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george.leopold
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re: Panel defines strategy for U.S. advanced manufacturing
george.leopold   7/19/2012 5:19:17 PM
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More analysis on the manufacturing report from EMS expert Rahul Razdan: On the manufacturing report, it is a large high level report, and I think heads in the right direction. However, the high level dynamics seem pretty straightforward...that is: 1. For the US to be competitive in manufacturing, the items manufactured need to have minimal dependence on labor costs. In all the situations, where labor costs are significant, other locals will have a significant cost advantage. 2. To enable the minimal dependence on labor, one needs to add automation. For a highly automated process, the US can be quite competitive because it also has the advantage of a large local market. 3. Another driver in this picture is the ability for late-stage customization. That is, the later one can commit to manufacturing the more ability there is for efficiency, minimization of market risk, and inventory exposure. Example: soda-water. If one looks at the above dynamics, it would seem that a focus on 1. Research around automation and late stage customization 2. Talent sourcing for the far fewer (but highly paid) people to develop/deploy/maintain these processes 3. Capital Availability to fund the investment for research and plants My sense is that the report is saying the above, but at a very high level without specifics. As an aside, with success, the above will drive more manufacturing capacity/capability, but it is not clear to me it will have a meaningful impact on employment. It would seem that services would still be the driver around employment.

junko.yoshida
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re: Panel defines strategy for U.S. advanced manufacturing
junko.yoshida   7/19/2012 6:23:35 PM
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Good summary in your comment above. One thing I am still not clear on is the number 3. What do you mean by "the later one can commit to manufacturing the more ability there is for efficiency, minimization of market risk, and inventory exposure"? Do you mean...if a company A -- which is in the business of selling soda --gets involved in manufacturing at later in the process, the company can make the last-minute changes in the soda color, flavor, etc. that may reflect better the new trend and preferences seen in the market? That may be so, but that doesn't seem to apply well for the electronics products. But when I come to think of it, Steve Jobs demanded the last minute change on the iPhone screen from plastic to a glass screen... so, even though Apple wasn't directly involved in manufacturing, it had enough clout to force Foxconn to make that change.

DMcCunney
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re: Panel defines strategy for U.S. advanced manufacturing
DMcCunney   7/19/2012 9:24:32 PM
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@Junko: "Steve Jobs demanded the last minute change on the iPhone screen from plastic to a glass screen... so, even though Apple wasn't directly involved in manufacturing, it had enough clout to force Foxconn to make that change." Which brings up a related point. Foxconn was doing (and still does) manual assembly. It was a change they *could* make, as it was substituting a part made from one material to a part made from another. An issue with robotic manufacture will be flexibility: what can the robots put together, and how quickly can they be reconfigured to put together something else? In the mentioned case, changing a robot line to use a glass part instead of a plastic one would probably not be difficult. Changing it to build a tablet instead of a smartphone might be another matter.

old account Frank Eory
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re: Panel defines strategy for U.S. advanced manufacturing
old account Frank Eory   7/19/2012 10:44:52 PM
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I would like to see more detailed job descriptions of these "qualified workers to run advanced manufacturing lines" that require some sort of new investment in technical education. George, you mentioned a high level of automation and minimal dependence on labor. No argument there. So, what technical skills exactly do the few (and ever decreasing number of) manufacturing workers need to have to work in such an automated environment? On the other hand, you mentioned the few but highly paid people needed to "deveop/deploy/maintain these processes." Those sound like engineers, not manufacturing workers. I don't mean to undervalue what a skilled manufacturing worker does -- far from it. If you tell me we have a shortage of skilled machinists, I understand what that means. If you tell me that in the future, the machinist will be replaced by a machine, I again ask, what sort of skills are required of the worker who watches over the machine?

DMcCunney
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re: Panel defines strategy for U.S. advanced manufacturing
DMcCunney   7/20/2012 2:50:04 AM
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@Frank: "So, what technical skills exactly do the few (and ever decreasing number of) manufacturing workers need to have to work in such an automated environment?" I can think of two basic types offhand: programmers writing the code that directs the robotic assembly, and techs to maintains the robotic gear, because things with moving parts break. Neither of these is necessarily a degreed engineer, but technical training will be required. The machinist won't be replaced by the machine. Robotics can do machining, once they've been programmed, but you won't program a robot to machine a prototype or make a quick replacement for a broken part you need replaced *now*.

KB3001
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re: Panel defines strategy for U.S. advanced manufacturing
KB3001   7/20/2012 11:53:09 AM
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I agree. That's where the added value resides. Actually some of this work is done remotely by Indian technicians in some industries. There is a limit on how much you can outsource in this field though.

george.leopold
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re: Panel defines strategy for U.S. advanced manufacturing
george.leopold   7/20/2012 1:05:58 PM
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I think DMcCunney is correct. Here's a hypothetical to further address Frank's question: If, say, Google decided it wanted to expand U.S.-based design and manufacturer of its wireless home media player, it would certainly need design engineers to generate new versions of the device and manufacturing engineers to oversee plant operations. Presumably there would be some detailed assembly work that would require certain skills. If Google found it could not find workers with these skills, it would be up to Google and others seeking to bring manufacturing back home to either train workers or work with community colleges to quickly adjust their curricula to teach the skills Google needs. All this won't solve our employment problems, but we will begin "making stuff" again, and that alone is worth the effort since knowing how to make something means you learn how to make it better and cheaper. That's how you move from low to medium volumes, which seems to be the sweet spot for U.S. EMS companies.

DMcCunney
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re: Panel defines strategy for U.S. advanced manufacturing
DMcCunney   7/20/2012 6:12:23 AM
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@Maxmin: "But where's the money coming from to invest such endeavor? From the bankrupt government?" There's an awful lot of money floating around looking for a good place to be invested. The point to initiatives like this isn't to provide the investment: it's to set up conditions where private investment is more likely to happen.

KB3001
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re: Panel defines strategy for U.S. advanced manufacturing
KB3001   7/20/2012 11:49:53 AM
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Exactly, and it's an initiative to be applauded.

george.leopold
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re: Panel defines strategy for U.S. advanced manufacturing
george.leopold   7/20/2012 1:09:14 PM
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A lot of that potential investment money is sitting offshore, and we have to find "sticks and carrots" to get companies like Apple to bring some of it back and invest in manufacturing and people. Let's start with wages at Apple Stores.

C VanDorne
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re: Panel defines strategy for U.S. advanced manufacturing
C VanDorne   7/20/2012 3:44:44 PM
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Three things: 1) This report is an improvement over the last one George highlighted (at least the last one I saw) in that the industry contributors look more credibile. In other words they actually came from industry. So that's a step in the right direction. 2) But to me all these large-scale proposals miss the point in that they address supply (fullfillment infrastructure) while paying lip service to that which preceeds it: demand. And we can't forget about profitability. 3) George, what are the details of the bill introduced by the Texas Democrat? The optimist in me assumes they correlate with this report? The realist in me compells me to other conclusions. Please advise.

george.leopold
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re: Panel defines strategy for U.S. advanced manufacturing
george.leopold   7/20/2012 5:30:27 PM
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Please note that I have linked to Rep. Johnson's bill in our story. So far, it has no cosponsors. Here's what her office released: "H.R. 6081, the Advancing Innovative Manufacturing (AIM) Act of 2012, to accelerate research, development, innovation, and education in advanced manufacturing. H.R. 6081 addresses a number of the recommendations included in the [manufacturing] report and will help to ensure our common goal of making sure the U.S. manufacturing sector is the most sophisticated and innovative in the world. American manufacturing is a cornerstone of our economy – it creates jobs, increases our national security, and promotes innovation across the private industry." It's highly likely that introduction of the bill was timed to coincide with release of the manufacturing report.

pixies
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re: Panel defines strategy for U.S. advanced manufacturing
pixies   7/20/2012 4:11:21 PM
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Well, I thought the reasons manufacturing jobs leave US is because the cost of the labor, not the lack of skilled workers.

DMcCunney
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re: Panel defines strategy for U.S. advanced manufacturing
DMcCunney   7/20/2012 4:46:28 PM
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Manufacturing jobs *left* the US for lower labor costs, but the jobs involved were low-skilled/unskilled. Bringing manufacturing *back* to the US replaces large numbers of low-skilled people with a much smaller number of high-skilled ones. One issue is the lack of the high-skilled workers required.

george.leopold
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re: Panel defines strategy for U.S. advanced manufacturing
george.leopold   7/20/2012 5:36:52 PM
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Indeed, we have heard from some domestic EMS providers that they attempt to "design the labor out" of products. Hence, electronics manufacturing by itself doesn't hold much promise for creating a lot of jobs. The question is whether a revived manufacturing "ecosystem" can help boost U.S. job growth.

DMcCunney
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re: Panel defines strategy for U.S. advanced manufacturing
DMcCunney   7/20/2012 6:43:26 PM
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"The question is whether a revived manufacturing "ecosystem" can help boost U.S. job growth." It can, with caveats many people will be unhappy about. Unemployment is structural, not across the board. Certain *kinds* of jobs are disappearing. Initiatives like this can create *new* jobs, but they won't help those currently out of work. By definition, they will *be* new jobs, and require knowledge and skills those currently unemployed will not have and may not be able to acquire. Building a robotic factory certainly creates employment for those who build it, and continuing jobs to maintain it. What will go away will be the large numbers of low-skilled workers that used to do the assembly. The factory of the future will employ many less people overall. Essentially, labor is being replaced with capital. The labor being replaced is all unskilled/low-skilled, and the sort of jobs that moved overseas because unskilled/low-skilled labor was simply a lot cheaper elsewhere. But replacing labor with capital has its own requirements. There must be a potential return great enough to justify the investment. There must be ready markets for the products the automated factory will make. The market will have volume requirements. You will need to sell at least X number of what you are making simply to cover the costs of making it, let alone make money, and X may be a large number indeed. I don't see an autmomated factory like this being used for low volume manufacturing unless what is being made carries a high price. It will start at medium volume and scale from there. I had a phone conversation last night with a friend who asked "But what do we *do* about the unskilled/low-skilled people? What opportunities can we provide for them?" My answer was "I don't know, and I consider that the biggest question we need to answer."

george.leopold
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re: Panel defines strategy for U.S. advanced manufacturing
george.leopold   7/20/2012 10:07:52 PM
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Your friend's question is the same one that inspired us to launch the "Rebuilding America" series. The underlying premise is that we needed to return manufacturing to the U.S. since the ability to manufacture is the key to continuing technology and product innovation. But as we dig deeper into the issue, it is becoming apparent to me anyway that flexible, value-added manufacturing isn't going to make much of a dent in the U.S. employment rate. Still, I don't agree with the assertion above that high U.S unemployment is "structural." As you pointed out earlier, there's a lot of capital out there looking for a return in investment. We need to invest in our workers through retraining as much as we need to rebuild our manufacturing infrastructure. At the same time, the service sector that provides most of U.S. employment is changing as more services are "produced" via the cloud. In the long run, that could be a far larger source of future employment for workers with the skills needed to fill those types of jobs.

DMcCunney
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re: Panel defines strategy for U.S. advanced manufacturing
DMcCunney   7/20/2012 10:55:01 PM
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"Still, I don't agree with the assertion above that high U.S unemployment is "structural."" What would you call it, when it isn't across the board, and tends to affect certain kinds of jobs? The underlying process has been going on for decades. Ask what used to be the ILGWU. As a rule, work flows to where it can be done cheapest, and it has been doing so. I'll make a few flat statements about the future: 1: If your job *can* be done by a machine, at some point, it *will* be. 2. If your job *can* be done somewhere else by someone getting paid less than you to do it, at some point, it probably will be. (Think "outsourcing to India") 3: You will need to find things to do which either *must* be done here, or things which carry a high enough value that someone will be willing to pay what you ask, or both. (And what those high-value things will be can and will change. Today's hot, in-demand, you can name you own salary level skills are tomorrow's outsourcing candidates as people elsewhere acquire them.) 4: You cannot be ignorant or stupid. You will have to know various things, and be able to continually learn new things. If you do not know various things, and are incapable of learning them, you will have insoluble problems. You will be unable to get a decent job because you can't do anything anyone will pay for.

DMcCunney
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re: Panel defines strategy for U.S. advanced manufacturing
DMcCunney   7/20/2012 11:15:08 PM
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"But as we dig deeper into the issue, it is becoming apparent to me anyway that flexible, value-added manufacturing isn't going to make much of a dent in the U.S. employment rate." That should have been obvious from the start. Manufacturing was traditionally a place where people who *were* unskilled/low-skilled could find employment, because it didn't require high skills or knowledge to work on an assembly line. But those jobs steadily moved overseas where unskilled labor was a lot cheaper. They aren't coming back. Those sorts of jobs that have to be done *here* still exist - think "flipping burgers in McDonalds" - but they don't pay anywhere near as well as an assembly line job used to. We do indeed need to invest in retraining, but we will still be left with some folks who simply won't get new jobs. Not everyone can be retrained for the new jobs that will be created. Flexible, value-added manufacturing will create *some* new jobs, and have other indirect benefits to the economy because the work is being done here. But by itself, it's not a panacea. Nothing is.



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