Reshoring manufacturing: How digital transformation is bringing back jobs

By Per Treven, Manufacturing Business Development Director, Ericsson North America

Digitalization, driven by advances in cellular connectivity, is coming to the manufacturing industry. It’s helping drive leaps in productivity, flexible operations, worker safety and even sustainability.

But as the industry adjusts to new realities coming out of the COVID-19 pandemic, another benefit of digitalization being explored is how technological advances like automation and the Industry 4.0 movement are helping reshore manufacturing jobs and increase competitiveness.

Industry 4.0 lays the groundwork for reshoring

For industry, the pandemic made it painfully clear that manufacturing abroad is extremely vulnerable to disruptions. One result of that realization is that companies are considering bringing back some of the jobs and production capabilities from overseas. But doing so will depend on reshaping what manufacturing looks like through technology.

Relatedly, the pandemic also accelerated digitalization efforts that have been slowly but surely coming to the manufacturing industry. Industry 4.0 is a blanket term, describing the significant transformation happening in the way goods are packaged and delivered, and the move towards automation and more flexible industrial production.

Technology can be a major enabler for solving some of the supply chain, production and labor industries the industry is facing. In a recent survey, 94 percent of companies said Industry 4.0 practices helped during the pandemic, and more than 50 percent said they were critical to pandemic response.

It’s a critical point in time for the industry and for people who want to see these jobs reshored. And digitalization, including automation, can help manufacturers capture some of the efficiencies that have driven offshoring in recent years, along with helping make the supply chain more resilient to potential future disruptions.

Shortening the supply chain

Typically, there’s some trepidation about automation in manufacturing jobs, mostly centered around the idea of workers being replaced by robots.

Workers have felt the disruptions of the last several years and any concern about the future is understandable. But we shouldn’t overlook the positive benefits that automation can bring to manufacturing workers and the industry overall.

The fact is that automation is affecting jobs globally. For example, over the last 10 years, Chinese manufacturing has seen a 6% growth compared to a .4% increase in the US. That’s being driven at least partly by automation technology, which China is adopting much faster than other regions. So to some extent, adopting more automation in places like the US and Europe is necessary just to keep pace with the rest of the world. It’s an efficiency gap that needs to be closed if manufacturers are to successfully bring plants and jobs closer to their home markets.

Automation, especially when coupled with AI/machine learning, can help. At Ericsson’s smart factory in Lewisville, Texas, where connectivity comes from a state-of-the-art 5G network, we’re putting these principles into practice – shortening the supply chain by making the equipment for 5G network rollouts in the US closer to where it will be deployed.

Closing the efficiency gap with private networks

And technology is enabling incredible efficiencies at the facility itself. An asset-tracking solution digitally integrates with factory floor sensors to track critical assets’ location, condition and status in real time. The solution provides real-time visibility of finished goods into the production floor and brought an immediate impact: a 10 percent increase in repair tech productivity and a 5 percent reduction in rework and waste.

Also in Lewisville, maintenance techs are utilizing virtual and augmented reality headsets to help experts hone in on problems, even if they’re not in the same facility. The result: A 10 percent decrease in plant maintenance labor and a 5 percent decrease in equipment downtime because of more efficient troubleshooting.

All this is chipping away at the cost reductions that initially prompted the offshoring movement, in addition to the added benefits of keeping the supply chain focused in the US and minimizing disruptions.

Powering these solutions is a robust, secure private network. Lewisville’s network is 5G combined with a 4G/LTE network, but in most circumstances the use cases’ characteristics determine which technology is best suited for the facility’s connectivity requirements. Additionally, LTE networks have the ability to seamlessly upgrade to 5G.

Private cellular networks bring several capabilities that will enable the use cases enabling reshoring. Compared to Wi-Fi, not only are the networks more reliable and efficient – delivering more power with less equipment around the factory – cellular networks are less susceptible to interference, and give plant mangers the ability to prioritize data traffic to key operations like safety functions through network slicing.

Upskilling is key to bringing manufacturing jobs back

There are other benefits, enabled by the robust connectivity of private networks, that can help build the case to reshore manufacturing. Automation helps with better volume production, and a digitalized factory has increased flexibility on the floor. A nimbler factory can customize to produce parts locally, essentially shortening the supply chain and avoiding the need to go offshore to find a specific part. Digitalization also allows for quicker retrofitting of existing plants and processes, again mitigating the need to send work elsewhere.

While the networks will be the backbone of the technologies enabling reshoring, it’s not all about technologies. New skills will be needed for the workforce, being the extension of the digital design process. As heavy industry digitalizes, the idea of what it means to be a “blue collar” worker will be redefined. AI-involved processes in the factory will require people on the floor who can take data and make sense of it in real time – a different skill set than an analyst sitting in an office elsewhere. Reskilling workers is a critical component of the reshoring movement. The technology that comes with digitalization will create 2.1 million new jobs, according to the World Economic Forum. But the workers currently in manufacturing will need to upgrade their skills to compete for these new positions. Computer skills will be of particular importance, however, there will not be a need to employ engineers for the factory floor. And here again, robust connectivity can play a role in training, enabling remote training and virtual exercises to prepare workers for the future.

Overall, digitalization represents a tremendous opportunity to reshore manufacturing jobs from overseas. Plants with reliable, fast and secure digital connectivity – especially cellular private networks than can keep data safe and focus traffic to critical functions – will enable the gains in productivity and efficiency that can bring these jobs back.

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Learn about Ericsson’s US Smart Factory

Smart manufacturing with seamless connectivity

Unlocking the value of Industry 4.0 with 5G

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