Is North America on the cusp of a manufacturing renaissance? Is one already underway?
Those questions are being studied and reported on by consulting groups and universities. The answers, however, have been a mixed bag.
In a sobering view, the MIT Taskforce on Innovation and Production reports that the output of U.S. high tech manufacturing, while still the largest in the world, “declined from 34% in 1998 to 28% in 2010 as other countries made big strides ahead into this market segment.” More starkly, MIT points out that “invented in the USA no longer means made in the USA,” and our best and brightest create their products here but manufacture them elsewhere. While business and government are working to encourage an industrialization makeover, some initiatives are “so new that we cannot know if any one of them will ultimately work or not.”
At the same time, the Boston Consulting Group is optimistic—perhaps even giddy—about our manufacturing future. In a report released last August, BCG contends that “the United States is steadily becoming one of the lowest-cost countries for manufacturing in the developed world.” The big drivers include a new, lower cost of labor, productivity gains, low cost energy and lower shipping costs on important trade routes. Other surveys have found that as many as one-third of American companies are considering the move of some production back to the United States.
If manufacturing comes back—or, is already coming back—materials handling automation will play a role. In part, that’s because the costs of manufacturing in the United States are still higher than low cost countries like China, according to Harry Moser, the founder of the Reshoring Initiative. In some instances, however, that gap can be narrowed with automation. “A 30% difference might be too large to overcome,” says Moser. “But if there’s only a 5% difference, maybe you can bring in automation to bridge that gap.”
That’s already happening in some industries. As The New York Times reported last September, the textile industry is competitive again “because machines have replaced humans at almost every point in the production process.” Similar trends are underway with materials handling automation in the plant.
For this Big Picture article, Modern talked to six systems integrators with a manufacturing heritage to see how the manufacturing comeback looks from their vantage point.
Dematic: Working smarter and more productively
To some systems integrators, the resurgence of manufacturing appears to be a strategic resurgence. “Our customers are asking where it makes sense to manufacture domestically,” says Mike Kotecki, senior vice president at Dematic. Automation, he adds, is definitely a part of that conversation.
The interest is being driven by several trends. One is labor avoidance. In the past, manufacturers were comfortable using labor until an operation reached a choke point. Now, manufacturers are following the lead of retail distributors and looking at automation as a way to avoid bringing back people who were let go prior to the financial crisis.
A second trend is the ability to use software and semi-automation to complement the existing workforce. “There’s an interest in voice- and light-directed solutions that are driven by software to increase the productivity of the precious labor they have on the floor,” Kotecki says. “We have people pushing voice-activated carts to pick parts and components on the line.”
Adding software and technology to the process brings a new level of quality assurance, especially when a bill of materials can change on the fly. “Software allows you to drive quality into the manufacturing process because you’re tracking everything that’s picked and assembled,” he says.
Similarly, automated materials handling technologies, such as automatic guided vehicles (AGVs) and automated storage solutions, are being applied to a sophisticated manufacturing processes. “We’re installing a shuttle system at a manufacturer that makes sophisticated tooling for the oil business,” Kotecki says. “The final product has a high value and precise sequencing is important to the process. The shuttle is repeatable and trackable.”
Intelligrated: Materials handling robots are coming
Labor is driving many of the decisions around automation in manufacturing today, even if the issue isn’t necessarily, or solely, the cost of labor. “There’s no question that our manufacturing customers want to get greater output of their production lines with the same amount of labor,” says Earl Wohlrab, product manager of robotic integration and palletizing for Intelligrated. “At the same time, skilled workers are retiring and these manufacturers realize they will soon have a labor issue.”
Regulatory changes also drive automation. “We saw a fairly healthy surge in projects in California when the state lowered the amount of weight that a person can lift,” Wohlrab says. “Instead of assigning two people to a task, automation became a viable option.”
Labor issues have coincided with a market that requires new approaches to the plant floor. For instance, packaging changes more frequently and with more variations than ever. A beverage manufacturer, for example, may be dealing with six packs, 12 packs, 24 packs and specialty packs, like a five pack. It may have to deal with corrugated cartons, plastic bottles, or some other material and type.
What’s more, a supplier may now be required to produce some packages in limited quantities that will only be used for display purposes and have to be handled differently from the rest of the line. “They’re being forced to bring something new and unique into the operation,” says Wohlrab. “Robots are versatile and flexible enough to handle those variations. And, if a customer has some idea of what might be coming at them in the future, we can include that into the design today so that they’re ready tomorrow.”
JBT Automated Systems: Taking AGVs deeper into operations
Automated materials handling has been found on some production lines for decades. For instance, AGVs have long been used by automotive manufacturers to deliver parts to the line. Today, the interest in materials handling automation is extending to more general manufacturing applications, according to Mark Longacre, marketing manager for JBT Automated Systems. “There are some big AGV projects going on in automotive, but not at the level of pre-2009,” Longacre says. “The uptick is coming from new industries.”
More importantly, says Longacre, manufacturers are moving automation deeper into their processes. Instead of limiting AGVs to delivering parts and components to the line or moving work-in-process along the assembly line, manufacturers are adding to their fleets for more routine tasks. For instance, one of JBT’s customers is adding to its fleet of AGVs to move labels, empty pallets and packaging materials. Those were previously moved by a lift truck. “These support movements represent a new and different market for AGVs,” Longacre says.
Longacre hears several themes from potential customers who are looking at automation in a big way. One is that they are modernizing their plants as they reconfigure them. “We just met with someone whose plant was hit by Superstorm Sandy,” says Longacre. “They don’t want to just get back to where they were. They want to take their materials handling systems a step further.”
Another is a move to eliminate labor from non-value-added processes. Moving empty pallets in a tissue plant, for instance, adds no value to the product.
“End users talk about creating a fork-free environment, but what they’re really doing is removing labor from processes,” Longacre says. “Now that a lot of the business rules reside on the AGV and it can communicate directly with a warehouse control or management system, it has become a much more dynamic system that can handle those tasks.”
Motorola Solutions: Doing more with less
Big Data and analytics are the most important driving forces in the implementation of new mobile computing and data capture projects today, according to Jim Hilton, the global lead for the manufacturing practice at Motorola Solutions.
“Regardless of the industry, we are seeing more RFPs than we have in several years,” says Hilton. “Their No. 1 priority is big data and analytics. To do that, you have to capture information at the place of work and make a decision at the place of work. That’s mobility.” Big Data, he adds, is a reason manufacturers are taking a second look at RFID.
If Big Data is the No. 1 priority, the No. 2 priority is enhancing the productivity of the existing plant and warehouse. “People are not expanding their manufacturing capacity because there’s a lower cost of domestic labor,” says Hilton. “Instead, customers tell us they have to do more with less. They aren’t hiring and the labor they have is reduced in size and is aging.”
At the same time, Hilton says, research has found that 54% of U.S. manufacturers don’t have a unified view of their plant floor information, leading to a lack of visibility and control. Only 15% of business decision-makers believe they have a seamless solution for wireless in their plants.
“A significant percentage of unplanned downtime is caused by inventory and material shortages, and those are issues of visibility,” says Hilton. “Before you can get more yield out of an existing line, you have to reduce those unplanned downtimes. That’s how materials handling and data collection fits into the picture.”
Muratec: Heavy materials handling
Whether or not manufacturing is returning to North America from overseas may be up for debate. However, manufacturers in heavy industries that can’t easily be outsourced, such as automotive, aircraft and heavy equipment, are expanding their existing domestic capacity, says Tom Meyers, manager of marketing and business development for Muratec. “Our customers aren’t building new plants,” says Meyers. “They are expanding their capabilities within existing facilities. And, they’re doing it with their existing workforce. They don’t want to add to their payrolls.”
One approach is to utilize automated storage—both pallet load and case and tote handling systems—to create dense storage for work-in-process in a conventional height building. “They’re not adding on to the building to erect a 60-foot automated storage and retrieval system (AS/RS),” says Meyers. “Instead, they’re installing one- and two-aisle systems throughout a conventional height building.”
The ROI for the systems, he adds, comes from cost avoidance: The manufacturer can avoid adding to payrolls, especially over two- and three-shift operations, and they can avoid building a new building. “Right now, we have projects underway in both the machine tool and electronics industries,” Meyers said. “One is putting in an AS/RS and another is putting in a mini-load. In both instances, they’re focused on work-in-process.”
Swisslog: Finding value, enabling processes
Bill Leber, director of business development and marketing at Swisslog, echoes seeing the increase in the number of manufacturers interested in automated materials handling systems. And while distributors are now embracing automation, Leber says manufacturers are much more accepting than distributors. “People who are running manual warehouses are leery of automation because they don’t have the skills to maintain it,” Leber says. “When you talk to manufacturers, our systems are pretty simple compared to a distribution center.”
And, companies are more willing to invest in manufacturing automation than in distribution systems because manufacturing drives the revenue line. “Manufacturing is mission critical,” says Leber. And in a mission-critical setting, automation can enable money-saving strategies, such as postponement. “Automated storage allows a manufacturer to buffer inventory in an almost-completed state rather than the final SKU,” says Leber. “And, they can reduce the number of setups because they’re holding inventory in that intermediate state.”
The last trend Leber observes is that manufacturers are re-engineering processes to manufacture more efficiently. “They’re taking a more holistic view of their processes and asking if there are different ways of doing it, and different paths they can take,” he says. “Materials handling automation is playing a role in that.”
Companies mentioned in this article
Dematic: dematic.com
Intelligrated: intelligrated.com
JBT Automated Systems: jbtc-agv.com
Motorola Solutions: motorolasolutions.com
Muratec: muratec-usa.com
Swisslog: swisslog.com
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