Enabling A Future For Manufacturing

U.S. manufacturing competitiveness can lead the world, but to compete on a global basis, companies must implement strategies for reducing waste from manufacturing operations and instead, invest in highly productive technology.

Many companies have rationalized not investing in new equipment for their factories in favor of outsourcing to other countries or not manufacturing at all. This seems to occur in waves during difficult economic periods, with one result being the current trend of outsourcing to China, India or other low-cost countries.

U.S. manufacturing competitiveness can lead the world, but to compete on a global basis, companies must implement strategies for reducing waste from manufacturing operations and instead, invest in highly productive technology.

This is not to say that companies should not go to China, India or other markets. These are huge and fast-growing markets. A Caterpillar executive recently said the market in China for selected products may be more than 40 percent of world consumption in future years. It makes perfect sense to produce products in these markets to serve these markets. However, shortcomings in the decision to produce in China strictly to obtain low cost are now becoming apparent as reflected in quality problems, supply disruptions and other issues.

Whether in China or the United States, appropriate investment is required for manufacturers to be competitive. Successful manufacturing begins with innovative and functional product design that reduces the number of parts. Investment in new machine technology will not increase product competitiveness unless the product design itself is innovative and cost-efficient.

The same is true for machine tools. Continuous technology advancements have substantially reduced numbers of parts while the machines themselves are faster, more powerful and more accurate.

Even the greatest and most innovative products may not guarantee success without the right manufacturing strategies. Lean manufacturing concepts provide opportunities to improve quality, reduce waste and achieve superior factory throughput. Modular assembly systems can be applied to complex equipment, such as machine tools, to maximize efficiencies. However, truly implementing a culture of producing on demand and minimizing both in-process and finished goods inventory is best achieved in societies with advanced infrastructure such as the United States.

Global competition is tough, and we are fighting low-cost labor in countries that do not have our tough environmental standards, high litigation costs and higher health care expenses. But if product design minimizes parts required and lean strategies are in place, investment in new machine tool technology can bridge the gap, making U.S. manufacturing truly competitive. We can say this because we do it, as we make machine tools in Florence, Kentucky. It works!

Let me explain. In an actual study comparing a vertical machining center from 10 years ago with a new high-speed vertical machining center, the metal removal rate was 165 cm3/min (10.07 in3/min) on the old model versus 758 cm3/min (46.3 in3/min) or 4.2 times higher. In addition to much higher horsepower on the new model, tool changes are incredibly faster, axis travels are several times faster, machine accuracies are much improved and maintenance costs are lower as machines are highly reliable, making the overall productivity gain extremely high.

Meanwhile, prices did not rise. Where else can you look and say the same? Compare car prices today versus 10 years ago, and you’ll see machine tools are the best value you can find. Plus, machine tools generate profits.

There’s more. New five-axis models and multitasking machines offer the opportunity to entirely reorganize production flow to get the leanest strategy. Combining more operations into a single machine results in fewer machines with output exceeding current production capabilities. Combining turning and machining center operations with the five-axis capability of multitasking equipment enables the machining of complex parts in a single setup. This reduces capital and direct labor costs while allowing maximum throughput with less in-process inventory.

Yes, the multitasking machine’s price is higher, but achieving a new process improves overall productivity. Direct labor is less, job quality is higher, and successfully retaining a growing factory is a valuable addition to society versus outsourcing to other countries.

This scenario foresees more machines being integrated with gantry robots, linear pallet systems or other means of automated parts flow. With a total integrated manufacturing strategy, the percentage of direct labor to total manufacturing cost is low. If you take into consideration the costs of rising shipping charges, inefficient supply lines, import duties, potential loss of intellectual property and quality issues from reduced control of the manufacturing process, the benefits of foreign outsourcing become dubious. Meanwhile, the advantages of producing in the United States remain considerable.

With manufacturing growing again, it is no coincidence that productivity is rising much faster in manufacturing than in the service sector. Investing in new machine tool technology and automation helps offset rising health care, energy and direct labor costs. Successful manufacturing industries generate value-added service jobs in both the community and the U.S. economy.

Recognizing this necessitates an integrated strategy between government, educational institutions and industry. The government must recognize that faster methods of depreciating equipment facilitate further investment that increases manufacturing competitiveness. Manufacturers benefit only if they invest, and everyone wins if they are
successful.

Also, this strategy only works with highly skilled and well-trained technical workers. Growing our manufacturing industries requires a well-trained, skilled workforce, and ensuring that remains a challenge. Partnership among builders, their customers and educational institutions is a start, but more needs to be done.

Successful manufacturing in the United States works, but investment in the right technology is imperative. The government should recognize that laws favoring such an investment create well-paying factory employment and also generate value-added service jobs. Outsourcing to foreign countries is not the panacea many companies perceive. There is another way to compete for those who are willing to invest in technology.