The Next Industrial Revolution Should Happen In America

The ‘Industrial Internet’ is poised to overhaul the way companies manufacture goods, in turn changing our everyday interactions with products.

Imagine yourself five years from now, sitting around a picnic table with a group of friends. One of them just landed a coveted manufacturing gig right after getting her master’s degree, and is now pulling in $200,000 a year. Another is complaining that the new $8,000 Ford Fusion he custom-designed online wasn’t delivered within the promised three-day window. He was stuck taking the driverless bus around town.

Brave new world? Not really.

Whether those products are made in China or Chicago depends on how quickly U.S. manufacturers embrace the industrial Internet and the startup innovations behind it. The U.S. is on the brink of a new golden age of manufacturing — if we realize the potential in our backyard, and act quickly to build on it.

The next industrial revolution wants to be homegrown. Will the U.S. manufacturing industry take advantage?

Embracing Possibility

After years of considering ‘cloud’ a dirty word, manufacturers are putting aside their doubts and setting up the decentralized production systems that define the next era of industry.

Many companies now see Industrial Internet technologies as the key differentiator in coming years. While only one percent of the world’s devices are connected today, Gartner estimates that by 2020, 25 billion ‘things’ will be connected, with the biggest adopters in utilities, manufacturing and government.

Tomorrow’s automated factories will make lean manufacturing and just-in-time inventory an everyday practice. The manufacturing process will be so flexible that factories will be able to deliver higher-quality and cheaper products than ever before.

Cloud and data-driven applications will power automated, machine-to-machine workforces. Skilled human operators will coordinate production and workflows, optimizing machine and materials utilization as business needs change. Real-time quality assessments on the production line will eliminate end-of-line rejects and all the wasted material that goes with them.

Customization will become cheaper and faster than ever before due to extreme flexibility built into product and process design. Specialized additive manufacturing technology, such as the metal 3D printing platforms of MatterFab, have the potential to drive this hyper-flexibility in heavy manufacturing environments.

It will become normal for consumers and businesses to design online the products they need, and have them delivered by times previously unheard of. Manufacturing will transition into the most efficient, personalized mass production model we’ve ever seen.

A Quiet Revolution

While it’s clear what the industrial Internet can do, implementing it on a massive scale will take time. The advanced technology that powers smart machines is just beginning to hit the sector. Cheap data storage and predictive analytics aren’t enough. They must be combined with machine learning to create an intelligent factory that diagnoses and fixes most of its own problems.

The software and hardware enabling such a factory is still at the bleeding edge of innovation. A number of domestic startups, particularly in manufacturing’s Midwestern backyard, are creating tools that will become cogs in the new industrial Internet.

Manufacturers are motivated to implement these new innovations into their production ecosystems. Today’s innovations are tomorrow’s competitive advantage. The incremental costs of installing sensors and software in large manufactured products are less than 1 percent of the total cost — and the efficiency savings are disproportionately large.

A smart locomotive by GE, for example, still looks like the diesel locomotive we’re used to, but with unprecedented intelligence. The locomotive optimizes fuel burn, predicts pending maintenance issues, schedules itself to avoid congestion while in transit and reduces idle time at the rail yard. Even a 1 MPH increase from such an intelligent system could reduce rail costs by $200 million.

Some companies are targeting this ‘small efficiency gain = huge bottom line savings.’ Falkonry, a ‘Condition as a Service’ company, provides a quick, easy and cost-effective method for adding pre-packaged machine learning for condition identification and prediction to IoT applications.

When companies are searching for fast answers to their industrial pain points, and lack the data science expertise to ‘launch and learn’ in-house, the quick integration and analysis capability of Falkonry is an interesting alternative to more conventional heavy enterprise-level offerings.

Paving The Road To New Industry

Despite its transformative potential, this latest industrial revolution is more silent than flashy. Manufacturers must initially enhance and then supplant legacy systems with intelligent, cloud-based ones — opening a Pandora’s box of security and interoperability challenges.

How do you lock down the multitude of unsecured sensor data and programmable logic controllers that comes with machine-to-machine communication? How do you integrate a brand-new factory-floor intelligence system with the legacy on-premise systems?

The industry and its ecosystem are still working on answering those questions. Fast-tracking the implementation of new standards, building consultancies around the new implementation problems and upping the level of cross-organizational collaboration around a common cause will help. The sooner it happens, the better.

Sight Machine, based in Michigan and San Francisco, is addressing the interoperability issue directly with its end-to-end manufacturing analytics platform. Their solution is the most elegant architecture we’ve seen thus far, which has allowed the company to take positions in several manufacturing verticals.

Sight Machine’s cloud-based platform has the ability to acquire, clean, manage and analyze the disparate, unstructured outputs from sensors, cameras, programmable logic controllers and legacy software systems. The predictive analytics engine provides manufacturing management real-time Overall Equipment Effectiveness (OEE) drilldowns that identify previously hidden quality/throughput issues (full disclosure: Sight Machine is a portfolio company of Mercury Fund).

Where is the world’s next manufacturing powerhouse?

U.S. manufacturers are already embracing innovation — often by way of working with receptive startups — and taking advantage of existing industrial infrastructure at home by reshoring operations. This adds job openings for skilled local labor. New highly paid manufacturing jobs, in turn, will lead to gains in U.S. economic activity.

Eventually, the imbalance between services and production in the economy will right itself again, and consumers will enjoy cheaper, more customized products actually made in the U.S.A., such as custom-built connected cars and homes that conserve energy based on weather.

Right now, the U.S. is positioned in the middle of the industrial revolution, and it’s in our best interest to stay there. Are we committed enough to making the next industrial revolution happen at home?

Only time will tell.