Monday, May 20, 2013

Manufacturing today

I wrote this for an assignment in a class and I liked it so I am posting it here.

I chose manufacturing because it is an industry that I was, and still am in a very peripheral basis, involved in.

Manufacturing is an industry based on consistency.  Consistency is a synonym for stagnation.  When something stays the same too long, it stagnates and becomes rotten.  The most useful skill in manufacturing is knowing when to change and adopt new technology.

The last question, "which businesses did you focus on in your industry choice that have used the collection of information in a strategic manner--how did it contribute to their success?" is a little more complicated and requires an understanding of the path the development and implementation of manufacturing technology typically takes.

In the 1950s the Air Force funded the development of a new technology called Numerical Control that they used to create consistent profiles for the wing struts of super-sonic aircraft.  This technology advanced into what is now called Computer Numerical Control.  The mainstream manufacturing industry was slow to adopt CNC machines.  When I started in manufacturing in the mid 1970s we used what was called "Hard Tooling", giant machines that were specially built to manufacture a particular type of component or perform a specific operation.

In the mid 1980s, between 25 and 30 years after NC technology was developed, the expense of the machines, the expansion of their capabilities and the ease of changing machine set-ups and programming made it possible for main stream manufacturers to invest in CNC technology and remain profitable.

While the adoption of new technology will reduce operational costs the expense of purchasing the technology and the expense of implementing the technology must be less than the reduction of costs.  Typically the reduction in costs must pay for the implementation within a maximum of 5 years and preferably sooner.

Recently, as a favor, I worked out a very conservative, one page, return on investment for the implementation of an EOS direct manufacturing system to be used in the manufacturing of firearms components.  I was able to prove that IF the company was willing to produce titanium components for popular firearms and they maintained labor and infrastructure costs within a specific, typical range for the region they were in, that they could return their investment within 2 years and probably less.

I also suggested that they indemnify themselves using typical industry methods since direct manufacturing of firearms components for the retail market would probably be subject to liability challenges, some real and more that were politically based frivolous lawsuits.
Profitability is very important since the firearms industry is a highly profitable section of the manufacturing industry and the more profitable a business is the more easily it can absorb the hidden costs of the implementation of new technologies.

However, since the firearms industry is also very political the implementation of new technology can be retarded based on potential political liabilities.  In other words, because some people hate guns they will grab at any straw to destroy the industry.

This is extremely dangerous to manufacturing in general and the United States in specific.  Weapons have driven development of manufacturing technology for centuries.  Usually high end retail consumers or special government orders pay for the implementation of new technology in very limited lots.  CNC technology and super-sonic aircraft or corporate and private jets for example.  Once these high end retail and special purpose government contracts have established the viability of the technology, the technology is implemented on a trend which usually follows the industry profitability and ROI.  Business which can expect the lowest return on investment, usually the least profitable, being the last to implement new technology.

The added expense of politically based liability reduces the ROI of the implementation of new manufacturing technologies in weapons production, limiting that technology to major weapons manufacturers like Raytheon or General Electric and slowing the implementation of new technologies in mainstream applications.

Fused Deposition Modeling, FDM, was developed in the 1990s, and now, 20 years later politicians in the United States are trying to legislate the implementation of the technology, especially as it pertains to weapons manufacturing.

This creates the potential for other nations which are not concerned with the issues surrounding political liabilities, and so do not require capital investment to deal with political liabilities, advancing into new manufacturing technologies faster than the United States and other industrialized nations.

Fortunately, India and China, the two nations poised to take advantage of this weakness, do not have high end retail consumers in weapons that can drive investment in the development of these technologies.  It remains to be seen if these nations will take advantage of the political issues to develop government investment in direct manufacturing technologies that would replace the high end consumer market.

Prior to reductions in funding by the Obama administration, DARPA, the Defense Advanced Research Projects Agency, developed plans to stimulate investment in direct manufacturing technology.  My understanding is that this directive is under funded and with the current political climate concerning direct manufacturing of weapons it is probably unlikely to be funded.  DARPA, the organization that developed CNC technology and the Internet, is politically out of favor.

The next ten years will be interesting years in manufacturing.  There is some hope that the medical industry will take the place of the weapons industry in driving investment in manufacturing technology.  Currently military spending runs around 5% of GDP, consumer firearms manufacturing runs about 1% of the GDP, about 25% or 1.5% total (estimated) of that being devoted to manufacturing.  Health Care spending runs around 16% total, with a relatively small percentage (maybe 2-5% or about half of weapons) of that devoted to manufacturing.

In all the collection of historical information on the Internet related to the implementation of manufacturing technologies has made understanding the implementation of new manufacturing technologies and the typical historical path this implementation takes much easier than at any other time in the history of the world.  Yet, people ignore or inhibit this path.  Very interesting.

In my opinion the current controversy over the implementation of new weapons manufacturing technology specifically, and new manufacturing technology in general, proves two very old axioms, that "History repeats" and "People are their own worst enemies" are both true and are probably not going to change soon.

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