2102: Reliable Plant says manufacturing returns to the US

Reliable Plant, an industry magazine for the manufacturing community, just came out with predictions for 2010. It’s a provocative piece and the predictions have interesting implications for the PLM community: 1) Production will return to the United States. The author of the article, Jeff Owens (president of a managed services provider for production equipment maintenance, industrial parts services and IT solutions), says that the weak dollar will enable manufacturers to be more flexible in where they opt to manufacture. This, he believes, will bring high-value, high-precision manufacturing will come back to the US. I certainly hope he’s right, but don’t look for rapid construction of huge plants by major global companies. If the prediction is correct, small and medium-sized manufacturers that have the agility to adjust rapidly will be the ones to jump first. Large high-precision manufacturers have heavily invested in overseas production facilities and may not be able to shift production before exchange rate changes tilt the playing field back to Asia, so impact at the high end may be muted.

The effect on PLM vendors could be significant, especially at the low- and mid-market parts of the spectrum, which specializes in manufacturing machinery, and in factory automation products like Tecnomatics, DELMIA and the like. Manufacturers who want to capitalize on this trend will need to very quickly design, build and bring on-line these new manufacturing plants and are likely to invest in the tools that can make that happen. 2) In a flat economy, manufacturing must ramp up. It’s a simple economic fact: As we exit the recession, inventories that have been drawn down need to be replenished to meet growing demand. This means performing deferred maintenance, restarting production lines, putting new product development onto the fast-track — all of the areas in which PLM excels. Look for demand across the board, increasing as signals become more clear about strengthening demand. 3) Highly skilled workers will be in demand – and can demand high pay. Pundits have for years been lamenting the loss of skilled manufacturing workers in North America as jobs went overseas. Now that some of these jobs may come back to North America, we’re faced with a serious skills shortage. The potential is great, therefore, for training solutions of all kinds. Using virtual reality tools to simulate processes, creating work instructions in 3D, renderings and advanced visualizations — all will play into (re)training workers for what is hoped to be a resurgence. 4) Outsourcing will ramp up along with the economy. The writer of the article (a provider of outsourced services, so not unboased) says that manufacturers will outsource non-customer-facing functions to others, so that they can concentrate on “lean, highly focused” operations. Likely to be outsourced: maintenance and repair, most IT functions and training. While manufacturers have been trimming their workforces to deal with the economic downturn, many of their outsourcing partners have been planning for the recovery, often scooping up the most talented human capital available. Again, there is good potential for PLM companies to benefit, as the companies winning the outsourced business grow their own businesses. They will need to train workers, simulate plants, and plan work. If you believe the basic premise, that manufacturing will return to North America as a result of the weak dollar and growing demand for high-precision and high-quality products, the future looks positive for PLM companies. Expect a slow start to the year, though, as caution will keep manufacturers from resuming large-scale production until there are clear signals of an economic recovery.

What do you think: when will you ramp up production? Do you see manufacturing return to North America in any meaningful measure?