Technology helps American manufacturing be great

Economic Trends 2017

Lorenz

Manufacturing jobs were at the heart of Donald Trump’s presidential campaign. The idea that jobs in places like Wisconsin had left for China or Mexico and he would help bring them back helped Trump win the Badger State. But so, too, did his pledges for lower taxes and reduced government regulation.

W. Kent Lorenz, chairman and chief executive officer of Pewaukee-based robotic systems integrator Acieta, said it will likely take at least a year before any significant legislative changes are felt by individual businesses.

“The bigger issue here is setting a tone for manufacturing here in the U.S.,” said Lorenz, who will be a presenter at the Northern Trust Economic Trends Conference presented by BizTimes Media on Jan. 26.

Lorenz said he doesn’t expect huge tariffs on goods produced in Mexico or China to become a reality, but he is banking on lower taxes and reduced regulations to help the manufacturing industry.

Those changes would potentially boost an industry that Lorenz says is already doing well, despite many suggesting it is dying.

Lorenz
Lorenz

Lorenz certainly has the insight into the industry to know whether it’s healthy or not. Acieta counts Caterpillar, John Deere, Harley-Davidson and Rexnord among its customers, along with many more small- and medium-sized firms. The company also sells into a variety of markets, including oil and gas, construction agriculture, recreation and medical.

He cautioned that the strong dollar will continue to make it difficult for businesses that export and while he thinks tax and regulatory changes will fuel growth in manufacturing, the idea that jobs will come back from China in large numbers is mistaken. If a company had 400 people doing work overseas, they’d look to use technology for workers in America to be five to seven times more productive.

“They’re not going to do the same job (in America) the same way (as it is done overseas),” Lorenz said.

He said technology like robotics and automation are making it easier for companies to produce goods here. Using automation allows companies to get closer to 100 percent utilization of their equipment, taking out the time lost to breaks, shift changes or fluctuations in productivity.

While it makes processes more measureable and repeatable, it also requires manufacturers to be more precise.

One of the measures Acieta tracks closely is industrial robot adoption rate. Today, there are about 160 robots for every 10,000 workers in the U.S. By 2025, that number is expected to reach 300, a level Germany and Japan are already at.

In Wisconsin, there are more than 3,000 industrial robots, Lorenz said, and many are in small and medium-sized manufacturers. While about a decade ago, some smaller firms may have felt robotics and automation wasn’t for them, today, nearly everyone sees a need to automate to increase productivity.

“Which is different than getting rid of people,” Lorenz said, adding that looming demographic trends mean the state and industry will need to retain and train its residents.

He said manufacturers want to retain the people they have and train them where needed. The industry is increasingly complex and highly technical. A high school degree is no longer enough and positions with simple repetitive tasks will likely be automated. But for employees with the right skills and a willingness to learn, there’s an opportunity to grow.

“The key is that the process knowledge that you have as an employee is kind of your secret sauce,” Lorenz said.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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