Will 2015 be a landmark year for manufacturers? John Zegers, director of the Georgia Center of Innovation for Manufacturing—one of the world’s top technology incubators—believes it will be. He outlined his top manufacturing predictions in a recent MFRTech article.
As Zegers reminds us, manufacturers focus on these key areas when making operational decisions:
- Transportation and energy costs
- Market demand for their products
- Rising labor costs in China and other developing nations
- Access to talent, tax, and regulatory policies
- Availability of capital
- Currency trends
The convergence of several activities is driving change in these areas.
Natural gas availability and price drives American reshoring
Domestic manufacturing is expected to receive a big boost this year due to the abundance of natural gas in the U.S. and its falling prices.
The mining of natural shale gas is positively impacting American manufacturers. According to Zeger, PricewaterhouseCoopers estimates that “high shale gas recovery and low prices could add one million U.S. manufacturing jobs and reduce natural gas coasts by up to $11.6 billion annually through 2015.” He further illustrates this growth by stating that one steel manufacturer has already invested more than $100 million in a Midwestern plant, which will help meet demand for tubes and pipes used in shale gas extraction. Back in Texas where System ID Barcode Solutions is headquartered, Dow Chemical is also building a large ethylene production plant in Freeport.
The renewed interest in U.S. natural gas is lowering prices at the pump, which is driving big changes for domestic manufacturers. Heavier goods cost more to ship and those costs continue to climb with every mile between factories and destinations. Shorter supply chains deliver significant savings, which is one of the main reasons manufacturers are moving back home. It’s simply cheaper to build products where they are sold—which is why companies with heavy foreign demand won’t be reshoring anytime soon.
Domestic manufacturing gains traction
With the return of manufacturers, Zeger expects a 4 to 5 percent increase in domestic manufacturing growth. He backs this prediction with the November 2014 National Purchasing Managers Index, which was 58.7.
Although U.S. manufacturing is on the rise, employment won’t enjoy the same rate of growth due to advancements in technology solutions that proactively manage big data. In fact, the 2014-2015 CSC Global Survey found that 81 percent of manufacturers believe advancements in big data solutions will significantly improve productivity and efficiency, thereby minimizing the need for extraneous employees.
IIoT redefines the manufacturing landscape
Indeed, big data and the Industrial Internet of Things (IIoT) are driving big changes this decade, starting in 2015. A November 2014 Forbes article backs up this claim: “The IIoT will take a major step forward next year. IIoT will no longer be an intriguing, over-the-horizon concept. It is evolving rapidly into new and tangible ways to connect disparate types of electronics equipment, devices, services, and software than have ever been connected before, delivering unprecedented benefits, opening new markets, changing how people live and work.”
Technologies that instantly capture and analyze data via embedded sensors will pave the way for mobility manufacturing by seamlessly connecting factories. As a result, managers will be able to make quick, educated decisions that benefit the entire supply chain. They will also significantly improve customer service.
Integrated connectivity won’t reside exclusively in large corporations. Zeger believes that smaller companies must also invest in software solutions to stay afloat in the newly connected world.
Use of predictive maintenance technology climbs, as do investments in capital equipment
Predictive maintenance software is a critical component to manufacturers’ continued success. Why?
This technology helps eliminate catastrophic breakdowns and unnecessary maintenance expenses by alerting companies before equipment fails. This becomes more important with the widespread adoption of IIoT and connected intelligence.
Zegers cites certain companies that are already breaking ground in predictive maintenance. Examples include Dahlonega and Polymer Aging Concepts, which produce sensors that predict when to replace the insulation in motors and generators, along with the Jeneer Group, which offers a down well sensor system that signals pump conditions for cycles in landfills. Because these companies are serving rapidly growing markets, Zeger reveals that manufacturers are lining up to do business with them.
Fueling the drive for competitive advantage are investments in capital equipment and software.
The Institute of Supply Management (ISM) predicts that capital expenditures in the manufacturing sector will rise by 3.7 percent in 2015. This is good news for the U.S. economy. It’s also great for 15 different manufacturing industries that the ISM says will increase revenues this year.
This momentum will contribute to a boom in manufacturing. In fact, Zegers expects the industry to grow at a higher rate than the GDP for the first time in several years.
In 2015, manufacturers will rely on recommendations of business process automation technology leaders like System ID when replacing inefficient legacy equipment and software, securing wireless networks, and strengthening their infrastructures.
System ID is poised to help all manufacturers by staying abreast of advancements through premier partnerships with technology giants like Zebra, Motorola Solutions, and Datalogic. That’s why when new software systems and mobile computing solutions hit the market, System ID will be the first to explain how these products will best benefit companies.
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