Leadership & Business: The Resurgence of Manufacturing in America

Interesting Innovations

Street Heat:
Ever burn your foot walking on hot asphalt in the summer? That’s because black absorbs heat—while white reflects it. Well, in case you haven’t noticed, modern cities are covered in the black stuff. Dutch construction firm Ooms is now heading its headquarters by running water pipes under the street. Some of them collect heat in the summer and run deep into the ground where they heat water via a heat exchanger. That heated water is stored for winter—a sort of battery, if you will. In fact to take it a step further, the water is returned to the ground after heating the building, by passing under the street again. The residual heat in the water, now only a few degrees above freezing, melts any snow or ice on the road surface. The water is then stored—used cold to cool the building—before being run under the asphalt again to prepare for winter. Brilliant!

A resurgence of manufacturing in America is coming—and when it arrives it will be here to stay. It’s true. I just can’t tell you exactly when.

That’s because as low cost manufacturing areas of the world become not so low cost, it will be time to drive out one of the last remaining inefficiencies… transportation.

That’s right. As any good Lean expert will tell you, transportation adds no real value—it’s an inefficiency. And as companies strive to drive inefficiencies out of their supply chain, they will ultimately drive out the need for intercontinental transportation.

Think about it. Whether because labor rates ultimately rise in China (secret: they already are), or because automation brings down the cost so much in the Americas, the value of shipping food from Asia to the US will ultimately diminish. So will the value of shipping anything else.

Even in the US, the likes of UPS as a product delivery system will ultimately go away as technology currently used (and quickly improving) for things like rapid prototyping become feasible for routine product manufacturing. Over time, the place of manufacture will get closer and closer to the customer.

American manufacturers should anticipate these trends and be weary of moving overseas too quickly—only to have to move back a few years later. Already we’ve seen companies move from Thailand in the 90s to China in this decade now looking to Vietnam and Cambodia for low cost labor. Asia is simply running out of low cost labor. And while some of these companies will go to Africa, that won’t last forever either.

World-class manufacturers, instead, should be looking a few more years down the road to better automation—right here at home. And to continuing their productivity gains through hard work and ingenuity. Because ultimately, the only successful manufacturers in the United States will do their manufacturing right here—at home

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