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21st century manufacturing, the jobs, workers and technology for a new era

A NOTE BY THE DIRECTOR                                                                                                              Ditchley 2016/11

EXECUTIVE SUMMARY

CONTEXT AND WHY IT MATTERS
There is a public conception that manufacturing is in terminal decline in western societies.  This is not the case as manufacturing remains the backbone of a modern economy, even if the numbers of directly employed people are lower.  The technological revolution is about to enter a new phase.  This could bring significant and perhaps rapid change in manufacturing, the broader economy and the labour market.  This conference took a look at what needs to be done to take advantage of the opportunities ahead, whilst managing the significant risks of disruption.

PEOPLE
Linda Hasenfratz, CEO of Linamar, a global vehicle parts manufacturer, chaired a group that included business leaders, government advisers, senior officials, academic specialists and scientists from the UK, US, Canada and a range of other countries.

WHAT IS COMING SOON
A number of maturing technologies are likely to come together in manufacturing in the next few years to drive continued evolution.  This will mean more automation. Rather than an absolute lack of jobs, the problem is more likely to be a mismatch between the new high-level jobs that emerge and the skills and adaptability of the people who used to work in other roles that are no longer viable.  The options for a working semi-skilled lower middle class will continue to reduce across the economy and manufacturing will be no exception.  People will need significant direction and support, and retraining and re-education will be necessary at all stages of careers.  Problem solving skills, technological awareness and adaptability will be more important than any specific skills sets such as computer coding in a particular language.

ACTIONS

Educate
Education is the most important action and for several categories of people: 

  • Governments and officials.  We still need better mechanisms, pathways and communication channels to connect government to industry to work together and shape sensible regulation.
  • Boards of companies.  Many boards are still behind the game on technology and data, and vulnerable on cyber security in particular.
  • Teachers, academics and parents, who are inadvertently turning young people away from fulfilling and lucrative careers by their lack of understanding of modern manufacturing.  We need to communicate a broader view of manufacturing as a significant ecosystem with manufacturing jobs at the core and therefore critical to any vibrant economy.
  • Citizens and workers.  There is time for people to retrain and to re-educate themselves, if they start now.  Technology provides easier means of access to the necessary information and classes than ever before.  People need to adjust to lifelong learning.  The phrase “formative years” should be banned.  Transitions to close skill gaps should be enabled at every stage – in the early years, after secondary education and throughout a working career.  All this amounts to a significant shift in society’s expectations.

Measure
There is a need for better measurement and understanding of the role of manufacturing in the economy.  We need to measure accurately and analyze that data before drawing conclusions.  Understand consequences. 

Own
There is a need for better coordination between government and companies in developing the right environment for innovation and growth.  This includes interaction with science to fuel innovation and the financial eco-systems to take companies from start-ups to large scale.  It also means ensuring a broad level of engagement, ownership and accountability as to the evolution underway.

Promote
There are many success stories in manufacturing.  More needs to be done to promote these.  Manufacturing needs to win back some of the kudos that Silicon Valley has monopolised in the public imagination, perhaps thanks to Steve Jobs and his emulators as charismatic “founders”. Manufacturing is the ultimate integrator of technology.  It is where the future lies and we should celebrate its vibrancy. 

FULL REPORT

CONTEXT AND WHY IT MATTERS
There is a widespread public conception that manufacturing is in terminal decline in western societies and has moved for good to China and other countries with lower wages.  The central role of manufacturing in the economy is not well understood and attitudes of students, teachers and politicians are based on a view of manufacturing that is decades out of date.  At the same time there are many signs that the technological revolution, which has been building up momentum over the last few decades on IT, is about to enter a new phase, continuing the transformation of manufacturing.  This could bring significant and perhaps rapid change in the broader economy and labour market as technologies like Artificial Intelligence, autonomous vehicles, advanced materials and blockchain take leaps forward.  This conference took a look at what needs to be done to take advantage of the great opportunities ahead, whilst managing the significant risks of disruption.

PEOPLE
Linda Hasenfratz, CEO of Linamar, a global vehicle parts manufacturer, chaired a group that included business leaders, government advisers, senior officials, academic specialists and scientists from the UK, US, Canada and a range of other countries.

WHERE WE ARE NOW
Although the number of people working directly in manufacturing in western societies has reduced, manufacturing remains the backbone of a modern economy around which many other jobs are structured.  For every job in manufacturing there are probably six or seven others outside the company in linked services.  Many of these linked jobs are high quality, offering dignity, identity and decent income.  They are often directly related to the work of the manufacturing company, for example in design, marketing and logistics, rather than just the general flow of wealth into the local economy.

The conception of China as a low wage manufacturing economy is out of date.  China is busily modernising its factories and is the world’s largest purchaser of industrial robots, for example.  China’s policy is to increase wages to develop its internal consumer market.  China is investing in AI and other advanced forms of automation perhaps even more determinedly than the West.  This opens up the possibility of re-shoring (the return of manufacturing to First World countries) in order to shorten supply chains.

Modern manufacturing facilities are one of the most powerful integrators of technology, with more in common with a science lab than a Victorian mill.  But it seems to be the latter vision that continues to dominate the imaginations of parents, teachers and other academics who were perceived to be unthinkingly dissuading their charges from working in manufacturing.  In contrast to the perceived excitement and pace of “tech” – used as shorthand for Silicon Valley-style innovation – manufacturing is still seen by many as “old” industry in decline.  The reality is probably the opposite with many engineering jobs in manufacturing intrinsically more interesting than many digital economy jobs but this is hard to get across.  Even arranging visits to modern manufacturing facilities tended to bounce off deep-seated prejudices that manufacturing is about noise, grime and the clang of steel.

Alongside industrial scale manufacturing there is also a resurgence in small-scale artisanal manufacturing.  These smaller companies are often missed in economic statistics but make a significant contribution in aggregate to economies.

WHAT IS COMING SOON
A number of maturing technologies are likely to come together in manufacturing to drive continued evolution.  This will mean still fewer people on the manufacturing shop floor and perhaps fewer employed directly by the manufacturing company itself.  But a successful manufacturing element in an economy will continue to drive the creation of new, highly skilled jobs elsewhere in the economy.

The technologies in question include Artificial Intelligence and increasingly autonomous machines.  Human interaction with the manufacturing process will be at a high level and largely through AI interfaces, rather than at the level of controlling individual CNC machines.  Much of the movement of materials around a factory site will soon be managed by drones, reducing the need for drivers.  AI will also eat up a significant number of semi-skilled clerical tasks, including the lower levels of textual research, accounts, marketing and procurement in a manufacturing firm.

Rather than an absolute lack of jobs, the problem is more likely to be a mismatch between the new high level jobs available and the skills and adaptability of the people who used to work in semi-skilled roles.  The options for a working lower middle class will continue to reduce across the economy and manufacturing will be no exception.  People will need significant direction and support, and retraining and re-education will be necessary at all stages of careers.  Problem solving skills, technological awareness and adaptability will be more important than any specific skills sets such as computer coding in a particular language. 

Alongside these jobs in the wider manufacturing eco-system, it was argued by some of the group that there would also be strong demand for practical skills in making things – welding, carpentry and other crafts.  These would have applications in the smaller-scale economy and for innovation and prototyping.  The focus on academic education through the expansion of universities is a problem.  More apprenticeships and more practical education could be valuable.  Increasingly, companies were setting up programmes to grow the skills and capabilities they needed, rather than relying on state education which continued to push out graduates who were not prepared for industry.

Big changes will come from the convergence of progress in bio-engineering, advanced materials and further steps forward on machine learning and AI.  When added to the probable eventual achievement of some form of quantum computing, it was hard to predict the cumulative effects on manufacturing, the economy and society in ten years’ time.  We should expect, though, to see every element in a manufacturing process equipped with sensors and all aspects of industrial processes tracked through blockchain, enabling companies to connect distributed supply chains and to develop new business models and new markets.

The value of data will continue to grow and the question of who owns data and controls access to it is becoming a critical issue for innovation and competition.  Large companies are increasingly seeking to centralise and to protect data, demanding also the rights to data from smaller suppliers’ operations.

All this data, sensor activity, automation and the Internet of Things will make cyber security a critical reputational and safety issue for manufacturing companies.   

ACTIONS
The recurring theme of the discussion was the need for education and training in the broadest sense, in order for people at all levels to understand the changes that are underway and their opportunities and options if they can seize them.

Education was required for:-

  • Governments and officials.  There are still far too few engineers, scientists and business people in government.  We need better mechanisms to connect government to industry, perhaps embedding or seconding people; creating demonstration centres; and joining forces in thematic and regional groups of companies to better engage with government.
  • Boards of companies.  Many boards are still behind the game on technology and data and vulnerable on cyber security in particular.
  • Teachers, academics and parents.  People who thought they were doing their best for children were inadvertently turning them away from fulfilling and lucrative careers by their lack of understanding of modern manufacturing.
  • Citizens and workers.  There was time for people to retrain and to re-educate themselves if they started now.  Technology has provided easier means of access to the necessary information and classes than ever before.  People needed to adjust to lifelong learning.  The phrase “formative years” should be banned. To remain relevant in the work place then people would have to continue to develop throughout their working lives.  All this amounts to a very significant shift in society’s expectations.
There was a need for better measurement and understanding of the role of manufacturing in the economy.  Manufacturing might be measured at only 10 percent of the economy but a lot depended on that 10 percent.  More precise data and more study of it would be helpful.

There was a need for better coordination between government and companies in developing the right environment for innovation and growth.  Government should set principles and broad guidelines but industrial strategy cannot in the end deliver growth, only companies can do that.  Companies should be involved at the early stages of the development of regulations.  Companies and governments needed to cooperate on creating the new eco-systems to allow the development of new business models.  This included interaction with science to fuel innovation and the financial eco-systems to take companies from start-ups to large scale.

There were many success stories in manufacturing.  More needed to be done to promote these.  Manufacturing needed to win back some of the kudos that Silicon Valley has monopolised in the public imagination thanks to Steve Jobs and his emulators as charismatic “founders”.  It was noted that different rules seemed to apply to IT companies when taking risks.  Manufacturing needed to show that it is an alternative hub of innovation, driving economies forward and creating new opportunities for rewarding work.

This Note reflects the Director’s personal impressions of the conference. No participant is in any way committed to its content or expression.


CHAIR: Ms Linda Hasenfratz

CEO, Linamar Corp; Chair, Business Council of Canada; Independent Director, Canadian Imperial Bank of Commerce;  Independent Director, Faurecia S.A. (2011-); Board of Advisors, Catalyst Canada (2003-); council member, Women On Boards Advisory Council (2013).

CANADA

Mr Clifton Isings CFA 
Vice-President - Investments (2014-), formerly Manager - International Equities (2005-14), CN Investment Division (Canadian National Railway Pension Fund); Member, CN's U.S. Subsidiaries Investment Committee (2009-); Member,  Investment Committee, Canadian Olympics (2010-).

Mr John Knubley 
Deputy Minister of Innovation, Science & Economic Development Canada, formerly Industry Canada.

Mr Patrick Lortie 
Partner, Manufacturing, Transportation, and Energy practice and Head of Montreal office, Oliver Wyman.

Mr Pierre Lortie CM 
Senior Business Advisor, Dentons Canada LLP (2006-); President, Canadian Ditchley; Governor, Council of Canadian Academies; Director, Canadian Consortium for Intelligent Aerospace Manufacturing; Chairman, The Schmelk Canada Foundation. Formerly: President, Canadian Academy of Engineering; President and Chief Operating Officer: Bombardier Transportation; Bombardier Capital; Bombardier International; President, Bombardier Regional Aircraft Division. A Governor, The Ditchley Foundation.

Mr Jayson Myers 
Senior Advisor, Canadian Manufacturers & Exporters Association (CME); Chief Executive, Jayson Myers Public Affairs Inc.; Chair, Canadian Manufacturing Coalition. Formerly: President & Chief Executive, CME; Co-Chair, Canadian Roundtable on Workforce Skills.

Dr Pearl Sullivan
Dean, Faculty of Engineering, and Professor of Mechanical and Mechatronics Engineering, University of Waterloo; Ontario Research Fund Advisory Board; Fellow, Institute of Materials, Minerals and Mining, UK.

CANADA/USA

Mr Samuel Galler
DPhil candidate in International Development on a Rhodes Scholarship, University of Oxford.

FRANCE

Professor Raja Chatila 
Director, Institute of Intelligent Systems and Robotics, Pierre and Marie Curie University; Director, 'SMART' Laboratory of Excellence on human-machine interaction; member, Ethics Committee on research in Information Science and Technology.

INDIA

Mr Hemant Luthra 
Chairman, Mahindra CIE; Independent Director and Member of Boards with interests in Alternative Energy and Asset Reconstruction; Senior Advisor, Mahindra & Mahindra; Corporate Advisor, Singapore Sovereign Wealth Fund, Temasek.

IRELAND

Dr Eoin O'Sullivan 
Director, Centre for Science, Technology and Innovation, and Babbage Fellow of Technology & Innovation Policy, Institute for Manufacturing, Department of Engineering, University of Cambridge. Formerly: Special Advisor to the Director General, Science Foundation Ireland; Senior Policy Advisor, Forfas (the Irish National Policy and Advisory Board for Enterprise, Trade, Science, Technology and Innovation).

IRELAND/USA


Dr Pippa Malmgren 
President and Founder, Principalis, London; Non-Executive Director, Department for International Trade (2016-); Chairman, Lewis Advisory Board; co-Founder, H Robotics; Advisory Board, MIT; member, Manufacturing INitiative, Indiana University. Formerly: member, President's Working Group on Financial Markets, President's Working Group on Corporate Governance and Special Assistant to the President for Economic Policy, National Economic Council. A Governor, a member of the Council of Management and of the Business Committee, The Ditchley Foundation.

ITALY

Dr. Ing. Arturo Baroncelli 
Board Member , International Federation of Robotics.

NETHERLANDS

Professor Dr Egbert-Jan Sol
NO Industry, Eindhoven (2011-): Chief Technology Officer (2015-) and Program Director Smart Industry (Netherlands); Executive Director, High-Tech Systems & Materials; Vice-Chairman, European Factories of the Future Association; Chairman, Digital City Eindhoven. Formerly: Vice President Technology, Ericsson Telecommunicatie BV (1996-2003).

NETHERLANDS/USA

Mr Antoine van Agtmael 
Senior Advisor, Garten Rothkopf, Washington, DC; co-author, 'The Smartest Places on Earth'; Trustee, Brookings Institution. Formerly: Chairman, AshmoreEMM; Founder (1987), CEO and CIO, Emerging Markets Management LLC; Founding Director, Strategic Investment GroupSM; Deputy Director, Capital Markets department, International Finance Corporation; Division Chief, World Bank; Managing Director, TISCO; Chair, NPR Foundation.

OECD/USA

Mr Andrew Wyckoff 
Director, Directorate for Science, Technology and Innovation, OECD. Formerly: U.S. Congressional Office of Technology Assessment; U.S. National Science Foundation; The Brookings Institution.

TRINIDAD & TOBAGO/UK/USA

Mr Damien Smith 
Economic Advisor, Future of Work, Department for Work and Pensions.

UK

Dr Claire Barlow 
Senior Lecturer and Deputy Head of Department, Cambridge University Engineering Department; Fellow, Institute of Materials, Minerals and Mining.

Lord Dundonald 
Founding Director, Anglo Scientific; Chair, Radio Physics Solutions; Chair, Tharos Ltd. Formerly: Director, Anglo Pacific; Member, House of Lords Parliamentary Information Technology Committee.

Mr Richard Elsy 

Chief Executive, High Value Manufacturing Catapult, Solihull (2012-). Formerly: Chief Executive, Torotrak plc; Product Development Director, Jaguar Cars Ltd; BMW, Munich; executive board member, Land Rover.

Professor Steve Evans 
Director of Research in Industrial Sustainability, Institute for Manufacturing, University of Cambridge; member, Lead Expert Group for the UK Foresight report on the Future of Manufacturing. Formerly: Martin-Baker Engineering, Nissan, Marconi, Plessey & Co.

Dr Dougal Goodman OBE FREng 
Chief Executive, The Foundation for Science and Technology; Fellow: Royal Academy of Engineering, Institution of Civil Engineers, Institute of Materials, Minerals and Mining, and Institute of Physics. Formerly: Deputy Director, British Antarctic Survey; General Manager, BP. A member of the Programme Committee, The Ditchley Foundation.

Professor Sir Mike Gregory CBE FREng 
Fellow, Churchill College, University of Cambridge. Formerly: Head, Manufacturing and Management Division, Department of Engineering, and Head, Institute for Manufacturing, University of Cambridge; Chair UK Manufacturing Professors' Forum; Co-Chair, UK Government's Advisory Group on Manufacturing.

Mr Jonathan Hellewell LVO 
Advisor, Government Affairs team, Prime Minister's Office, No 10 Downing Street.

Mr David S. Holmes 
Manufacturing Director, BAE Systems Military Air and Information Business Unit.

Mr Will Hutton 
Principal, Hertford College, University of Oxford (2011-); Chair, Big Innovation Centre. Formerly: Chief Executive, the Work Foundation (2000-08); Editor-in-Chief, The Observer (1996-2000). A Governor of the Ditchley Foundation.

Mr Peter Marsh 
Lecturer, writer and former Manufacturing Editor, The Financial Times. Author, 'The New Industrial Revolution: Consumers, Globalization and the End of Mass Production'.

Mr Ravi Mattu 
Financial Times (2000-): first Editorial Director, FT². Formerly: Technology, Media and Telecoms Editor; acting Editor and Deputy Editor, FT Weekend Magazine (2013-14); Editor, Business Life, Financial Times (2009-13).

Professor Svetan Ratchev MEng PhD CEng MIET FIMechE 
Director, Institute for Advanced Manufacturing, Head, Advanced Manufacturing Technology Research Group and Director, Centre for Aerospace Manufacturing, Faculty of Engineering, University of Nottingham; Principal Investigator, EPSRC Cloud Manufacturing and Evolvable Assembly Systems research programmes; Director, EPSRC Manufacturing Technology Industrial Engineering Doctoral Centre.

Dr Claire Ruggiero 
Innovation Director, Lloyd's Register (2016-); Vice President Governance and Innovation Inspection Services, Lloyd's Register Energy (2013-). Formerly: Growth and Innovation Manager, LR Rail Asia, Lloyd's Register (2011-13).

Dr Robert Sorrell 
BP (1987-): Associate Director, BP International Centre for Advanced Materials; Vice President for Public Partnerships. Formerly: Vice President for Refining and Marketing Technology Strategy.

Mr Daniel Susskind 
Fellow in Economics, Balliol College, University of Oxford; co-author, 'The Future of the Professions' (OUP 2015).

Sir Mark Walport FRS FMedSci 
Chief Scientific Adviser to HM Government, Government Office for Science. Formerly: Director, Wellcome Trust; Professor of Medicine and Head of the Division of Medicine, Imperial College London.

USA

Mr Nicolas Minbiole 
Vice President, Global Engineering, Technology and Operations, CAE, Quebec (2016-). Formerly: Senior Vice President, Head of Quality, Airbus Defence and Space, Germany; Vice President of Global Quality, Tesla Motors; Program Quality Director, Nissan North America.

Dr Clifford Winston 

Searle Freedom Trust Senior Fellow, Economic Studies program, Brookings Institution. Formerly: Associate Professor, Transportation Systems Division, Department of Civil Engineering, Massachusetts Institute of Technology.

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