The impact of digitization in the industry’s economy

Lantek USA had the unique opportunity to interview Dr. Chris Kuehl, Economic Analyst for the Fabricators & Manufacturers Association, to take a closer look at how technology has impacted our industry’s economy and what it means for the future of manufacturers, particularly in the United States.

Chris Kuehl, Managing Director at Armada Corporate Intelligence

Are you aware of any statistics regarding the average savings of factories who have Digitized?  Are the impacts of Digitization being monitored? If so, what trends are you seeing?

I am not aware of any specific statistics or studies out yet. I do not know of any concentrated effort to monitor at this point. I know it has been a topic of conversation with how appropriate digitization will be. At this point it is anecdotal evidence being it is still a very new concept for the industry.

Regarding the Artificial Intelligence aspects of Industry 4.0 and the sheet metal fabrication industry, there are likely welcomed benefits like Big Data predictions, but there are also fears that robots will replace jobs.  Do you see any trends of jobs lost to robotics? 

I think what is happening right now is a lot of very basic manufacturing jobs have been replaced by automation and robotics. With material handling systems and things of that nature we have seen unskilled jobs replaced. The skilled worker jobs have been more of a collaboration using robotics. This does mean there have probably been fewer hires with one or two people working with robotics instead of three or four without robotics. Most robotics that companies have applied to their shop floors are rudimentary right now. What we are seeing right now is the replacement of more mechanical and human activities where people may have used machines on repetitive tasks. In summation, it has probably had little impact on the skilled workers; but, the unskilled workers have been replaced more so by robots in the repetitive tasks.

It seems that, in America at least, Millennials were discouraged from learning a Trade and instead sent off to college for a "higher" education.  Could you explain how this is impacting sheet metal fabricators as well as Employment now and in the near future?

There has been a trend for the last 20-30 years that people were being expected to go to college and learn a white collar profession with not much thought into a career path. This is changing in the sense that there are new jobs in the sector that we no longer have facilities to train for. There are too few community colleges and trade schools which has led to a chronic shortage in manufacturing. This is something that is reversible by getting into the heads of students, parents, teachers, and counselors that there is a future in manufacturing. More than anything else, there is a perception that we are no longer going to be a manufacturing nation. This is wrong; we will always be a manufacturing nation and will continue to grow as one in the future.”

Do you see the learning of a Trade, and potentially not being buried in Student Loan debt, coming back in favor?

Yes, I think it is starting to. We are now seeing students think: “What exactly am I going to do for a living and what is the most practical way to go through this?” There is no secure way with a Bachelor’s degree now to get a job out of college like in the past. We are now seeing manufacturing become a more sophisticated job with higher pay scales. The reason students go to college now is to set themselves up for a job after college, even if they may not be fully vested in what they studied.

Given the current economic trends and technological advances, would you say we can see manufacturing returning stateside for years to come?

Yes, I think so. We are seeing a dramatic shift away from thinking manufacturing overseas is cheaper. Three factors contribute to this: 1) these countries are no longer low wage, low cost countries we have thought them to be, 2) transportation costs, which have always been high, continue to grow, so having to move product across the ocean or by rail is adding to the overall price,and 3) the use of automation and robotics is making companies more competitive in the United States. Where manufacturers used to have to be as labor intensive as competitors, they do not anymore. I think the main factor now for manufacturers is, “How close can we stay to our market or should we seek other places that are extremely cheap but distant from our customer?".