Imagine custom shirts and shoes at mass production prices with same day delivery; imagine turbine parts produced at the airport where and when they are needed; imagine a new tooth made while you’re in the dentist chair.

The age of smart local manufacturing is just around the corner. Often called Industry 4.0, this new wave manufacturing incorporated connected devices (internet of things: IoT), cloud computing and machine learning. The term Industry 4.0 originated in 2011 with German government-funded research on advanced manufacturing.

Christoph Roser at AllAboutLean.com explains: The first industrial revolution was the Industrial Revolution between 1760 and 1820ish, which brought us steam power and mechanization through spinning mills. The second industrial revolution was mass production, starting around 1870, but best known for the assembly lines of Henry Ford 1913. The third industrial revolution was the introduction of computers and automation in manufacturing from 1950 onward. The fourth industrial revolution is cyber-physical systems.

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End of the Flight to Cheap Labor

“Much of the labor intensive manufacturing moved to areas of the world where cheap labor was abundant and had the raw material or the ability to bring them in and ship the product at a reasonable rate,” said Charles Speelman, Superintendent of the Tri-Rivers Career Center in Marion Ohio (below).

Jimmy Carter’s inauguration in 1977 marked the peak of U.S. manufacturing employment. Outsourcing really accelerated after Bush took office in 2001. “Everyday low prices” became a staple Wal-Mart thanks to cheap Chinese labor.

But in the last ten years, the rise of the Chinese (and Mexican and Vietnamese) middle class reduced the labor arbitrage. Third wave factories invested in automation reducing labor as a percentage of total costs. Beginning in 2010, U.S. manufacturing employment began to rise with the first hints of onshoring.

Car manufacturing is an interesting signal: while parts are made worldwide, Hondas are built in Ohio and Alabama, BMW and Mercedes are made in South Carolina, Toyotas are made in Indiana and Volkswagens are built in Tennessee.

Automation is making U.S. products more competitive compared with similar goods sourced from low-cost countries. In a 2015 BCG survey, 71% of manufacturers said advanced manufacturing technologies will improve the economics of local production, and 75% said they will continue to invest in fourth wave technology.

Speelman added, “The United States had the most efficient workforce, but labor intensive and/or our own clean air and water standards made the cost so much cheaper to outsource and ship. The U.S. is still the biggest consumer in the world by a lot. Now with all the automation and robotics the cost of this technology is the same anywhere in the world, thus labor cost is not the highest cost. As a result, manufacturers will locate to where they have abundant shipping options and a trained workforce to operate, maintain, program and install this new highly technical automation equipment. That will be a huge advantage to the US.”

By creating a statewide network of robotics and advanced manufacturing centers (see feature), Spellman is giving Ohio a leg up in the Fourth revolution.

Massive Onshoring For High-Skill Regions

Olivier Scalabre heads BCG‘s Operations Practice for Western Europe, North Africa and South America. He thinks we’re in the early innings of a fourth manufacturing revolution will promote productive local clean fabrication.

This time, robots plus software that gets smarter over time will boost industrial productivity by more than a third according to Scalabre. He sees the chance for a new wave of economic growth.

“Today in our factories, only 8 percent of the tasks are automated. It will be 25 percent in 10 years,” said Scalabre.

Robots aided by machine learning are working for us right now, “They helped Amazon prepare and ship all the products required for Cyber Monday, the annual peak of online retail,” said Scalabre, noting the $3 billion spent on electronics that day signals real economic growth.

3D printing has already improved plastic manufacturing and it’s now making its way through metal, notes Scalabre. Jet engine nozzles are made up of 20 different parts that need to be separately produced and then painstakingly assembled. Aerospace companies are now using 3D printing, which allows them to turn those 20 different parts into just one and resulting in 40 percent more productivity.

Factories will be smaller and more nimble. “Scale does not matter anymore, flexibility does,” predicts Scalabre. Many will operate on a multi-product, made-to-order basis.

We’ve told our children that manufacturing had no future but “We need to reverse that and teach manufacturing again at university,” said Scalabre.

For regions that skill up for the revolution, that will mean hundreds of small nimble high-tech manufacturing facilities with a few highly trained well-paid staff members. But only the countries that will boldly transform will be able to seize this growth.

“The technical education demands of  advanced manufacturing are going to require a new educational and training model that reflects the flexibility, on-demand requirements of the new norm,” said Andy Hepburn, GPS Education Partners. “Creating pathways that can accelerate education and training into this higher technical roles will be instrumental in building this new technical workforce.

As discussed in Smart Cities, transformation will be regional requiring thick partnerships, sustained leadership and aligned investment leading. That will enable “smart products from smart factories via smart supply chains.”

Next Steps for EdLeaders

The most direct next steps for educators include manufacturing and coding pathways:

  • Visit a RAMTEC site in Ohio and help plan a regional network of advanced manufacturing training centers.
  • Check out Idaho Ptech Network which connects the dots between education and employment in high demand, high-value careers for rural students in Idaho.  “Idaho PTECH provides employer-driven pathways to the skills and competencies for a new economy driven by certifications and credentials, rather than seat time and sheepskins,” said CEO Alan Millar. (See feature on NY Ptech.)
  • Read about GPS Education Partners in Milwaukee and plan high school programs that promote manufacturing work experience, job certificates, and college credit.
  • Use Project Lead The Way to promote hands-on STEM learning.
  • Support development of makerspace in all of your schools (see 18 part series).
  • For elementary and middle-grade students, support cool out of school maker activities from JAM, Modular Robotics, WonderWorks, LittleBits.
  • Support coding and computer science in schools (see BoardDocs example).
  • Use these career awareness resources.

Less obvious is the critical need to support deeper learning experiences to prepare young people to do what AI doesn’t do well: give a hug, solve a mystery, tell a story (NPR); to solve problems and build relationships (Brookings); and focus on adding value in novel situations. (Anthony Goldbloom on TED).

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