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Manufacturing enhances innovation and competitiveness. How can leaders support it?

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Is ‘Made in America’ back?

In the news

•

Psychic repair teams. Demand for predictive-maintenance technology is surging, helping to modernize factories and boost productivity. By listening to sounds made by factory equipment and comparing them with a large database of recordings, AI systems can confirm that a machine is healthy or predict when it’s on the verge of breaking down. One company said that a similar technology can reduce unplanned machine downtime by up to 50%. As manufacturers strain to increase efficiency in the wake of supply chain disruptions, the global market for the technology is expected to grow quickly—hitting $18.6 billion by 2027. [WSJ]

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Manufacturing’s moment. Conditions might be ripe for US manufacturing to thrive. The supply chain breakdowns of the past few years have American companies yearning to bring manufacturing closer to home. ESG considerations make localized production a more attractive option. National security concerns also weigh in favor of domestic manufacturing for products such as computer chips. Moreover, automation can curb the cost of labor. Some who’ve been clamoring to “reshore” manufacturing are asking: If not now, when? [Bloomberg]

“Although it only accounts for about 11% of US GDP, US manufacturing drives 20% of the nation’s capital investment, 60% of exports, and over 70% of business R&D.”

On McKinsey.com

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Making stuff matters. Since 1997, the US has lost about 25% of its manufacturing firms and about 4.5 million manufacturing jobs, says McKinsey partner Eric Chewning. A lack of manufacturing hinders technical innovation and could make America particularly susceptible to supply chain disruption. In his previous work at the US Department of Defense, Chewning also saw that there was a single supplier for many components of military equipment—this lack of resilience could potentially lead to security vulnerabilities. A resurgent US manufacturing sector would be a valuable national resource.

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Skills to pay the bills. Americans in the middle of the country who do not have college degrees could benefit greatly from an influx of good manufacturing jobs. But in a conversation with McKinsey senior partner André Dua, Chewning notes that tens of thousands of jobs may require new digital capabilities that many workers don’t currently have. Before America can build more products such as computer ships or naval submarines, an infusion of resources could be needed to reskill the manufacturing workforce. See four goals for the future of America where manufacturing plays an important role.

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 12:32 - 29 Sep 2022

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Manufacturing enhances innovation and competitiveness. How can leaders support it?

Is ‘Made in America’ back?

In the news

“Although it only accounts for about 11% of US GDP, US manufacturing drives 20% of the nation’s capital investment, 60% of exports, and over 70% of business R&D.”

On McKinsey.com