The American Jobs Plan Won't Save Manufacturers: Half of America's Manufacturers Will Disappear by 2040
The American Jobs Plan as it exists today won't rescue American manufacturing.
STATE COLLEGE, Pa., Aug. 12, 2021 /PRNewswire/ -- The following statement details findings from Dr. Jeremy Frank, Founder and CEO of KCF Technologies, Inc.:
As the CEO of an American manufacturing company, I've been watching the progress of the American Jobs Plan with great interest. The original version of the plan promised to "revitalize manufacturing, secure U.S. supply chains, invest in R&D, and train Americans for the jobs of the future" with investments of over $500 billion in manufacturing, research, and development.
That significant chunk of change evaporated from the bipartisan deal struck weeks ago. American manufacturers may still benefit from planned infrastructure investments—new roads, buildings, water systems, and energy projects won't get off the ground without people to build them—but the reality is that without a significant course correction, American manufacturers are going to disappear almost as quickly as that $500 billion promise.
The American Jobs Plan as it exists today won't rescue American manufacturing. Too much is made of creating more jobs, and too little is made of maximizing the resources we already have. "More jobs" sounds great coming from a podium, but there simply aren't enough workers for the jobs available today. Millions of manufacturing jobs are currently unfilled, and the problem is only going to get worse. Deloitte and The Manufacturing Institute have raised the alarm that our manufacturing skills gap will result in 2.1 million unfilled jobs by 2030, delivering a $1 trillion blow to our economy.
It hardly needs to be said that the COVID-19 pandemic delivered a ferocious shock to American manufacturing and exposed the fragility of our supply chains. According to the 2021 State of North American Manufacturing Annual Report, 83% of manufacturers are "likely" or "extremely likely" to replace at least one overseas supplier with a North American supplier in the next 12 months, an increase of 53% vs. March 2020. The report estimates that this level of reshoring will inject $443 billion into the US economy.
That certainly sounds hopeful, but it's not enough to revive our flagging manufacturing sector. How can we successfully reshore—adding nearly 580,000 new supplier contracts to our manufacturing output—with no one to do the work?
These numbers expose the gap that federal investments could help fill by skilling up existing workers and helping manufacturers acquire the technology needed to truly compete on the global stage. Without a major shift to automation and machine learning, the idea that manufacturing is part of the "Arsenal of American Prosperity" will crumble.
Automation isn't threatening to replace human workers; if that were true we'd have a jobs deficit, not an alarming surplus. Automation and better manufacturing jobs go hand-in-hand. Simply creating more jobs is short-sighted and does nothing to address the manufacturing skills gap—specifically, the need for workers who can manage Industry 4.0 technology and keep American manufacturing competitive.
The hard truth is this: a fading promise of federal cash-for-jobs and theoretical plans to reshore won't save American manufacturing. Within 20 years, more than 50% of American manufacturers today will go extinct. Manufacturers need to act now to save themselves.
The number one killer of American manufacturers isn't some external threat like a pandemic or foreign competitors. It's already inside your plants. If outside investments aren't coming and a new wave of skilled workers isn't beating down your doors, the only way to survive is to cut costs and increase productivity with the resources you already have.
Every machine and line in the manufacturing landscape that isn't operating at peak efficiency is a threat to American prosperity. We're already seeing a dramatic difference between laggards and leaders—there is a 22% difference in overall equipment effectiveness (OEE) between the top 75% and bottom 25% of manufacturers today. Improved OEE has far-reaching implications; lower costs, increased productivity and capacity, and significant energy savings. Take, for example, the industrial centrifugal pump, which accounts for over a third of all industry energy consumption. These pumps waste nearly 15% of the energy they consume—the equivalent of the total output of two large power plants over a period of a full year.
This kind of resource wastage is, unfortunately, emblematic of American manufacturing today. We're excellent at inventing new technology; less so at optimizing what we already have. Plant operational improvement has failed to progress at a significant rate over the past few decades, but the advent of Industry 4.0 represents a chance for all manufacturers to make a significant leap forward, enabled by the confluence of several powerful technologies: big data, advanced analytics, cloud computing, and IoT.
The combination of these technologies offers greater levels of automation, better decision-making intelligence, and more efficient business models; leading ultimately to greater operating flexibility, lower cost, and higher productivity. In the simplest sense, Industry 4.0 makes visible the details of manufacturing, including the behavior of machines themselves, which enables better-coordinated processes and higher-skilled, better-paid, more efficiently utilized workers. However, the promise of Industry 4.0 comes with a big caveat: a significant number of industrial IoT implementations fail because manufacturers don't have the right skills in-house to analyze the data and take action.
What we have found in helping manufacturers implement Industry 4.0 solutions is that the keys to success are holistic, health-focused solutions. Focusing on the efficiency, wellness, and optimization of both machines and people leads to better overall plant health and more consistent operations. Manufacturers can do more with less—fewer resources and fewer workers—which is the only reliable way forward for our industry.
Manufacturers that want to be around in the future need to take action now and put their resources toward the technology and training that will help them stay competitive. Our industry doesn't need a Jobs Plan, it needs an infrastructure plan; investing in machine health, plant health, and Industry 4.0 skills development to stave off a mass manufacturing extinction event. The future can still be made in America, but only if manufacturers stop waiting for help and make it themselves.
About the Author
Dr. Jeremy Frank is the CEO and co-founder of KCF Technologies, an engineering technology company providing innovative machine health solutions. He believes that total business transformation is possible through the convergence of technology and people.
Dr. Frank earned a Doctorate in Mechanical Engineering from the Center for Acoustics and Vibration and an MBA with a focus on cohesive strategy, both from Penn State University.
About KCF Technologies
Founded in 2000, KCF develops technologies and services that empower industrial businesses to improve performance, reduce downtime, and optimize operations. Employing smarts, grit, drive, autonomy, and responsibility at every step, KCF is committed to continuous innovation to bring the latest technologies to life to make the things we work and live with smarter.
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SOURCE KCF Technologies, Inc.
