North American manufacturers are expanding operations and increasing output. Here’s how the materials handling industry is enabling the emerging comeback.

Is North America on the cusp of a manufacturing renaissance? Is one already underway?

Those questions are being studied and reported on by consulting groups and universities. The answers, however, have been a mixed bag.

In a sobering view, the MIT Taskforce on Innovation and Production reports that the output of U.S. high tech manufacturing, while still the largest in the world, “declined from 34% in 1998 to 28% in 2010 as other countries made big strides ahead into this market segment.” More starkly, MIT points out that “invented in the USA no longer means made in the USA,” and our best and brightest create their products here but manufacture them elsewhere. While business and government are working to encourage an industrialization makeover, some initiatives are “so new that we cannot know if any one of them will ultimately work or not.”

At the same time, the Boston Consulting Group is optimistic—perhaps even giddy—about our manufacturing future. In a report released last August, BCG contends that “the United States is steadily becoming one of the lowest-cost countries for manufacturing in the developed world.” The big drivers include a new, lower cost of labor, productivity gains, low cost energy and lower shipping costs on important trade routes. Other surveys have found that as many as one-third of American companies are considering the move of some production back to the United States.

If manufacturing comes back—or, is already coming back—materials handling automation will play a role. In part, that’s because the costs of manufacturing in the United States are still higher than low cost countries like China, according to Harry Moser, the founder of the Reshoring Initiative. In some instances, however, that gap can be narrowed with automation. “A 30% difference might be too large to overcome,” says Moser. “But if there’s only a 5% difference, maybe you can bring in automation to bridge that gap.”

That’s already happening in some industries. As The New York Times reported last September, the textile industry is competitive again “because machines have replaced humans at almost every point in the production process.” Similar trends are underway with materials handling automation in the plant.

For this Big Picture article, Modern talked to six systems integrators with a manufacturing heritage to see how the manufacturing comeback looks from their vantage point.

Dematic: Working smarter and more productively
To some systems integrators, the resurgence of manufacturing appears to be a strategic resurgence. “Our customers are asking where it makes sense to manufacture domestically,” says Mike Kotecki, senior vice president at Dematic. Automation, he adds, is definitely a part of that conversation.

The interest is being driven by several trends. One is labor avoidance. In the past, manufacturers were comfortable using labor until an operation reached a choke point. Now, manufacturers are following the lead of retail distributors and looking at automation as a way to avoid bringing back people who were let go prior to the financial crisis.

A second trend is the ability to use software and semi-automation to complement the existing workforce. “There’s an interest in voice- and light-directed solutions that are driven by software to increase the productivity of the precious labor they have on the floor,” Kotecki says. “We have people pushing voice-activated carts to pick parts and components on the line.”

Adding software and technology to the process brings a new level of quality assurance, especially when a bill of materials can change on the fly. “Software allows you to drive quality into the manufacturing process because you’re tracking everything that’s picked and assembled,” he says.

Similarly, automated materials handling technologies, such as automatic guided vehicles (AGVs) and automated storage solutions, are being applied to a sophisticated manufacturing processes. “We’re installing a shuttle system at a manufacturer that makes sophisticated tooling for the oil business,” Kotecki says. “The final product has a high value and precise sequencing is important to the process. The shuttle is repeatable and trackable.”

Intelligrated: Materials handling robots are coming
Labor is driving many of the decisions around automation in manufacturing today, even if the issue isn’t necessarily, or solely, the cost of labor. “There’s no question that our manufacturing customers want to get greater output of their production lines with the same amount of labor,” says Earl Wohlrab, product manager of robotic integration and palletizing for Intelligrated. “At the same time, skilled workers are retiring and these manufacturers realize they will soon have a labor issue.”

Regulatory changes also drive automation. “We saw a fairly healthy surge in projects in California when the state lowered the amount of weight that a person can lift,” Wohlrab says. “Instead of assigning two people to a task, automation became a viable option.”

Labor issues have coincided with a market that requires new approaches to the plant floor. For instance, packaging changes more frequently and with more variations than ever. A beverage manufacturer, for example, may be dealing with six packs, 12 packs, 24 packs and specialty packs, like a five pack. It may have to deal with corrugated cartons, plastic bottles, or some other material and type.

What’s more, a supplier may now be required to produce some packages in limited quantities that will only be used for display purposes and have to be handled differently from the rest of the line. “They’re being forced to bring something new and unique into the operation,” says Wohlrab. “Robots are versatile and flexible enough to handle those variations. And, if a customer has some idea of what might be coming at them in the future, we can include that into the design today so that they’re ready tomorrow.”