2019 marks a year of transition in manufacturing as more companies look to take advantage of advances in AI and machine learning, leading-edge product design, and new ways to connect directly with consumers.
As we look to the year ahead of us, we’ve compiled a list of our predictions for the top seven manufacturing trends – based on our experience of working with some of the world’s top manufacturing companies in aerospace, transportation, pharma, health sciences, and more.
Trend 1: Extreme Materials and Manufacturing Methods
Why Rare Earth Materials May One Day Be Supplemented with Rare Moon Materials
Auto and truck makers switching over to the production of electric vehicles are facing a problem.
The Chinese government’s decision to create an aggressive “cap and trade” system to encourage more electric vehicles sales is having a ripple effect around the world as manufacturers struggle to find sufficient quantities of “rare earth” raw materials needed to ramp up high-power electric motors and batteries production.
Given that China itself is a major producer of rare earth metals, the situation is causing significant unease for American and European manufacturers who are dependent on imported materials. And recent American tariffs have once again stoked fears that China may retaliate by threatening to withhold these raw materials from the world market.
Manufacturers are also scrambling to find supplies of another rare metal, cobalt, which is used as a chemical catalyst in lithium-ion batteries (Elon Musk called cobalt the ‘salt’ in the battery chemistry ‘salad’). Much of the world’s active cobalt mining takes place in the politically unstable Democratic Republic of Congo (DRC) and, since 2016, the rising cost of cobalt has bumped up the price of electric cars by an average of $1,000. In response, material scientists are working day and night to identify substitutes. For example, Tesla Motor engineers have reportedly reduced the amount of cobalt used in their batteries by half, giving them a cost advantage over other EV makers.
Why not find new sources of rare earth elements and other precious metals? Well, it turns out that the cost of creating new precious metal mines from scratch is so expensive that researchers are investigating whether space mining (and manufacturing) are viable long-term alternatives.
The Center for the Advancement of Science in Space (CASIS) is hoping to demonstrate that high-quality optic fiber cables can be produced in space.
Will We See Rare Earth Elements Supplemented with Rare Moon Elements?
It’s theoretically possible. A recent Goldman Sachs report estimates that large quantities of platinum, for example, could be commercially recovered from the moon’s surface with an investment of “only” $2.6 billion. While that number looms large, in Goldman’s view, it’s in line with the valuation of other tech ventures, such as Uber.
Yet despite this, there have been setbacks for the nascent space mining industry. Two of the early pioneering startup companies, Planetary Resources and Deep Space Industries, have recently fallen into what may turn out to be fatal financial difficulties. But with the Chinese recently landing on the far side of the moon, we feel that space mining will be back in the news in 2019.
Trend 2: Intelligent Automation in Manufacturing
2019 will bring two of the biggest manufacturing trends together: robotics and AI/machine learning.
A survey at the EmTech Digital Conference, produced by MIT Technology Review Insights, found that business leaders wanted to use AI to achieve these top four enterprise goals:
- Improve and/or develop new products/services
- Achieve cost efficiencies and/or streamline business operations
- Accelerate decision-making
- Expand the scope of what can be automated (intelligent automation)
Meanwhile, major investments in robot automation are on the upswing: IDC analysts predict that the market will grow to $120 billion in 2019, a year on year increase of 18%.
The IFR (International Federation of Robotics) confirms this rapid growth: their World Robotics Report indicates that over 380,000 units were shipped globally in 2017 – an increase of 30 percent compared to the previous year.
According to IFR president Junji Tsuda, “Robots evolve with many cutting-edge technologies. They are vision recognition, skill learning, failure prediction utilizing AI, a new concept of man-machine collaboration plus easy programming and so on. They will help improve the productivity of manufacturing and expand the field of robot application. The IFR outlook shows that in 2021, the annual number of robots supplied to factories around the world will reach about 630,000 units.”
What do experts think is needed to deliver the promise of intelligent automation to the factory floor?
Some believe that we need to learn from past mistakes, such as implementing automation for automation’s sake — a charge that was leveled against Elon Musk as his Tesla Motors production line struggled to produce its new Model 3 in high volumes (and was only resolved by building a human-powered production line housed in a giant tent outside the factory).
Instead, the answer may lie in created connected robots that have more flexible work capabilities. What do we mean by that?
First, robots will be more useful to us when they can fit seamlessly into a manufacturing company’s enterprise systems — working side-by-side with workers — a notion known as co-bots.
Second, production managers, planners, and operations teams need to be able to get a bird’s eye view of how the robots in the factory are being utilized — and, crucially, provide easy to use tools to be able to change their work tasks as needed without downtime, e.g. calling in specialists to reprogram them individually.
Third, robots need to adapt as easily as human workers can to work on one set of manufacturing tasks then switch to a different, unrelated task as the demands of production change throughout the week.
Fourth, the value of robots will really come into its own when they begin to connect seamlessly with enterprise AI/machine learning systems; first to collect data from operations, then later to act on the insights derived from big data analysis.
Trend 3: Managing a Changing Workforce in Manufacturing
As we’ve written before, manufacturers are facing a generation shift in their workforce.
As Baby Boomers retire, many manufacturing companies are struggling to attract younger Millennial and Generation Z workers. (Read our report on how to make your manufacturing facility more attractive to the next generation of workers.)
Manufacturers are also facing a looming digital skills gap. Many older workers need additional training to be able to operate sophisticated factory equipment, from CNC machines to 3D printers, to robotics systems, and as a result, may choose to retire rather than learn new skills.
Many younger workers (being ‘Digital Natives’) have the necessary digital skills that manufacturing companies are looking for, but they may not be choosing an education in STEM, e.g. science, technology, engineering, and mathematics.
One solution to this STEM skills shortage is to create Makerspaces at high schools, colleges, and libraries as part of the STEM curriculum. Makerspaces create opportunities for students (and adults) to learn how to build projects with their own two hands which, in turn, makes them a good recruiting ground for manufacturing companies to find new employees. See our report on how to create an effective Makerspaces at your facility.
Given the difficulty of finding younger workers, some manufacturers are also looking for ways to keep older workers on the job as long as possible. One example is Porsche, the German sports car manufacturer, who has made major investments in ergonomic tools to help prevent injuries on the job. While the effort may have been targeted at older workers initially, the resulting improvements offer benefits to workers of all ages.
Good ergonomics is good business at Porsche. Careful study of the production process has led the company to introduce new methods for assembling cars and SUVs that avoid unnecessary stress and strain for the assembly line workers.
Trend 4: Reshoring Manufacturing to American Factories
It’s been a turbulent year for manufacturing companies. Recent tariffs on aluminum and steel imports have caused many companies, including many famous names in the furniture industry, to scramble to find new sources of materials.
Fortunately, for us here at Formaspace, we have always made all our furniture here at our Austin, Texas factory — using steel and other raw materials also made here in the USA — so we haven’t had to find new suppliers. However, we too have been affected by the changing costs of raw materials as a result of these tariffs.
Of course, tariffs are not the only economic headwind facing manufacturers: so too is the UK’s impending exit from the EU, currently planned for March 29, 2019; the so-called “Brexit” has the potential to disrupt international supply-chains, particularly among those companies across the pond.
Meanwhile, we are seeing increased signs that companies are ‘reshoring’ their operations back to the USA.
A recent example is Apple, which is building a new campus here in Austin, Texas (a few miles from the Formaspace factory HQ) for engineering, R&D, operations, finance, sales, and customer support. The 133-acre campus will initially accommodate 5,000 additional employees, with the capacity to grow to 15,000, which would make Apple the largest private employer in Austin. (At 6,200 people, Austin already represents the largest population of Apple employees outside of Cupertino.)
Meanwhile, Taiwanese-owned Foxconn Technology Group is building a $10 billion plant in Wisconsin in exchange for nearly $4 billion in state and local incentives. It’s hoped that the company, famous for its manufacture of iPhones in China, will eventually hire upwards of 13,000 workers.
However, according to the Wall Street Journal, the new factory, which will produce LCD panels, missed its target of hiring 278 full-time workers in 2018, so it will forgo its first year of tax incentives. Slowing sales of Apple products in China, as well as a low unemployment rate in Wisconsin, are said to be two of the reasons for the slower than expected ramp-up in employment at the facility.
Trend 5: Doubling Down on Efficient Manufacturing Processes
The era of Henry Ford and his Model T is long gone: today’s consumers would never accept his view that “you can have a Model T in any color you want, as long as it’s black.”
Today’s customers demand more variety in product offerings than ever before, which poses an extreme challenge, not only for product designers and marketers to come up with exciting new concepts, but also places a heavy burden on operations teams, supply chains, and factory floor managers struggling to cope with exponentially expanding complexity that comes from offering a seemingly infinite number of options for the consumer. Yet, if managed correctly, short-run products sold with a “long tail” can be very profitable.
How can manufacturers cope with increasing complexity?
The first principle is to not let complexity overwhelm your factory floor. It’s critical to keep manufacturing operations clean and organized. Formaspace can help. We offer Rapid Plant Assessments where we come to your facility and help determine ways that you can improve your production with streamlined layouts and improved material handling processes.
The second principle is to design away complexity. Look at the core components of your products and see if a complex manufacturing issue could be solved by switching production over to a new material. Or use AI-based design to create structures optimized by machine learning.
The third principle is to look at production components that involved multiple teams — are the solutions optimized across the organization? Or are some designs suboptimal because one group designed their part of the solution without effectively working with another team on their part of the problem?
Tesla’s “Superbottle” is a masterstroke of engineering that is the envy of the automotive industry: it combines all the vehicle’s cooling requirements into one single tank, eliminating the need to manufacture and install multiple cooling systems in each vehicle.
Our fourth principle is connecting your operations and manufacturing processes with your company’s existing IT infrastructure. Without smooth production systems in place, the entire manufacturing arm of your company could grind to a halt trying to keep up with today’s consumer demand for customization.
Trend 6: Critical Role of Design in Creating Demand
Creating desirable, differentiated products will be a major challenge for manufacturers in 2019.
There is increasing consensus that cost-cutting alone does not bring long term success; instead, companies are increasingly discovering that the route to achieving the kind of long-lasting, profitable relationships with customers is by creating compellingly designed products.*
*Even analyst McKinsey has recently opened a new Design consultant practice.
This is particularly true in hyper-ware, social media-driven consumer markets, where consumers dissect every move by leading companies, such as leading industrial design-oriented companies, such as Apple or Nike.
Yet even these renowned companies need to create new product concepts to keep their sales momentum going, such as Apple’s rumored folding screen iPhones, or Nike shoes with self-tying laces.
Fortunately for today’s product designers, the tools that are available to create designs are more powerful than ever, from sophisticated 3D modeling software to additive manufacturing (3D printer) that can create realistic, working prototypes. Augmented Reality (AR) and Virtual Reality (VR) tools also help accelerate the design and prototyping cycles, providing designers, customers, and executive decision-makers with the type of realistic feedback needed to greenlight a new product with confidence.
In the furniture market, this includes Formaspace, which has led the market with its innovative 3D Configure tool that allows users to design their own customizations to our workbenches, tables, and desks, using a free, easy-to-use, browser-based tool. Why not check it out for yourself?
Of course, these same affordable design tools are increasingly available to consumers as well, which has led to a raft of home-grown product designs and “mods” (e.g. customization of commercial products). Savvy manufacturers have not seen these efforts as a threat, rather as an opportunity to satisfy (if not learn from) their most ardent fans. As a result, managing “crowdsourcing” of ideas is now rising to the top as one of the most powerful tools in a manufacturing company’s arsenal.
Trend 7: Role of Manufacturers in a Product as a Service World
Our final manufacturing trend for 2019 is the changing role of manufacturing product offerings and sales channels.
Until recently, most traditional manufacturing companies have relied on an indirect B2B sales model, selling to wholesale distributors or retailers who, in turn, managed the relationships with end-user customers.
However, thanks to the pervasive power of the Internet, managers, and entrepreneurs all over the world have been scouring every possible business model to transform traditional product sales into a “services model” aimed at end-user consumers.
Want to ride a bicycle or a scooter around town? Today’s consumers have more options than just heading to their local bike shop and making a purchase. Instead, more and more cities offer bike and scooter rental services, which treat the product (bikes and scooters) as a service (payable by the hour, via your credit card).
Of course, this is bad news for bicycle shops, but it can be a lucrative business model for business, e.g. selling (or renting) services directly to the consumer (B2C).
How far can this trend go? Well in many cases, it’s happening under our noses. As Apple’s iPhone sales have slowed down (presumably due to market saturation), the company is doubling down on selling software and content services, including music and TV subscriptions.
And a fight has emerged in California, as traditional car retailers are up in arms at Volvo car’s announcement that it intends to offer Volvo cars to consumers on a subscription basis, joining Tesla, which already sells its vehicles directly to consumers.
Of course, it’s not just manufacturers who are offering their products directly to consumers, sales companies, such as Amazon, are also getting into the act — by sourcing their own products to sell to consumers under their own brands.
Make Formaspace Part of Your 2019 Manufacturing Plans
2019 is going to be a banner year for manufacturing.
We want to be part of your plans for the New Year.
Formaspace has extensive experience providing custom industrial furniture solutions for aerospace, transportation, pharma/health science, and electronics manufacturing markets.
Did you know that three out of four of Formaspace’s customers are listed on the Fortune 500?
If you can imagine it, we can build it, here at our Formaspace factory headquarters in Austin, Texas.
Why not contact your Formaspace Design Consultant today to find out how we can help make your operations more efficient and profitable?
