Manufacturing is the backbone of the American economy. It’s driven growth, created jobs, and fostered innovation. Through the years, there have been expansions in the industrial landscape to include Mexico and Canada, making North America a manufacturing powerhouse. As consumer demand drives speed and innovation, manufacturing companies must adapt to new technologies and trends to survive.
The History of Manufacturing
Though many products sold on the North American market are manufactured internationally, manufacturing in North America has a history nearly as old as the United States itself. The history of domestic production has evolved over centuries, adapting to technological advances, economic shifts, and global trade dynamics.
In 1964, the Maquiladora Program was established in Mexico, marking a significant development in the North American manufacturing landscape. Maquiladoras operate under preferential tariff programs agreed upon by Mexico and the United States, which allow equipment and materials to enter Mexico without being taxed. The program allowed maquiladoras to be completely foreign-owned. Many maquiladoras are located near the US-Mexico border to reduce transportation time and costs.
Trade agreements, such as the North American Free Trade Agreement (NAFTA), have also made it easier to expand manufacturing geographically. Now updated and replaced by the United States-Mexico-Canada Agreement (USMCA), these agreements have facilitated the geographical expansion of manufacturing operations across North America by reducing trade barriers, standardizing regulations, and providing greater market access.
Offshore manufacturing in Asia grew in popularity in the 1970s. There, companies found skilled workers for low wages. However, shipping and production costs have risen in recent years, and tariffs have been enacted to discourage reliance on foreign-produced goods.
The Impact of COVID-19
For all the economic benefits of international manufacturing, COVID exposed its weaknesses. During the pandemic, supply shortages were common. Many companies produced their products in Asia and could not get them to the US within the planned time frame. More and more companies are showing renewed interest in domestic manufacturing. At the same time, the manufacturing industry is also becoming more digitized and adapting to consumer demands.
Smart Factories
Technology has made significant advancements over the past 20 years. From smartwatches to smart homes, nearly everything can now be connected to the Internet of Things (IoT). Now, interconnectivity is going past consumer electronics and into the factories that produce them.
Industrial IoT
Factories that implement Industrial IoT (IIoT) use software that connects data from all facets of the factory. Companies can track every step of a product’s journey in one place, monitor machines and facilities, and identify problems. IIoT also allows these factors to be monitored remotely.
Artificial Intelligence
AI can draw analytics from centralized data, allowing it to address problems before they happen. Machine learning is a fundamental subfield of AI in industrial applications. It is the process by which machine systems use data to optimize processes, leading to higher quality and efficiency.
Factories also use AI to monitor inventory. Sensors can track the quantity and location of parts, providing real-time updates. With remote monitoring of interconnected devices, companies can track inventory and productivity anywhere.
Digital Twins
A digital twin is a real-time representation of a system. Unlike a digital prototype, which can be updated by designers but is not connected to live data, a digital twin is connected to its physical counterpart through sensors and IoT. The digital twin continues to be used throughout a product’s life cycle. It simulates system behavior and can run scenarios to identify potential issues.
Digital twins are not just made for products. Process twins can reveal how to increase efficiency using IoT data and diagnose problems. With process twins, bottlenecks and inefficiencies in operations can be identified faster than ever before.
Pick and Place Machines
SMT pick and place machines have been widely used since the 1980s and are still a mainstay in today’s smart factories. Pick and place machines scan PCBs to identify where components need to be placed. The machines then position the pieces on the board more efficiently and precisely than human assembly. The most common pick and place mechanism is the robotic arm, which uses grippers or a vacuum nozzle to move components, but some companies opt for delta or fast pick robots for their increased speed.
Sustainability
The percentage of consumers who care about sustainability in their products has increased since the pandemic. The pandemic brought awareness to global challenges, including environmental issues. As a result, more companies are creating environmental, social, and governance (ESG) goals. These goals often encompass ambitious targets such as achieving carbon neutrality, incorporating recycled materials into products, and adhering to sustainable manufacturing processes.
Smart factory technologies can also contribute to sustainability initiatives. Optimization leads to more efficient energy use. Digital twins allow companies to analyze and optimize their operations by creating virtual replicas of physical processes and systems, significantly reducing material waste and resource consumption. The combination of heightened demand for sustainable products and the adoption of advanced technologies is driving a significant transformation in how companies approach sustainability.
From B2B to B2C: A Shifting Industry
Advancements in technology mean that brick-and-mortar stores may be going by the wayside. With the popularity of online retail and new supply chain strategies, companies that have traditionally followed a B2B model are shifting to B2C, shipping items out directly from their factories and warehouses instead of going through a separate retailer.
Skilled Labor Shortage
As companies relocate international manufacturing operations to North America, they encounter a significant challenge: a shortage of skilled laborers. To address this shortage, companies must invest in their employees through competitive wages, training programs, and safety.
In North America, manufacturing is seen as dangerous, dissuading potential employees. Prioritizing safety is vital to attracting and retaining skilled workers. Identifying risks before they happen invests in employees and keeps operations running smoothly. Protocols, training, and wearable safety devices are all measures that can be taken to create a safe workspace.
Supply Chain Trends
The 2021-2023 supply chain crisis brought the general public’s attention to the logistics behind their products. Globally sourced and manufactured parts were delayed or unable to make it to North America, causing disruptions.
Reshoring
Though the supply chain crisis has passed, there are still long lead times and parts shortages that can delay production for months. North American companies have taken to reshoring. Reshoring enables manufacturers to deliver products faster, cutting down on lengthy shipping times that can be further delayed by international political disruption. Reshoring also creates more jobs for North Americans, and companies avoid import and export taxes by manufacturing domestically.
Transparency
Companies must have complete visibility into every aspect of their supply chain. Working with a manufacturing partner that is invested in a digital supply chain gives access to technologies and analytics that will better prepare you for disruptions. Blockchains are used in supply chain management to track all supply chain transactions in a fixed ledger. As a decentralized network, the blockchain can be viewed by all authorized users, providing transparency.
Just as factories are embracing IoT, supply chains are embracing cloud computing. Cloud computing allows companies to store information on parts availability, inventory levels, and tooling on the cloud. At Pivot International, we use cloud computing to track the progress of our customers’ projects. We monitor when parts are nearing their end-of-life so that we can instigate a redesign early enough to avoid production delays. The supply chain is also becoming more automated at the factory level. Machines connected to the IoT are automated to carry out processes efficiently.
Keeping up with Industry Changes
It is important to be aware of trends and innovations in your industry. Reshoring may not be the solution for everyone, but smart factories, sustainability, and the IoT are all a significant part of the future of manufacturing. Partnering with a manufacturer that has implemented these practices is vital to efficiently producing a successful product.
Pivot International has six manufacturing and assembly sites in the United States. With 17 fully automated SMT lines, we can help with your manufacturing needs. In addition to our US sites, our company DCI has a 38,000-square-foot manufacturing facility in Juárez, Mexico. Headquartered in Lenexa, Kansas, our global supply chain team gives our partners real-time information on their products. Contact us to learn more about how we can be a solution for your modern manufacturing needs.
