Boeing’s Dreamliner has 6.5 million lines of software code for onboard systems support. It’s a very complicated aircraft.
That says a lot about the direction of travel of transportation in particular, and manufacturing more generally.
Simon Arnold noted in his comments to my previous blog post that some of the large R&D manufacturing initiatives in NZ are focused on the here and now problems of firms, rather than developing capabilities for future needs. Some will dispute that point – I know Scion has done a lot to try and alert the forestry sector to opportunities in bioproduct manufacturing.
What is a possible future for manufacturing? The McKinsey Global Institute looked at just this topic last year.
They note that manufacturing, like many other sectors, is going through considerable change. Technology, supply factors, demand and policy are all influencing manufacturing, creating greater risks and uncertainties.
New materials, robotics, additive manufacturing techniques (such as 3D printing), the rapidly increasing use of sensors (as part of the product as well as in the processing and distribution chains), and the ability to design and model performance virtually are opening up new opportunities for manufactured products and processes.
“Green manufacturing” ,where the whole lifecycle of the product and its production is considered, is being taken seriously by leading firms. This is driven partly by consumer demand, but also by the desire to improve resource use by firms, so that they save money. As with “food miles”, there is likely to be a growing interest in properly valuing the costs of raw materials in manufactured products.
Some are even suggesting we are moving into a glucose-based manufacturing economy.
As products become increasingly sophisticated so the supply chains become more complex, and harder to manage. Firms are starting to design manufacturing processes and supply chains that are more resilient – both to natural disasters as well as failures of suppliers. Agile operations that are able to quickly respond, and prepare for, changes will be more successful.
Volatile energy and raw material markets influence company strategies. Government policies (or lack there of, or their inconsistency) can also add to the uncertainty of the operating environment.
Demand for major manufactured commodities may increase by 30 – 80% as the global population continues to grow. This will open up of new opportunities in the emerging markets. Within and between markets there are also growing demands for greater customization of products to meet local needs. More sophisticated and customized products are leading to greater demand by customers seeking services (training, software support, etc) from manufacturers, not just products.
And, there is intense competition for highly skilled workers in the manufacturing sectors. Capital markets may also become tougher.
The McKinsey report states that its a whole new manufacturing world and that:
“manufacturing companies need to develop new muscles”
To be a global manufacturing company means that greater collaboration internationally will be required, and that firms need to develop a much better understanding of their different markets so they can tailor their products and supply chains accordingly. McKinsey point out that China isn’t a single market, but at least 22 different markets.
The profiles of some of NZ’s existing “High Tech” manufacturing firms are available in MBIE’s recent sector report [Pdf].
If NZ want’s to remain a viable niche player in the global manufacturing scene then firms (and government) need to think hard about the changing manufactured world, and how we can develop and attract the skilled people who will be needed. Universities and CRIs can and should help local firms meet their immediate needs, but they also need to help those firms see further ahead and support them in developing the capabilities they are going to require.
If factories in a box become common, what will be the valuable niches where NZ firms can thrive in? As Simon pointed out in response to my previous post, we need to be producing high value “weightless” products and services because we are a long way from the key markets.
One opportunity I see is in extending the sophisticated computational modelling skills developed by the Auckland’s Bioengineering Institute into the manufacturing sector to help design and prototype sophisticated manufactured products, as well as to design resilient supply chains and life cycle analyses.