Advanced manufacturing in a digital age

Business confidence is on the rise, with first quarter manufacturing activity showing signs of strength – all underlined by a positive outlook for the U.S. economy in 2015.

This confidence, however, is being tempered with a cautious eye on factors including the implications of the recent changes in the price of oil, the direction of the dollar, trends in U.S. exports, and slower growth in markets like China and India. Beyond the short-term horizon, executives are looking ahead at the broader picture and determining their strategy as manufacturing evolves in a Digital Age.

New technologies are increasingly spurring the potential for disruptive innovation, and companies are being challenged to design new and improved solutions for unmet customer needs. Manufacturers in the U.S. are among those blazing the trails by leveraging advanced manufacturing. Each day we are seeing more examples of materials innovations, the adoption of smart sensors that use the Internet of Things to enable machine sensing and communication, the use of advanced robotics on the manufacturing shop floor, and new products being created on demand using additive manufacturing (3D printing). The list of examples goes on.

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In this environment, creating and capturing value has never been more important and challenging, according to a newly released Deloitte U.S. perspective on the future of manufacturing. As this perspective points out, one of the strongest effects of the exponentially developing digital infrastructure is its ability to break down barriers, opening the manufacturing world to newcomers and new solutions they might bring to market. To stay competitive, companies will need to understand the factors driving change in specific sectors where they compete, focus on activities that convey a structural advantage, leverage the skills and capabilities of third parties, and be increasingly open to fundamentally adapting their business models.

As the face of manufacturing changes, so do the requirements of the workforce of the future. In the U.S., the talent issue is a strategic focus and a major concern to most executives. More than 80 percent surveyed by Deloitte U.S. and The Manufacturing Institute for “The skills gap in U.S. manufacturing. 2015: and beyond” study believe that the skills gap will impact their ability to meet customer demand. What is astounding is the magnitude of the skills gap. In the U.S alone, an estimated 3.5 million manufacturing jobs will need to be filled over the next decade, but a skills gap is expected to result in 2 million of those jobs going unfilled. Baby boomer retirements and a pervasive perception of manufacturing being an unattractive career destination are two factors fueling this widening skills gap.  Executives surveyed indicate that skills in technology, problem solving, math, as well as technical training are lacking in manufacturing employees.

Public policy and collaborative investments by government and industry play a vital role in both solving the talent challenge and building world-class advanced manufacturing infrastructure and capabilities. In this ever more competitive world, we are seeing increasing examples of government and industry making joint investments to promote talent development and collaborate on innovation projects. The competition for high quality manufacturing jobs has never been higher, and the external environment that is created to stimulate growth is proving to be a key differentiator in attracting investment.

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Companies are recognizing that the rules for engagement are changing. Driven by the capabilities offered by these new advances in manufacturing, companies realize that investments today will be vital for their positioning them for growth looking forward.

-Tim Hanley is the global leader of the Manufacturing Industry group of Deloitte Touche Tohmatsu Limited. On May 7, Hanley will be a keynote speaker at the MMAC’s World Trade Association breakfast as part of the WTA’s 51st Annual Wisconsin International Trade Conference, with the theme of “Go Global. Grow your Business.”

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