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A cavernous factory in Charlotte, North Carolina, is among the newest and shiniest in the empire of Siemens, the German engineering group. There is a palpable buzz as workers put the finishing touches to a new breed of 300-tonne gas turbines – workhorses of the global electricity industry.
The turbines cut production times by a third and costs by 15 per cent but their improved efficiency is not the most striking feature of what is happening in Charlotte. More fundamentally, the Siemens operations offer a microcosm of the factors behind a far-reaching new industrial revolution that is altering the global balance of power in goods production.
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This new period has the potential to turn winners into losers and also-rans into champions. It provides high-cost nations with a way back into areas of manufacturing some of them thought they had lost to emerging economies such as China and India.
In many countries, policy makers are re-examining the potential of production industries to generate jobs and growth at a time of great economic uncertainty. “Everywhere I go, re-industrialisation is at the forefront of political thought,” says Peter Löscher, Siemens chief executive.
There are seven features that define this new era in which manufacturers, once dismissed as grimy and uncompetitive, can once again be seen as a powerful engines of growth.
First, “networked manufacturing” makes it easier for businesses to operate in dispersed locations, drawing on skills spread across their empires.
In the North Carolina unit, workers are connected with 350 global parts suppliers and about 3,000 engineers scattered around the world in other Siemens centres.
Through such ties, the Charlotte plant has gained access to new ideas in production and design, some of which are derived from industries as diverse as medical equipment and car production, helping the unit to be competitive despite the handicap of relatively high wage costs.
Joe Hogan, chief executive of ABB, the Swiss-Swedish engineering group, says new technologies are removing the incentives to relocate intricate manufacturing away from high-cost countries.
Second, manufacturers are harnessing advances in technology. The US factory uses an array of new ideas, from new types of surface coatings to advances in computer-aided design.
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In the new era, says Omar Ishrak, chief executive of US medical equipment maker Medtronic, combining technologies – in anything from electronics to biotechnology – will prove crucial. “It’s not enough to know about different technologies, you have to be able to combine them,” he says.
A third factor is “industrial democracy”. More countries have a role in manufacturing, with China leading the way. This can be seen at Charlotte, which can take advantage of its 40 per cent stake in Shanghai Electric, a group offering Siemens insight into the latest Asian trends and production facilities.
“Personalised production” is illustrated in techniques to ensure that most of the gas turbines being made in the plant incorporate bespoke features for consumers.
The turbine plant also depends on ideas that have been produced in a number of “niche” industries – the fifth factor. Large manufacturing operations are creating more work for boutique operations. The North Carolina plant is a big user of machines for boring tiny holes in turbine blades produced by UK-based niche manufacturer Winbro.
While networked manufacturing widens the geographical options, companies also see a virtue in “cluster dynamics” – having groups of suppliers concentrated in small areas to help ideas flow more freely. The Charlotte unit has 15 local suppliers and managers are keen for a threefold increase in this number in five years.
Environmental imperatives are the final component of the new revolution. The turbines produced in the factory have higher standards of efficiency than previous generations, assisting in reducing emissions of carbon dioxide from power stations.
The new industrial revolution reduces the barriers for manufacturing, making it possible for more companies and countries to compete. But the new world of the new era will not be “flat”. Diversity will remain, with opportunities created by organisation and imagination. The rewards will go to those that boost their brainpower reserves and technology, while making the most of global connections.
“There’s a sense that we are seeing a global manufacturing renaissance,” says Jeff Immelt, chief executive of General Electric.
For more on the seven ages of manufacturing, view our interactive graphic at: www./industrialrevolution