users;
- Increases in American oil and natural gas production, which has led to:
- Increasing demand for machinery and chemicals
- Declining energy costs in the US
- Lack of quality control and intellectual property protection in other markets.
While these opportunities and trends apply to the manufacturing industry as a whole, the effects are particularly profound for advanced manufacturing.
WHAT IS ADVANCED MANUFACTURING?
Advanced manufacturing brings to mind certain buzz words: cutting edge, innovation, value-added, customization, emerging technology, skilled workforce…and so on. Conceptually, it seems obvious; we can picture what advanced manufacturing is. The challenge comes when attempting to create a definition and delineate between traditional and advanced manufacturing. Whether trying to track the advanced manufacturing industry nationally or at a regional scale, a consistent and clear definition is needed.
The Science and Technology Institute, a federally funded research and development center, assembled a summary of some advanced manufacturing definitions that have been proposed by experts. These definitions are outlined in brief below:1
New Manufacturing Industries – Based on what is being produced, this definition focuses on new and emerging industries such as aerospace and bio-manufacturing (the manufacturing arm of the biotechnology industry) as opposed to “traditional” manufacturing such as steel, automotive, or machinery.
Use of New Methods for Manufacturing – This definition includes industries that develop newer and better products through the use of advanced production technologies. Paul Fowler of the National Council for Advanced Manufacturing explains that under this definition, advanced manufacturers use computer, high precision, and information technology combined with a skilled workforce.
Sustaining the Cutting Edge – Another definition offered by some experts is the rapid transfer of science and technology into manufacturing processes and products. Today’s digital economy allows competitors to quickly adopt new products, replacing the current cutting-edge technology. Therefore, to remain a front-runner, the time from research and development to production must be reduced.
Manufacturing Frontier – This definition contrasts with those that distinguish between traditional and advanced manufacturing, noting that technological advancements and innovation take place in both well-established and emerging industries and apply to both existing and new products. This viewpoint presents a dynamic non-definition as businesses strive to achieve and maintain a competitive advantage. As the “frontier” continually changes, so does what comprises advanced manufacturing.
Some believe that the range of definitions for advanced manufacturing has contributed to years of underinvestment in US manufacturing by both the public and private sectors, noting that, “without strong agreement about what advanced manufacturing means, we’ve over-valued some segments of the manufacturing sector and under-valued others.” 2
Taking into account the definitions above, the 2011 report to the President, Ensuring American Leadership in Advanced Manufacturing, and the 2012 report, Capturing Domestic Competitive Advantage in Advanced Manufacturing, prepared by Presidents’ Council of Advisors on Science and Technology offer a comprehensive definition:
“Advanced Manufacturing is a family of activities that (a) depend on the use and coordination of information, automation, computation, software, sensing, and networking, and/or (b) make use of cutting edge materials and emerging capabilities enabled by the physical and biological sciences, for example nanotechnology, chemistry, and biology. This involves both new ways to manufacture existing products, and especially the manufacture of new products emerging from new advanced technologies.” 3
“Advanced Manufacturing is not limited to emerging technologies; rather, it is composed of efficient, productive, highly integrated, tightly controlled processes across a spectrum of globally competitive U.S. manufacturers and suppliers. For advanced manufacturing to accelerate and thrive in the United States, it will require the active participation of communities, educators, workers, and businesses, as well as Federal, State, and local governments.” 4
What is the difference between typical and advanced manufacturing? In today’s rapidly shifting global economy, is there a difference anymore? Any given manufacturer is not likely to align perfectly with a single definition. The chart below summarizes how the manufacturing environment is changing in key areas.