|
Paul T Kidd takes a look at the way manufacturing
may develop over the next 10 to 20 years, and the role of international
research in such developments
Your washing machine is broken.
It's very old so you decide to buy a new one. Off you go to the
local store, where on arrival you see lined up the usual array
of products, but you immediately discover that none of them are
for sale.
Before you get upset and head
off for another shop, you may want to know that you can have
any one of the products on show, or choose from several that
are not in store, and have it delivered to, and installed in
your home within four hours. And it will cost you nothing, well
not immediately anyway. You won't pay anything until you start
using it, and then you'll only pay for the amount of use.
When you visit this futuristic
store, you won't even need to speak to a sales person if you
don't want to. You'll be able to use in-store computer screens
to help you chose the washing machine that best suits your circumstances.
You'll find yourself being asked about the number of people in
your family, and how many times each week you use a washing machine.
Based on the answers you provide to such questions, you'll be
offered a choice of products that best suits your requirements.
Here you'll see the familiar brand names, Hoover, Hotpoint, Indesit,
and many more, plus several brands that don't exist today - new
market entrants from emerging industrial economies such as China,
Malaysia and several others.
But you won't see any information
on price because you won't want to pay the high price tag that
is attached to modern consumer products. The price is high because
it covers the cost of recycling the product once its useful life
is over. The price is also high because it covers the product
upgrades that will be provided over the period of use, to extend
the useful life. Also included in the high price are the advanced
energy efficient technologies and electronics that will help
to reduce energy usage, as well as the maintenance and repair
costs that will keep the machine operating at optimum efficiency.
Next you'll be asked about
your broadband Internet connection, and if you have a wired or
a wireless network in your home. The Internet you see is the
key to this new way of using a washing machine. When it is installed
in your home, in addition to the usual power, water and drainage
services, it will also be connected to the Internet.
The operation of the machine
will be continuously monitored using the Internet so that any
problems are quickly detected and a repair technician despatched
to your home before you even experience a breakdown. And for
those non-urgent washes, the Internet will provide the means
for the energy supply company to control the timing of the wash
so that it makes use of cheaper off-peak electricity. This aspect
is part of a Europe-wide energy management scheme designed to
ensure a more constant energy demand, which has resulted in a
reduced need for power stations devoted solely to handling demand
peaks, thus saving on unwanted and harmful emissions of greenhouse
gases.
The Internet is also key to
how you will pay for the service, for it is no longer a product
that you are buying, but a service.
On the in-store computer screen
you'll be asked to identify your utility suppliers - gas, electric,
water, telephone, and Internet. Then you'll see what the service
will cost from each of your utility companies, for each of the
products that have been identified as being suitable for your
needs; the manufacturers of washing machines have teamed up with
utility companies to deliver the service. Each utility will offer
you a deal based on your specific circumstances, and your payments
will be collected through the monthly or quarterly bill from
the utility company that you eventually select.
And of course you didn't need
to visit an electrical appliance store to do all this. You could
also have done the same from home using Internet shopping, or
at your local supermarket, or any one of several outlets offering
computerised shopping facilities.
This scenario is yet to become
reality, but the technologies to enable this to happen are either
already available or on the way. And what will make this scenario
feasible and likely are transformations that are taking place
in the manufacturing industry, resulting from the merging of
once separate industries, technologies, and products and services,
and the need for a more environmentally sustainable form of consumerism.
The scenario highlights what
manufacturing may be like in the future, 10 to 20 years from
now. But manufacturing has an image problem, inherited from its
past that is hindering the development of this industry. It is
perceived as dirty, largely based on manual work, polluting,
and as being no longer relevant to modern economies. Manufacturing
is in decline and is something that is done in newly industrialised
countries like China. The future for European economies lies
in services.
And the figures seem to support
the view that manufacturing in Europe is in decline with manufacturing
jobs being exported to poorer nations on the other side of the
world. In the wealthy countries such as the United States, the
United Kingdom and many others, growth in service sectors has
outpaced growth in industrial sectors. This has been accompanied
by a significant growth in manufacturing in Asian counties.
World Bank figures produced
in 2003 show that manufacturing as a share of Gross Domestic
Product (GDP) fell by about 2 percent to a typical level of 20
percent during the 1990s in the wealthiest nations. However,
in the Asian countries around the Pacific Rim, manufacturing
as a share of GDP rose in the same period by 4 percent to a typical
level of 32 percent. Industry employment in the European Union
fell over the same time from 33 to 28 percent.
Many might say good riddance.
If manufacturing is no longer relevant to modern economies, why
bother with it at all? But the fact remains that manufacturing
in the European Union accounts for 22 percent of EU GDP - not
insignificant. The whole basis of modern life rests on manufacturing.
Without manufactured goods our quality of life would be much
the poorer, as we can see from the state of affairs that exists
in poor countries such as those found in Africa. Manufacturing
is not only a significant contributor to wealth creation in Europe;
it is also the basis for a high quality of life.
The truth about manufacturing,
as the scenario highlights, is that it is becoming a service-oriented
industry. In doing so it is reflecting a change that is occurring
in the advanced economies where services are becoming increasingly
important. But this is quite different from the perception of
manufacturing that was common in the 1980s. At that time many
politicians undervalued the economic importance of manufacturing,
not understanding that, what was happening at that time, was
not that it was becoming less relevant, but that it was undergoing
a process that also happened during an earlier period in agriculture.
In the 19th century, agriculture
began a transition from a labour intensive industry to a capital
intensive one, a process that accelerated in the mid-20th century.
Something similar happened to manufacturing in the 1980s. But
just as agriculture did not become economically unimportant as
a result of this change, neither did manufacturing. Agriculture
also became a global industry in the latter part of the 20th
century, and so did manufacturing. Europe still has an important
agricultural industry, along with all the product and service
industries that it needs to function. Likewise with manufacturing:
it remains economically important, along with the product and
service industries that support it.
Whilst it is true that a lot
of manufacturing has been moved out of Europe to low cost countries
such as China, much of what has been shifted to East Asia is
low value production of commodity items. Typically, manufacture
of products such as DVD players, televisions, and so forth, where
competition is based mostly on price, have been exported out
of Europe because in such cases production costs are an important
factor.
Another area where production
has been shifted to East Asia is that of commodity parts for
more advanced and sophisticated products. These components are
shipped to Europe and incorporated into higher value more technologically
advanced products. Production in Europe therefore has tended
to focus in recent years on high value, high technology products.
These products require high levels of skill and know-how to manufacture,
and their production provides good quality jobs. It is the low-value
commodity products - those that often involve boring and repetitive
jobs that became synonymous with the production lines of the
20th century - that have mostly been exported.
Increasingly in manufacturing
there is more emphasis placed on knowledge as a source of competitive
advantage. This knowledge appears in many forms, such as new
technologies, or how to manufacture complex products like aeroplane
engines, or understandings of changing customer needs derived
from customer data. These kinds of knowledge are seen as a means
of remaining competitive in a world where an increasing number
of nations are acquiring manufacturing capabilities and producing
their own home grown commodity offerings.
Another truth about manufacturing
is that it does contribute significantly towards environmental
problems, not just during manufacture, but also during use and
final disposal of products. But this happens regardless of where
products are manufactured, and if we are to tackle these problems
we have to take an interest in manufacturing and maintain the
capability to influence its development towards a more sustainable
form.
These factors - globalisation,
service orientation, knowledge intensity, and responding to environmental
concerns - highlight the importance of undertaking research in
the area of manufacturing, not just in Europe, but also on a
global level. Manufacturing is a global industry. The way that
it is structured, with both supplier and customers located across
several time zones, demands a more global approach to research.
National and regional research is still important, but there
are many issues, such as finding more environmentally sustainable
forms of manufacturing, or formulating international standards,
or developing globally accepted operating procedures for suppliers,
that require a global manufacturing research programme.
Such a role is fulfilled by
the Intelligent Manufacturing Systems (IMS) Programme, which
has sought to address global research issues in the area of manufacturing.
The Programme includes most of the world's leading manufacturing
nations: Japan, the USA, the European Union, Norway, Switzerland,
Canada, Australia and South Korea.
IMS started in 1995,with an
agreed life span of 10 years, and is industry led. It provides
a unique opportunity for manufacturing firms to collaborate on
addressing common issues and finding solutions to shared problems.
A recently published report
on the impact of IMS over its first 10 years highlights the contribution
that has been made towards addressing research in global manufacturing
issues. Programme participants have reported numerous benefits
from their involvement, including increased understanding of
global business practices, an important competitive issue in
a world where global operations are becoming the norm. Also identified
as an important benefit of participation are significant economic
gains such as cost reductions and increased sales. Environmental
benefits are also identified as important. These benefits include
reduced use of hazardous materials, lower energy consumption,
and also the creation of worker-friendly workplaces.
So successful has been this
collaboration that continuation of IMS for a further 10 years
has been agreed among the participating nations. Over this period,
globalisation of manufacturing is set to accelerate, along with
its service orientation and knowledge intensity. Apart from the
never ending challenges of maintaining manufacturing competitiveness
in an increasingly competitive business environment, manufacturing
firms face over the next 10 years, the challenge of becoming
environmentally sustainable.
In this respect IMS can serve
an important role. With its unique position as the only global
manufacturing research programme, it can first and foremost provide
a forum for manufacturing business from around the world to discuss
and better understand the problems faced, the possible solutions,
and the opportunities available. IMS also provides the framework
for undertaking the ground breaking research that will be necessary,
in areas such as manufacturing technologies and product design
and delivery, to develop new sustainable manufacturing business
models.
Washing machines have evolved
since they first appeared in the 20th century. No doubt they
will continue to do so. And no doubt the manufacturing industry
will provide many more useful and labour saving devices to improve
the quality of our lives. But the manufacturing industry also
needs to evolve if it is to continue to meet human needs. Research
is essential to both evolutions, and to achieve an environmentally
sustainable manufacturing industry, both evolutions need to be
integrated. And IMS, over the next 10 years, may turn out to
be the only global framework where these developments can be
addressed in a truly international way.
The author is a freelance
writer, researcher and consultant in the area of future manufacturing
systems (contact details: paulkidd@cheshirehenbury.com).
The IMS Impact Report is
available at www.ims.org.
A pdf version of this article
is available for downloading: download
pdf version |