Some things may, indeed, get better with age—but manufacturing facilities are not one of them. That unfortunate fact is at the root of an issue hindering America’s ongoing efforts toward a much-heralded Manufacturing Renaissance. The average age of manufacturing assets and equipment currently in operation in the U.S. is closing in on 20 years, according to the Bureau of Economic Analysis. What’s more, investments by U.S. firms in the upgrades and upkeep of equipment and facilities has averaged 3.8 percent of revenue in recent years—far below the 6 to 9 percent typically required to stay current and compete effectively with foreign rivals. “We running behind the times,” Raj Batra, president of industry automation at Siemens, told CEOs gathered for a Chief Executive roundtable held in partnership with Siemens. “If you think about how outdated you feel when your cell phone is six months old, how is it okay to have an automation asset that’s 30-plus year old automation asset on your factory floor?” Creaky, antiquated equipment and facilities are inherently problematic. More susceptible to cyber risks and lacking the latest smart manufacturing tools and technology, they hinder efforts to improve productivity and shorten time to market. They’re inherently problematic in a marketplace where the mantra is mass customization—a time when producing smaller batches of a wider variety of goods is becoming de rigueur. Finally, they are a liability during a window in which America has the opportunity to reverse a decade-long race toward outsourcing production to countries with low-cost labor. “People think that it’s technology that you can only deploy in a $1 billion-plus enterprise. But I’ve seen car washes that are using state-of-the-art technology.” “The good news in this sea of bad news is that technology is very scalable,” noted Batra, who pointed out that digitization can cut […]
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