Saturday, June 2, 2012

Our Manufacturing Revolution

After our gloomy jobs report yesterday, what about some good long-term news.  It regards an unlikely source - - manufacturing.  The Economist had a special report on manufacturing and innovation in the April 21, 2012 issue.  We have entered "the third industrial revolution" according to the report - - the digitization of manufacturing that will transform the way goods are made.  A number of remarkable technologies are converging - - clever software, novel materials, more dexterous robots, new processes (i.e., three-dimensional printing), and a whole range of web-based services.

What is interesting is that the why, how, and what of the digital manufacturing revolution also defines the where.  The report noted the following regarding the where revolution - -

"The revolution will affect not only how things are made, but where.  Factories used to move to low-wage countries, to curb labor costs.  But labor costs are growing less and less important: a $499 first-generation iPad included only about $33 of manufacturing labor, of which the final assembly in China accounted for just $8.  Offshore production is increasingly moving back to rich countries not because Chinese wages are rising, but because companies now want to be be closer to their customers so that they can respond more quickly to changes in demand.  And some products are so sophisticated that it helps to have the people who design them and the people who make them in the same place.  The Boston Consulting Group reckons that in areas such as transport, computers, fabricated metals and machinery, 10-30% of the goods that America now imports from China could be made at home by 2020. boosting American output by $20 billion-$55 billion a year."

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