Ekkehard Schulz, chairman of ThyssenKrupp AG, gave a recent speech in which he said, “We expect a renaissance of manufacturing in the U.S.A.” The occasion was the company’s launch of a $5 billion steel plant in Alabama. His use of “renaissance” caught my attention, as this was the first time I’d noticed the word used in a significant public way to describe U.S. manufacturing. Since then, “manufacturing renaissance” is a phrase I keep encountering. More significantly, I encounter attitudes consistent with that renewal.
In a Bloomberg interview, GE Appliances CEO James Campbell described his company’s new skepticism toward offshoring, and why the company is bringing some production back to the United States. He says that as the company adopts “a systems view of what we define as cost,” the presumed savings from offshoring disappear. Specifically, the slowness of changing production systems that are far away, along with currency instability, impose costs that have to be factored in. In addition, the company has recently come to understand that production and product design are interrelated. “To be competitive, you have to own both,” he says. Wow.
Mike Bair, a Boeing VP, seems similarly unsatisfied with global supply chains. He leads a team working on the next Boeing plane (after the 787). Rather than making this plane’s components around the world, he said in a recent interview that he envisions bringing production here, by having suppliers build facilities alongside the U.S. location where the plane is assembled. The result would be a manufacturing cluster or hub. What an irony that would be, with manufacturing not shipping off, but now crowding in.
These are interesting times to be watching U.S. manufacturing. “Renaissance” might indeed be the right word for the changes these comments suggest. After all, one of the hallmarks of the original Renaissance (circa 14th through 16th centuries) was a return to classical sources of learning that had been marginalized. Like U.S. manufacturing today, the Renaissance period was characterized by appreciation for ideas that people of the past had already known.
A renaissance isn’t painless. The word doesn’t mean “resumption”—it means rebirth. A rebirth is necessary when something previous has withered beyond rejuvenation. Even as manufacturing in the United States reinvents itself, certain facets of U.S. manufacturing continue to struggle through decline. Hope and pain are happening at the same time.
Hope will win. Something else about the original Renaissance is this: It involved the discovery of an abundant new hemisphere, rich in possibility. It involved the discovery of America. In the manufacturing renaissance, it seems as though we are discovering the same thing again.
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