The Future of Manufacturing: Grit & Vision

I just returned from London, where I participated in a panel discussion at the Financial Times’ Future of Manufacturing Summit. It was a great opportunity to exchange views with corporate leaders, from large companies to small and medium enterprises.

The discussion was refreshingly different from academic debates and press headlines — much more pragmatic.

Economists have come up with different theories to reconcile today’s faster pace of innovation with the crawling pace of productivity growth. Talk to business leaders, and you realize the answer is simple: innovation is hard, but execution is harder, and takes longer.

Large companies are investing more in new technologies, building up their digital-industrial capabilities. They have the means and the scale to do it — GE is a case in point. But even the industrial giants encounter major challenges: reorganizing production processes, adapting management strategies, identifying new benchmarks.

Smaller companies face additional hurdles:

1. They need to be convinced that the digital-industrial innovations are a game-changer — a marginal improvement in efficiency is not worth the effort;
2. They need confidence that they are adopting the right standards, not investing in systems that will rapidly become obsolete;
3. They need an ecosystem to share best practices, pool resources and build the right capabilities.

Larger companies can be a catalyst, starting with their own supply chains and distribution channels, helping their partners embrace the new technologies. Trust is key: especially where larger companies are the ones developing digital solutions, smaller partners need to know they can capture a share of the efficiency gains.

Smaller companies feel at a disadvantage. They should not — for two reasons.

1. Digital-industrial innovations are a great equalizer. Think of additive manufacturing, or ‘3D printing’, which brings greater speed and flexibility in the manufacturing process so that companies can reach economic efficiency at lower production levels. This redefines economies of scale — the traditional advantage of large companies.

2. New innovations blur the traditional boundaries across sectors. Industrial companies become software companies; cars become energy products. This means that no company, no matter how large, can succeed alone. Everyone needs partners and ecosystems, and large companies need smaller ones more than ever before. GE Ventures plays the key role in building ecosystems around GE, in a symbiotic relationship with tech start-ups.

Companies and policymakers alike recognize talent and skills as the # 1 priority. Here as well the discussion went beyond the headline concern that ‘robots will take all the jobs’:

1. We can’t neglect traditional manufacturing skills. Many new jobs will be created by augmenting traditional factory-floor or field-service abilities with new digital tools. Today we are losing traditional skills, in the mistaken conviction that the future only has room for data scientists. Meanwhile a generation of experienced workers is set to retire across a range of industries, from energy to transportation to marine — and there is no pipeline to replace them. The skills gap is wide and getting wider.
2. We need more apprenticeships. We need more collaboration between industry and the school system, to co-design curricula and give students hands-on experience in the school labs and in the factories.
3. We need to leverage new technologies to accelerate learning and up-skilling: from online courses to wearable devices, the same technologies that create the challenge can give us the tools to meet it.

There is a palpable concern that ‘older’ workers are most vulnerable, whereas younger, digital-native generations will thrive. Many older workers will see their jobs transformed by digital technologies; some will see them automated away — truck drivers being one prominent example. (And with digital technologies, you can be ‘older’ already in your mid-thirties…)

Manufacturing can help bridge the age divide: Many older workers have a wealth of traditional skills that are very valuable in manufacturing. A number of truck drivers, for example, are military veterans, whose skill set goes well beyond steering a truck. With the skills gap getting worse, manufacturing companies will need to bring this talent on board.

Manufacturing companies can help demystify the new technologies and help older workers get over the initial reluctance to embrace them. Hands-on training is the best way to help workers become familiar with the new technologies and see them for what they are: a tool, not a threat.

The Future of Manufacturing is bright; but it takes vision and grit to build

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