Bringing it home: The three A’s and the return of American manufacturing
LightFieldStudios via Getty Images According to a recent McKinsey report on international manufacturing trends, the United States lost over six million jobs to offshoring between the years 2000 – 2009. But a UC Berkeley study undertaken as far back as the early 2000s tabulated losses of up to fourteen million jobs throughout the nation’s economic ecosystem. Each offshored manufacturing and/or service job exerts an adverse, widely resonating local-to-national jobs impact, akin to how throwing a stone into a pond sends waves from the point of impact outwards, far and wide. Since 2012, however, the offshoring trend has reversed sharply. Why? And what does this “reshoring” mean for American manufacturers, especially small and medium-sized companies? Access now➔ Bringing it home: American manufacturing –- new skill sets needed for this new era Globalization is no longer the singular wave of the future. Two influential studies by Columbia University and The National Institute of Standards and Technology (NIST), respectively, cited two triggering causes: geopolitical realignments and Covid-19. These “Event Horizons” have revealed globalization’s fragile stressor points. For example, the Covid-19 pandemic nearly brought globalized manufacturing and distribution down overnight like a house of cards. The impact of recent financial downturns, wars and natural disasters on worldwide manufacturing, supply chains and services have awakened business and governments to globalization’s downsides This dawning realization requires major changes in how we manage supply chains. While just-in-time manufacturing faltered during disruptions such as the Ukraine War and the Covid pandemic, moving away from this mechanism creates its own challenges. Gad Allon, a professor and department director at Wharton University of Pennsylvania, pointedly notes that companies of all sizes realize “they need to rethink their supply chain” and operations “ in terms of resilience for the types of volatility we will continue to see.” But Allon also emphasizes that “the reality is most companies are simply not ready for it.” But Allon and his peer industry analysts all agree on one salient point: for American companies to succeed in the dawning restoration era depends on their adopting and adapting to the “Triple-A Trifecta”: Automation, Analytics and Artificial Intelligence. This means investing in what we might summarize as the trifecta’s “Three A’s” technologies array — including process automation, data analytics, as well as machine learning, robotics and ever-evolving AI. These technologies and practices have already proved essential in offsetting the myriad of costs in reshoring once far-flung global networks. The Three A’s do so by delivering in efficiencies and reducing redundancies in workforce employment. Indeed, Reuters, Forbes and Deloitte have all published recent reports with one starkly unifying point: companies and institutions investing in Three A’s-based solutions have kept manufacturing employment rates down to one-third of 1979 employment numbers, while more than doubling industrial production in manufacturing sectors. The indispensables: Small-to-medium size companies –- and knowledge Offshoring not only shipped manufacturing, production and services overseas. The mass relocations also shipped American expertise overseas –- and not only in classic blue-collar manufacturing, industrial and trade skills but also emerging twenty-first century, American high -tech knowledge bases. In their galvanizing Wall Street Journal article on the national threat of offshoring digital fluencies, University of Michigan professor Sridhar Kota and economist Tom Mahoney presented compelling evidence that offshoring American manufacturing and design expertise jeopardizes America’s economic health. According to Kota and Mahoney, to secure its edge in new era of reshoring, “America must control the production of those high-tech products,” especially those “it invents and designs.” Access now➔ Kota and Mahoney sounded a clarion call: during the offshoring era, larger, established business and manufacturing consulting also outsourced their expertise and offshored their project management. This has deprived small-to-medium sized American manufacturing companies’ client-focused digital expertise in the short-term and weakened the pool of national digital expertise just as the new era of Triple-A Trifecta- (“The Three A’s”) based industry has dawned. But there are ample potential silver linings. Government and academic studies all indicate that small-to-midsize businesses seem best poised to play a leading role and benefit most quickly from reshoring. But these companies can optimize their advantage by choosing partners both savvy and agile enough to have retained their digital knowledge base during the halcyon days of offshoring. These are the Three-A’s-fluent partners that have continually upgraded their knowledge and skill sets –– and proven their effectiveness during such disruptions as the Covid pandemic. Industry sources such as Gartner Reports and McKinsey concur small-to-midsize enterprises in particular can optimize their reshoring niche opportunities by investing in a specific area of […]
