Ferey Feridian's excellent column this week on the potential of automation to transform U.S. manufacturing also underscores the gap in the rate of adoption between small and large manufacturers and the "uneven rates of digitization across sectors," referenced by Feridian that we read about each week. It’s a big deal: Ensuring that small companies are tethered to productivity gains will determine whether America's industrial renaissance fulfills the promise Feridian and others envision.
Three regional industries provide three different case studies in how companies are keeping pace, or not.
The West's dynamic aerospace and aviation sector is earning plaudits not just for the eye-opening accomplishments of its compelling brands, but for manufacturing prowess that's fueling growth, much if residing in in the supply chains of SpaceX, Boeing, Lockheed, and others. Today it's evident that contract manufacturers are responding to the promise and certainty of steady work by investing in equipment, in process upgrades and in technology. Yes, OEMs are demanding lower tolerances, tighter deadlines, and better QC, but in the five short years we’ve been profiling jobs shops throughout the West, there’s been tangible productivity improvements. CompanyWeek’s Contract Manufacturing archive speaks for itself.
In Colorado and much of the West food manufacturing is the single fastest growing manufacturing industry, driven by changing consumer tastes and a preference for all things local. The industry has largely kept pace; smaller brands have managed to self-manufacture or tap a network of co-packers to contract manufacture for them. Technology is also playing a role. Digitization is manifest throughout the sector including apps that help small brands find production facilities nearby.
But that may soon change, in large part by a growing labor crisis. In California, a booming artisanal food sector is certain to pressure the state's ability to locate and house a sufficient manufacturing workforce. Across the West, a ravenous cannabis industry is siphoning off employees, even though many cannabis businesses already are reported as food businesses. And without meaningful immigration reform, labor markets throughout agriculture and food production will get much tighter before they get better for growers and manufacturers.
Automation is already at the center of any long-term solution in food manufacturing. Technology is migrating across industries into food, from advanced production lines to highly automated logistics and distribution solutions available to small brands. But the race is on and the stakes are high for U.S. manufacturing: Will growth in a modern and decentralized food production ecosystem keep pace as labor markets tighten? The worry isn't that automation will replace human labor; it's that industry won't automate fast enough to make up for an acute labor shortage.
The potential to reshore billions of dollars of product manufacturing frames the outdoor industry opportunity, and technology and automation will determine how fast U.S. brands can repatriate production. An industry long defined by cut-and-sew production is poised for a productivity renaissance.
The wait may be long. Unlike aerospace, apparel and outdoor industry OEMs are largely resigned to maintaining operations offshore and investing in technology and automation through international partners. There are outliers. Brands like Nike, Apple, Patagonia, and GE are investing in U.S. production.
But homegrown brands are the domestic manufacturing heroes in this space, and not surprisingly, companies that would benefit most from technology-fueled productivity gains. It's here that community players in economic development, in government, in trade and education must be more deliberate in incubating and accelerating the prospects for more domestic manufacturing. And for making technology and automation more accessible to promising companies.
Small steps. In Colorado, the Office of Economic Development and International Trade's Advanced Industries program today includes outdoor industry and consumer product firms in the pool of grant applicants. Cities throughout the region are fostering industry clusters to better recruit and support consumer-facing brands that make things.
Manufacturing's future is indeed bright, all the better if the sector's well-heeled brands and community stakeholders embark on a deliberate path to push technology and automation down and sideways -- to small businesses and across industries -- in a bid to sustain U.S. manufacturing.
Bart Taylor is publisher of CompanyWeek. Reach him at firstname.lastname@example.org.