Dr. Helmuth Ludwig, CEO of Siemens Industry USA, laid out three reasons why his company is optimistic about the future of U.S. manufacturing. In a press conference call held Friday, Jan. 17, Ludwig said the continuing economic recovery, the industry trend of going digital and the next generation of manufacturing employees are grounds for everyone to be positive.
Ludwig and Siemens are confident that the economic recovery will continue in several key segments. He pointed to the fact capital spending is expected to increase 9 percent in 2014 (according to a December study by Goldman Sachs) and that the Purchasing Managers Index (PMI) has been stable — at around 55 — for the last six months. Ludwig also cited the Manufacturers Alliance for Productivity and Innovation’s most recent business outlook, which was at its highest level since September 2011.
More specifically, the auto industry – a major player in manufacturing — is coming off a five-year high in light-vehicle sales. Ludwig, who was speaking from the Detroit auto show, added that Volkswagen committed a $7 billion investment in North America. The most important factor, however, is that the auto industry itself is positive about what the future holds. Another booming industry, oil and gas, has seen significant investments in shale gas. The main benefactors have been metals technologies and the chemical industry. For example, the voestalpine Group is investing over $700 million to build a direct reduction plant in Texas.
There is no question that manufacturing, as a whole, is going digital. But what does it mean? Well, simply put, it equates to a major boost in operational efficiencies. And Ludwig says that this increase is just what the industry needed.
Software can change productivity for the better in manufacturing. Ludwig cited an example of a software change at one manufacturing facility that resulted in a 24 percent decrease in energy with the same end result. Two software innovations currently making a big impact in manufacturing are remote monitoring and virtual machines. The former is almost a necessity in any manufacturing environment. The latter allows parts to be tested in a virtual environment. In one example, a virtual machine provided an 18 percent decrease in downtime during the changeover process.
Ludwig is confident that this upward digital trend is sustainable in the U.S., a country he believes offers the most advanced software in the world. In fact, 65 percent of the top 100 software companies are based in the U.S.
The Next Generation
After years of education shifting away from STEM, Ludwig says the U.S. is back on track. Perhaps the biggest challenge facing the industry today is getting the next generation of engineers engaged. Ludwig believes that this movement is in place thanks to manufacturing partnerships between leading universities and companies. Siemens, for example, offers an apprenticeship program through Piedmont Community College in North Carolina. The company also has manufacturing initiatives with high schools in Georgia.
Ludwig is quick to point out that Siemens is not the only company doing its part. Current manufacturing leadership is driving these types of collaborations between universities and businesses through the country, further supporting optimism in the next generation. Perhaps just as important is support from the government. As example, the National Additive Manufacturing Innovation Institute, which includes manufacturing firms, universities, community colleges and nonprofit organizations from the Ohio, Pennsylvania and West Virginia, was launched in August 2012. The consortium was selected through a process led by the Department of Defense and received an initial $30 million in federal funding.
Ludwig believes the best way to ensure a sustainable manufacturing renaissance in the U.S. is by keeping manufacturing attractive. Industry leadership, major companies, the government and education institutions are all doing their part.
“It’s an exciting time to be in manufacturing,” Ludwig said.