A revolution is underway in the manufacturing sector. Is your business going to be apart of it or fall by the wayside?
Advances in automation, machine learning and analytics are allowing organisations to capture and use information about products and processes more quickly and effectively than ever. The “Internet of Things” (IoT) is allowing everyday objects to send and receive data almost instantaneously, providing greater visibility of systems and products used across the globe.
Those who embrace these new possibilities, commonly known as Industry 4.0, will be able to streamline operations, produce new and unique individualised goods, and develop new value-added services. Those that don’t, will end up closing their doors for good.
In New Zealand, manufactured goods accounted for $22.6 billion of gross domestic product in 2015 and employed 14 per cent of the country’s workforce, according to ManufacturingNZ. This is a significant portion of the workforce that, should it dwindle, could have a severe impact for the entire nation.
When the subject of embracing new technology is viewed in the context of affecting an entire country, it becomes incomprehensible as to why so many organisations are reluctant to invest in new technology. Especially when there are so many funding options available.
Unfortunately many organisations think that their options are limited to bank loans or using their own, or stakeholder equity, to invest in new equipment, but that needn’t be the case.
Many of the country’s manufacturers are small to medium enterprises, producing short-run, niche products, which often serve as components to larger manufactured goods. These types of businesses stand to benefit most from applying Industry 4.0 technologies, according to New Zealand Manufacturers and Exporters Association chief executive Dieter Adam.
When a factory closes, two options become available.
- Option 1: Employees will need to develop new skills to go into a different job, a task which may be easier for some but not others.
- Option 2: Find work elsewhere, creating a skills gap in the local economy.
If New Zealand really wants to boost its economy and bring manufacturing jobs back, businesses need to think about their own growth and succession plans for the future and what investments need to be made.
Revolutionising the way we build
A Boston Consulting Group report found one electronics manufacturer managed to streamline its labelling and inspection processes on 10,000 Stock Keeping Units (SKU) across six assembly lines. This was done by installing collaborative robots to inspect parts using vision systems, and to complete tedious pick-and-place tasks, lifting labelling speed from 125 parts per hour to 250.
In another example, the engineering team of a truck engine manufacturer used a 3D printer to create a prototype for a water pump used for heat and pressure testing. This cut tooling time from 20 weeks to two, and costs from $10,000 to $770.
If New Zealand businesses were to implement similar technology, the savings could be substantial, as could the opportunities for growth. This really couldn’t be a better time for businesses to invest.
Finding funds is always a challenge, whether you manage a factory or not, and as a result, many businesses decide not to upgrade because of the initial capital outlay, but what if there were alternative options available?
Growth capital solutions can provide flexible options for acquiring the funds for new assets as well as upgrade or replace them as needed. Maintenance, installation, disposal and software costs can also be built in depending on the agreement.
Upgrading technology not only helps grow a business, but it helps boost the local economy, provide more skilled jobs and help retain those jobs in the future.
Now you have no excuse. When are you going to start investing?