Manufacturing goes digital:
Smart factories have the potential to spark labor productivity
“Manufacturing productivity has stalled for the past five years but trailblazers who have increased investment in smart technology initiatives have seen twice the level of gains to labor productivity compared to their peers. Furthermore, leaders in this group expect increases in labor productivity to continue to accelerate ahead of the average over the next three years. Clearly there is a recipe to extract value through investments in smart factory initiatives.” — Morgan Travis.
Smart factories will be the game changer for the US manufacturing industry. Adopting smart factories will likely result in threefold productivity improvements over the next decade.
EACH industrial revolution has transformed production, delivered better economic output, and, consequently, immense economic gains globally. But something has shifted in the past two decades—manufacturing productivity growth appears stuck. In spite of the continual improvements in equipment, software, and management approaches, the annual labor productivity growth rate in the United States was around 0.7 percent in the years between 2007 and 2018, and showed zero net average growth during the past five years.
Labor productivity is a major metric of economic output, and gains in productivity are important because, on a macro scale, labor productivity determines the standard of living of people, nations, and the world.1 Currently, however, economic output is moving in lockstep with the number of hours people work, rather than rising as it did for much of the last seven decades (figure 1).2.
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