DIGITAL INNOVATION MANUFACTURING EXECUTIVE. The Best Strategy for Reclaiming U.S. Manufacturing Jobs Is...

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1 Tap Into Critical Conversations Happening Daily Join today! MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL B O LD I D E A S F O R A B E T T E R F U T U RE / M A Y / T W E N T Y D O L LA RS The Best Strategy for Reclaiming U.S. Manufacturing Jobs Is... DIGITAL INNOVATION By Zvi Feuer and Jeff Miller SIEMENS PLM MAY 2012

2 The Best Strategy for Reclaiming U.S. Manufacturing Jobs Is... DIGITAL INNOVATION THE KEY IS TO INNOVATE USING DIGITAL TECHNOLOGY ACROSS THE ENTIRE MANUFACTURING PROCESS FROM DESIGN, THROUGH ENGINEERING AND MANUFACTURING.... By Zvi Feuer and Jeff Miller

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4 MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL Zvi Feuer is senior vice president, manufacturing engineering software, at Siemens PLM Software. Jeff Miller is marketing programs director, Americas marketing, at Siemens PLM Software. PRESIDENT OBAMA HAS BEEN ON THE ROAD IN RECENT weeks with a positive message about the U.S. economy. Job growth has been strong in the past few months, and some of that growth includes increases in manufacturing employment jobs that many feared were gone from this country for good. One of the president s stops was the new Rolls-Royce aircraft engine manufacturing facility in Prince George County, VA, where he told approximately 1,460 workers and community leaders, This facility is part of the evidence of what s going on all across the country, noting that U.S. manufacturers are adding jobs for the first time since the 1990s. At other stops in Wisconsin, Washington state, and North Carolina, Obama highlighted the economy s addition of 429,000 manufacturing jobs in the last two years. With the renaissance of American manufacturing as one of his key economic goals, Obama has laid out a Blueprint for an America Built to Last that encourages companies to create manufacturing jobs in the U.S. while removing deductions for shipping jobs overseas and encouraging in-sourcing ME Global Leadership Community How Can We Afford These Jobs? It s obviously clear to the president and his advisors that increasing the number of good manufacturing jobs is critical to our country s economic recovery. Without them, consumer spending will continue to lag. But this poses a conundrum. We need these high-paying manufacturing jobs to get consumers spending again, but it was those high salaries (and benefits) that got many of those jobs moved offshore. Siemens PLM Software shares the president s belief that bringing back good manufacturing jobs is critical to this country s future. In fact, we would take it a step further and say that due to America s leadership role in the global economy, bringing back U.S. manufacturing jobs is important for the economic health of the entire world. But can U.S. companies afford to bring back those jobs? Our answer is yes. Companies can afford the higher labor costs they incur by making their products here if they can balance those costs with 1) savings in other places, and 2) continued development of products that people and businesses want to buy. This will require innovation, not simply in the sense of conceiving appealing new products, but innovation across the entire process of product design, engineering, and manufacturing to improve efficiency and productivity. This idea is gaining currency among many of America s leading CEOs. The March 2012 issue of the Harvard Business Review, for example, includes an article by Jeffrey Immelt, chairman and CEO of General Electric, in which he discussed his company s effort to bring back some of the jobs the company had previously sent to low-wage countries. Immelt cites the need for two types of innovation, human and technical, as critical to the renewal of American manufacturing. Our business strategy could no longer rely on having employees literally hand off what they were best at doing, Immelt wrote. But we could change the environment in

5 Feature/ Digital Innovation /4/6 which they worked, engaging the entire workforce from design to development to assembly. That is human innovation. Regarding technical innovation, Immelt gave the example of a new GE Aviation plant that will open in 2013 to meet the growing global demand for the company s jet engines. We plan to invest about $60 million and create 250 jobs in a new 300,000-square-foot facility to manufacture advanced composite components for our jet engines, he wrote. We will continue to invest in products throughout our businesses, because technical innovation more specifically, advanced manufacturing and materials processes is the other key to America s manufacturing revival. What This Means to You Manufacturing executives can no longer limit their considerable ingenuity to making the plant or even the supply chain operate more efficiently. To make it cost-effective for your company to bring manufacturing jobs back to this country, you will need to begin deploying advanced manufacturing and materials processes, similar to what GE is doing with its jet engine business. You must also ensure that the manufacturing function collaborates with other parts of the enterprise and becomes a source of innovation for everything from new product development to the delivery of value-added services. This is a tall order, and it places a lot of the responsibility for the renewal of U.S. manufacturing, the resurgence of the U.S. economy, and ultimately the health of the world economy, on you, the manufacturer. We may be biased, but we can t imagine a company being able to bring back these outsourced jobs without the use of digital manufacturing technology (see below). In fact, we would like to think that our customers have a distinct advantage in this arena, and that they will be the companies leading the renewal of American manufacturing. We say this because Siemens PLM Software has been working for years to develop technology aimed at increasing manufacturing productivity and creating an environment that supports innovation across the enterprise. And while many of our customers are using this technology today to support globally dispersed product development processes, digital manufacturing is equally applicable to a made-in-the-usa product strategy. In fact, we believe that it is only through the use of this technology that companies will be able to achieve the levels of innovation and efficiency necessary to counteract our country s higher labor costs. Digital Manufacturing Powers Productivity Digital manufacturing employs computer simulation, 3D visualization, analytics, and various collaboration tools to create product and manufacturing process definitions simultaneously. It evolved from manufacturing... We need high-paying manufacturing jobs to get consumers spending again, but those high salaries (and benefits) got many of those jobs moved offshore.... We can t imagine a company being able to bring back these outsourced jobs without digital manufacturing technology.

6 MANUFACTURING EXECUTIVE LEADERSHIP JOURNAL initiatives such as design for manufacturability (DFM), computer-integrated manufacturing (CIM), flexible manufacturing, Lean manufacturing, and other practices designed to improve collaboration between product and process design. One of the main ways digital manufacturing improves a company s productivity is by integrating the activities of product design, engineering, and manufacturing (including data integration among a company s various CAD, CAM, tool design, ERP, MES, and other applications). Before we explain in more detail why this is important for the return of U.S. jobs, let s look at what happens when this kind of integration isn t possible. There are quite a few well-known cases in the history of modern product development where a company developed a highly innovative product, then outsourced most of its production to companies around the globe. This looked like a good plan until the supply chain began shipping the sub-assembly back to the main assembly line, where it became clear the pieces didn t go together the way they should. These problems, usually caused by a lack of communication between design and manufacturing, increased the cost of the product and also generated significant delays in getting it into the market. Digital manufacturing minimizes or eliminates these costly mistakes by managing both the design and execution of manufacturing processes in a fully associative data model. This way, an engineering change is communicated precisely and immediately to manufacturing engineers. Similarly, input and expertise from manufacturing can be incorporated into the product even as it is being designed. Digital manufacturing boosts productivity in other ways as well. One is by enabling the re-use of best practices and optimized manufacturing processes. Digital manufacturing facilitates this by establishing a single source of product and process knowledge, and our customers have seen this to be a key enabler for achieving significant productivity gains. Product Complexity: No Longer a Problem Another important benefit of deploying digital manufacturing is that it helps a company manage the complexity that characterizes today s products and production processes. For example, digital manufacturing tools make it possible to plan, optimize, and validate manufacturing processes before the start of production. When you ve got a product that s more complex than anything else you ve ever made, and perhaps new production processes to go along with it, this can save enormous amounts of time. The key concept is that it is cheaper, faster, and more accurate to simulate using digi-... It s clear that the pendulum is starting to swing away from offshore manufacturing.

7 Feature/ Digital Innovation /6/6 tal technology than it is to physically prototype or test using trial-and-error methods, says an August 2011 CIMdata report on digital manufacturing. Digital manufacturing enabling technologies are the bridge from the virtual to the physical world. In addition, digital manufacturing tools make it possible to analyze the impact of changes quickly by associating product, process, resource, and plant information so that changes to any one facet will ripple through related elements automatically. If a design feature gets changed, for instance, the tooling for that feature may also change. There could also be changes to a plant where the part will be machined. Digital manufacturing solutions automatically show how a single design change affects every aspect of manufacturing planning and execution. Getting to Volume Production Sooner Under the digital manufacturing umbrella are applications that analyze tolerances, generate tool paths for machining processes, graphically program robots, and define and simulate material handling and flow through work cells and factories. As a whole, their effect is to get products launched sooner by decreasing the time it takes to start producing them in volume. The CIMdata report on digital manufacturing proposes this scenario: Imagine that your CEO has committed to producing a revolutionary new product to solve an unmet market need. The product requirements are defined, but you have to bring a new plant online in 18 months, half the time it took the last time. Any issues related to production planning could cause expensive delays and cause the company to miss the market window for this product. Digital manufacturing tools can be used to design and simulate a production facility including its layout, tools, equipment, fixtures, and the behavior of automated machines and production lines in a process known as virtual commissioning. Virtual commissioning lets an organization debug and test automated systems and the program logic needed to control them. Leveraging virtual commissioning technology makes it possible to decrease the time to volume production by identifying problems long before any equipment is ever bolted to the ground. And the faster a company achieves volume production, the more quickly it begins to generate profit from that product. Equally important, virtual commissioning permits the what-if studies that can minimize waste and optimize flow. A number of our customers have used digital manufacturing tools to virtually commission entire factories. Take-Home Message Digital manufacturing is a broad concept with many underlying tools and technologies. In this article, we have only covered a subset of its functionality. But we hope it s enough to get you to share our belief in the importance of this technology for our country and the future of manufacturing here. In all of the ways that digital manufacturing makes manufacturers more efficient and innovative, this technology is our best hope for offsetting the labor cost disadvantage of manufacturing products here. It s clear that the pendulum is starting to swing away from offshore manufacturing. Not completely, certainly. But now that we can see the harm done to our economy by the loss of good-paying manufacturing jobs, we can begin to make corrections and bring some of that work back. We at Siemens PLM Software are proud to support the innovative enterprises that are bringing back U.S. manufacturing jobs. M 25 ME Global Leadership Community... Digital manufacturing improves a company s productivity by integrating the activities of product design, engineering, and manufacturing.

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