According to the latest Thomas State of North American Manufacturing Report in 2021, 83% of manufacturers planned to reshore production – only 54% planned to do so in 2020. The sole reason for the reshoring boom is, of course, the COVID-19 pandemic. The Association of Manufacturing Technology estimated that the US must invest up to $600 billion in manufacturing technologies to reverse industry technical debt and become competitive… It sounds like a mission impossible, doesn’t it? In this article, Paavo Kakela, VP Sales at EID Robotics explains how Microfactories can help US manufacturers accelerate production reshoring!
US Manufacturing Reshoring Boom
According to the latest 2021 Thomas State of North American Manufacturing Report, 83% of manufacturers plan to add North American suppliers to their supply chains within a year. Interestingly, only 54% of manufacturers planned to do so in March 2020. Thomas’ findings were based on its production and sourcing trends intelligence and anonymized and aggregated data collected from its 1.6 million monthly industrial buyers.
The report results clearly evidence the industry’s strong reshoring trend due to the continued COVID-19 pandemic.
What’s the impact on the US economy?
According to Thomas’ research, manufacturers add an average of 11 suppliers to their supply chains yearly. If 83% of the 580,000 manufacturers in the US now bring on one new supplier at an average of $921,247 per contract per supplier, it amounts to a potential USD 443 billion injection into the US economy.
What is the US Industry Technical Debt?
The Association of Manufacturing Technology estimated that the United States must invest $400-600 billion in manufacturing technologies to improve its trade deficit with the most significant importers such as China. The technical debt is partly a result of the vast offshoring boom that started two decades ago. Advanced manufacturing competencies and technologies were simply not needed locally any longer, creating a vacuum in the US. Thus, the United States must increase investment in skilled labor and manufacturing technologies from operational and technological perspectives to become competitive.
How Can Microfactories Help US Manufacturers in Reshoring Production?
The COVID-19 pandemic disrupted supply chains globally in 2020, accelerating the reshoring trend radically. Since the outbreak of COVID-19, manufacturers have been seeking fast, cost-efficient, and low-risk solutions for ramping reshored production capacity in the US.
A short microfactory overview; is a manufacturing, assembly, or production unit producing lower volumes in a smaller footprint than traditional factories. They are typically highly automated and robotized to increase capacity and quality while reducing costs through minimized investment and operational workforce. Microfactories are controlled and managed with software operating systems. Data is collected in real-time for predictive fault detection, maintenance, performance, and quality improvement throughout the process. These qualities make microfactories an ideal solution for US manufacturers to accelerate reshoring!
Here’s is a rundown of the key benefits of microfactories in the reshoring scenario.
Fast Delivery Process
A microfactory can provide manufacturers with ~ 30% faster deployment time and radically lower reshoring costs and risks compared to a traditional factory.
It is possible to install the microfactory system even in one day at a manufacturer’s premises. This further decreases ramp-up costs. However, an ultra-rapid onsite installation requires a thought-through, field-proven design, development, and testing process.
Local manufacturing saves costs through reduced working capital and higher resiliency against global disruptions. It decreases logistics costs, inventory, waste, and lead times and increases forecasting accuracy.
Small microfactories require only limited floor space and staff compared to traditional factories. They also consume less energy and raw materials and bring radical cost savings.
Reduced Reshoring Risks
Reshoring production always contains risks. A microfactory, however, minimizes the investment risks compared to a large traditional factory. A modular microfactory platform is pre-verified, and the modules and interfaces are tested end-to-end. You can deploy it near your other operations.
With a microfactory, you can increase product quality, reducing warranty and repair costs, customer reclamations, and waste while increasing profitability.
Reshoring and local manufacturing require agile, small-scale production capabilities. A modular microfactory platform, such as ANT Plant can be customized quickly for a high product mix and small batches while increasing capacity when needed.
You can typically charge higher prices with local manufacturing because of domestically made products (Made in the USA, Made in Europe) and increase your profitability. Domestic production can also unlock the public procurement markets.
By investing microfactories instead of large, traditional factories, you can reshore production back to your home country or start local manufacturing step-by-step in a controlled way. You can expand by investing in the second microfactory after your first investment is already producing cash flow and paying back the investment. This controlled scaling reduces the risks of reshoring and local manufacturing radically. However, although the microfactories are based on the latest and greatest manufacturing technologies, high-quality design for manufacturing and assembly (DFMA) is still critical!
EID Robotics provides you with a full partnership, including high-quality DFMA design, in-depth automation technology know-how, turn-key delivery, and 24/7 support. That’s why you should contact EID Robotics for the next project!