What Donald Trump could mean for US manufacturing
Throughout Donald Trump’s campaign he’s talked about how he wants to revive manufacturing in the USA and create plenty of jobs within the industry. Those plans have been met with a mixed reception from manufacturers around the world.
President-elect Trump has promised to spend $1 trillion on infrastructure projects, a move that has been applauded by Caterpillar Inc., its Vice President for Global and Corporate Affairs agreeing that a lot needs to be on to improve infrastructure in the country. This is no doubt going to create jobs in manufacturing, construction and beyond.
While many manufacturers are eager to take on new contracts and employ more people, Trump’s plans have been criticised by some. The campaign rhetoric was to bring all manufacturing back to the USA and revamp existing overseas trade deals. This could have repercussions for any manufacturers that rely on exporting their goods.
The idea is that limiting trade will make companies look within the US for products and supplies they would normally import from elsewhere. It’ll also encourage people to buy products made closer to home by limiting exports.
The auto industry
Car manufacturers could be hit hard by Trump’s plan to scrap the North American Free Trade Agreement as many rely on exporting to Mexico. If trade deals are pulled and restrictions imposed on manufacturers, this could hit the auto industry hard as it comes at a time when growth in US car sales has stalled.
Another impact of scrapping the North American Free Trade Agreement is the effect it could have on Canada’s auto industry as it, and many other sectors, rely on US sales.
Many US companies also have factories in Mexico and use the cheap labour and manufacturing costs to keep prices down for the end user.
While Trump’s plans will undoubtedly make more jobs in the USA by taking them away from Mexico and other countries, consumers will pay for this US workforce in higher product prices. Charles Chesbrough, senior economist and Executive Director of Strategy and Research at the Original Equipment Suppliers Association, a Detroit-based trade group representing auto suppliers commented on Trump’s plans to Fortune magazine: “His trade policies could add $5,000 or more to the price of a small car from Mexico.”
Bad news for green energy
The plans coming out of Trump’s campaign could also have repercussions for manufacturers involved in green energy and transport. He wants to scrap subsidies for electric car manufacturers and renewable energy providers and wants to relax environmental regulations that could see fossil fuel companies benefit hugely.
Trump’s America First Energy Plan pledges to “unleash an energy revolution that will bring vast new wealth to our country”. America may already have undergone a shale revolution but Trump wants to go further, accessing “$50 trillion in untapped shale, oil and natural gas reserves, plus hundreds of years in clean coal reserves”.
Relaxing these regulations will allow more traditional energy companies to expand what they’re doing, creating jobs in the process. Trump is confident that within a few years, the US could overtake Saudi Arabia as one of the biggest oil producers in the world.
Already energy suppliers and the manufacturers of large pipeline projects are seeing the value of their shares rise.
It seems that most manufacturers are eager to work with the Trump administration on its plans to reduce tax, boost infrastructure spending and ease regulations but these same manufacturers are worried Trump’s views on trade will limit any benefits that come from other plans. Those who rely on free trade for their imports and exports are the most at risk.
5 Minutes With PwC on AI and Big Data in Manufacturing
Please could you define what artificial intelligence is, and what Big Data is?
AI is the ability of a machine to perceive its environment and perform tasks that normally require human intelligence, and it’s a whole field of different technologies, techniques and applications.
Big data is a set of tools and capabilities for working with, for processing, extremely large sets of data.
How does AI and Big Data work together?
Big data is just one of the enablers of AI, though as we see increasing volumes of data, it’s one of the most important
How can this be applied to a manufacturing setting?
Broadly speaking, there are many benefits of AI, and the use of data, which include reducing costs, minimising human error, and increasing productivity and efficiency. The important thing to consider is any setting - for the use of any technology - is what is the problem you are trying to solve? Be it merely automating repetitive tasks or to reinventing the nature of work in factories by having humans and machines collaborate in order to make better and faster decisions.
Why should manufacturers use AI and Big Data when adopting smart manufacturing capabilities, what is the value for manufacturers?
One view is, again, the economic benefits of AI, which come in manufacturing as a result of:
1. Productivity gains from automating processes and augmenting the work of existing labour forces with various applications of AI technologies.
2. Increased consumer demand due to the increased ability to personalise and tailor manufactured products, along with higher-quality digital and AI-enhanced products and services.
Manufacturing (and construction industries) are by nature capital intensive, and in our 2018 report, “The potential impact of AI in the Middle East,” we estimated that the adoption of AI applications could increase the sectors’ contribution to GDP gains by more than 12.4% by 2030.
How can AI and Big Data help manufacturers to evolve in the Industry 4.0 revolution? What about those already looking at Industry 5.0?
It’s really about the investment you make now, in order to futureproof your business.
We typically see two broad strategies or approaches to the adoption of AI. There are things that we can do immediately, without any recourse to Big Data - which is to adopt technologies we describe as Sensing, those involving computer vision, for example. There are plenty of use cases where these can be used immediately in manufacturing, such as for automatic fault detection. However, there is a longer term play which requires investing in data - getting the right collection mechanisms in place, storage, data governance, Big Data capabilities etc - in order to develop increasingly valuable machine learning driven AI use cases. This is absolutely necessary for long term adoption success.
What is the best strategy for organisations looking to realise the value of AI and Big Data in manufacturing?
AI and Big Data are only one part of a successful smart factory. The organisations that lead on AI adoption are those who have already made the most progress in digitising core business processes. In order get ahead in using AI solutions at scale, there are a number of technology investments and organisational decisions to be made, including:
1. Digitising processes ultimately leads to improved ability to generate data, and in the manufacturing setting - with many 100s of sensors generating 1000s of measurements in real time, the result is Big Data. Data is key to building AI so reliable and accurate data acquisition, management and governance are key. The production line and factories play a critical and direct role in the data-acquisition process.
2. AI strategy, both long and short term, begins with the use cases, the business applications. Manufacturers need to ask where they want to use AI and gather these use cases together and prioritising projects based on a balance of expected impact and complexity of implementation.
Of course, in addition to technology and business processes, people are at the heart of any successful technology adoption. AI teams need to be composed not only of data scientists, also data engineers and solution architects to enable their work, data stewards to ensure accuracy, and increasingly so call “Analytics/AI translators” who are able to communicate with business leaders and technology experts. Culture is also key, and manufacturers need to enable a data and AI-driven culture, building trust in data and algorithms by educating their workforce about AI and its capabilities, how best to extract value. It’s not just the positive of course, but also the risks and limitations, as these when encountered without expectations having been set, can significantly impact willingness to invest.
What are the challenges when it comes to adopting AI and Big Data in manufacturing?
has shown that one of the major challenges to implementing AI is uncertainty around return on investment (ROI). As I said, there is significant investment required for a long term data and AI strategy to be successful, and expectations around the time to see tangible returns must be set realistically.
Many companies also struggle with the data side: collecting and supplying the data that an AI system needs to operate, and ensuring that it is accurate. Again, this speaks to the bigger investments required in digitisation.
Some of the main challenges for manufacturing companies with implementing AI at a scale from our research include:
- 40% → Technologies not mature
- 40% → Workforce lacks skills to implement and manage AI
- 36% → Uncertain of return on investment
- 33% → Data is not mature yet
- 32% → lack of transparency and trust
- 24% → Work councils and labour unions
- 22% → Regulatory hurdles in home & important markets
One element highlighted here, particularly around lack of trust, and labour unions, is that AI is typically misrepresented in the media as “replacing” workers, and taking jobs. Yes, there are efficiency gains to be made from automation, as there have been since the first industrial revolution. But we believe that Data and AI are at their most valuable when they are used to augment workers, enhancing their abilities and the products being manufactured.
Another challenge we’re starting to see emerge is cyberattacks increasingly targeting interconnected equipment and machinery in smart factories. PwC recently hosted a webcast, in cooperation with the National Association of Manufacturers in the US and Microsoft to discuss this.
What are the current trends in AI and Big Data in manufacturing?
- We see companies putting slightly more focus on adding AI solutions to core production processes such as the engineering, and assembly and quality testing
- Safety is of significant importance, with techniques adopted in protocol adherence capabilities (for example maintaining safe distance from specific machinery) being adopted in more every day scenarios for COVID-19 protocol adherence
- There is considerable interest in predictive maintenance for large machinery involved in manufacturing processes, and also supply-chain optimisation
What do you see happening in the AI and Big Data industry in manufacturing in the next 12-18 months?
Honestly, I think we’ll see a continuance of where we’ve already been going for the last 12- 18 months. AI and data are already being used in manufacturing but this use doesn’t get as much attention in the media as, say, healthcare, but the success stories are there, and they will continue as operations continue their digital journeys.