REPORT: The future of manufacturing is centered on routers and sensors
A new study from consulting giant McKinsey says factories are the next fertile ground for the "Internet of things." The report, called Industry 4.0: How to Navigate a Changing Industrial Landscape, also says something intuitive: Over the next 10 years, factories and manufacturing facilities will worry less about buying new equipment and more about outfitting their spaces with an array of high-tech sensors and routers.
According to McKinsey’s research, the evolution of manufacturing in the United States, Germany, and Japan will increasingly rely on a combination of in-factory sensors, increased use of analytics and data science, in-factory use of augmented reality such as Google Glass, and drastic increases in how 3-D printing is used for the mass market.
The consulting firm estimates that only 40-50 percent of equipment in factories will have to be replaced over the next decade, as large multinationals work towards the highly promoted industrial revolution known as Industry 4.0.
Hans-Werner Kaas, a senior partner at McKinsey who researches autonomous vehicles and sensors in factories, said one example of "Industry 4.0" is smart robots that turn sheet metal into auto bodies. While traditional auto manufacturing robots are programmed to pick up sheet metal and then weld it, robots in the very near future will be able to scan the surface of the metal, detect defective pieces and then reject them, saving companies money. "This requires sensor abilities in equipment," he added.
McKinsey also predicts career changes for manufacturing workers. While the current trend toward automation and reduction of standard factory floor staff will continue, Kaas added that "any skill set which truly requires handling of data and analytics" will be highly in demand for manufacturers in the next decade.
IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.