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Title: The third industrial revolution
Source: The Economist
URL Source: http://www.economist.com/node/21553017
Published: Apr 22, 2012
Author: The Economist
Post Date: 2012-04-22 17:36:56 by jwpegler
Keywords: None
Views: 32015
Comments: 81

The digitisation of manufacturing will transform the way goods are made—and change the politics of jobs too

THE first industrial revolution began in Britain in the late 18th century, with the mechanisation of the textile industry. Tasks previously done laboriously by hand in hundreds of weavers’ cottages were brought together in a single cotton mill, and the factory was born. The second industrial revolution came in the early 20th century, when Henry Ford mastered the moving assembly line and ushered in the age of mass production. The first two industrial revolutions made people richer and more urban. Now a third revolution is under way. Manufacturing is going digital. As this week’s special report argues, this could change not just business, but much else besides.

A number of remarkable technologies are converging: clever software, novel materials, more dexterous robots, new processes (notably three-dimensional printing) and a whole range of web-based services. The factory of the past was based on cranking out zillions of identical products: Ford famously said that car-buyers could have any colour they liked, as long as it was black. But the cost of producing much smaller batches of a wider variety, with each product tailored precisely to each customer’s whims, is falling. The factory of the future will focus on mass customisation—and may look more like those weavers’ cottages than Ford’s assembly line.

The old way of making things involved taking lots of parts and screwing or welding them together. Now a product can be designed on a computer and “printed” on a 3D printer, which creates a solid object by building up successive layers of material. The digital design can be tweaked with a few mouseclicks. The 3D printer can run unattended, and can make many things which are too complex for a traditional factory to handle. In time, these amazing machines may be able to make almost anything, anywhere—from your garage to an African village.

The applications of 3D printing are especially mind-boggling. Already, hearing aids and high-tech parts of military jets are being printed in customised shapes. The geography of supply chains will change. An engineer working in the middle of a desert who finds he lacks a certain tool no longer has to have it delivered from the nearest city. He can simply download the design and print it. The days when projects ground to a halt for want of a piece of kit, or when customers complained that they could no longer find spare parts for things they had bought, will one day seem quaint.

Other changes are nearly as momentous. New materials are lighter, stronger and more durable than the old ones. Carbon fibre is replacing steel and aluminium in products ranging from aeroplanes to mountain bikes. New techniques let engineers shape objects at a tiny scale. Nanotechnology is giving products enhanced features, such as bandages that help heal cuts, engines that run more efficiently and crockery that cleans more easily. Genetically engineered viruses are being developed to make items such as batteries. And with the internet allowing ever more designers to collaborate on new products, the barriers to entry are falling. Ford needed heaps of capital to build his colossal River Rouge factory; his modern equivalent can start with little besides a laptop and a hunger to invent.

Like all revolutions, this one will be disruptive. Digital technology has already rocked the media and retailing industries, just as cotton mills crushed hand looms and the Model T put farriers out of work. Many people will look at the factories of the future and shudder. They will not be full of grimy machines manned by men in oily overalls. Many will be squeaky clean—and almost deserted. Some carmakers already produce twice as many vehicles per employee as they did only a decade or so ago. Most jobs will not be on the factory floor but in the offices nearby, which will be full of designers, engineers, IT specialists, logistics experts, marketing staff and other professionals. The manufacturing jobs of the future will require more skills. Many dull, repetitive tasks will become obsolete: you no longer need riveters when a product has no rivets.

The revolution will affect not only how things are made, but where. Factories used to move to low-wage countries to curb labour costs. But labour costs are growing less and less important: a $499 first-generation iPad included only about $33 of manufacturing labour, of which the final assembly in China accounted for just $8. Offshore production is increasingly moving back to rich countries not because Chinese wages are rising, but because companies now want to be closer to their customers so that they can respond more quickly to changes in demand. And some products are so sophisticated that it helps to have the people who design them and the people who make them in the same place. The Boston Consulting Group reckons that in areas such as transport, computers, fabricated metals and machinery, 10-30% of the goods that America now imports from China could be made at home by 2020, boosting American output by $20 billion-55 billion a year.

The shock of the new

Consumers will have little difficulty adapting to the new age of better products, swiftly delivered. Governments, however, may find it harder. Their instinct is to protect industries and companies that already exist, not the upstarts that would destroy them. They shower old factories with subsidies and bully bosses who want to move production abroad. They spend billions backing the new technologies which they, in their wisdom, think will prevail. And they cling to a romantic belief that manufacturing is superior to services, let alone finance.

None of this makes sense. The lines between manufacturing and services are blurring. Rolls-Royce no longer sells jet engines; it sells the hours that each engine is actually thrusting an aeroplane through the sky. Governments have always been lousy at picking winners, and they are likely to become more so, as legions of entrepreneurs and tinkerers swap designs online, turn them into products at home and market them globally from a garage. As the revolution rages, governments should stick to the basics: better schools for a skilled workforce, clear rules and a level playing field for enterprises of all kinds.

Leave the rest to the revolutionaries.

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Begin Trace Mode for Comment # 61.

#2. To: All (#0) (Edited)

This video represents the Model-T of 3D manufacturing.

Given today's rate of change, it won't take 100 years to get to a Ferrari. It will take 15 years.

15 years after that, traditional manufacturing will be dead.

You 20th century reactionaries of the left and right... please tell how we revive unskilled assembly line work as a middle class job...

jwpegler  posted on  2012-04-22   17:52:41 ET  Reply   Untrace   Trace   Private Reply  


#3. To: jwpegler (#2)

So they will have Ferrari torrent sites? I want a space shuttle. And a launch pad.

A K A Stone  posted on  2012-04-22   18:00:25 ET  Reply   Untrace   Trace   Private Reply  


#7. To: A K A Stone (#3)

So they will have Ferrari torrent sites?

Excellent question! You get it. Ultimately yes, but...

You still have to afford the machine that prints nano-materials based on the design.

That will prohibitively expensive for a long while... but not forever.

Ever seen the Star Trek replicator? This is not exactly the same thing at all, but it's a reasonable approximation for discussion purposes.

In the 19th century, individual artisans created the products we needed.

In the 20th century, massive numbers of people on the assembly line did the same to serve enormously more numbers of customers.

The middle to late 21th century, we will combine digital models with nano- materials to build whatever we need, very fast, and relatively cheap, with very little manual labor.

jwpegler  posted on  2012-04-22   18:15:22 ET  Reply   Untrace   Trace   Private Reply  


#14. To: jwpegler (#7)

The middle to late 21th century, we will combine digital models with nano- materials to build whatever we need, very fast, and relatively cheap, with very little manual labor.

As long as you have an approved government-supplied debit and credit number and a permit to purchase.

sneakypete  posted on  2012-04-22   19:33:10 ET  Reply   Untrace   Trace   Private Reply  


#17. To: sneakypete (#14) (Edited)

As long as you have an approved government-supplied debit and credit number and a permit to purchase.

I understand your point, but the post is about how revolutionary the technology could be to our lives.

Sure, if we wind up in a government police state, all of this could be postponed for decades or even centuries, just like technology was postponed under Communism during the 20th century and also how technology was postponed by the Church during the Middle Ages in Europe.

I completely agree that governments of all stripes are evil. Governments have demonstrated their true nature for all to see. The challenge of our age is with the government monopoly schools... how can Americans can learn from their history, when their history is distorted or not even taught at all...

So, let's take a quick second to celebrate the human spirit and the how it continues to try to move us forward in-spite of government intervention to the contrary.

That was the point of my post about this very revolutionary technology, that has the potential to transform everything...

jwpegler  posted on  2012-04-22   19:52:21 ET  Reply   Untrace   Trace   Private Reply  


#21. To: jwpegler (#17)

...just like technology was postponed under Communism during the 20th century...

We didn't think that in the 50s when the Soviets launched Sputnik.

lucysmom  posted on  2012-04-22   20:06:08 ET  Reply   Untrace   Trace   Private Reply  


#35. To: lucysmom (#21)

...just like technology was postponed under Communism during the 20th century... We didn't think that in the 50s when the Soviets launched Sputnik.

The only reason they were able to do that was because of what they took from Germany at the end of WW2..... That's how they get pretty much all they have is re-/reverse engineering things/technology they've stolen....

CZ82  posted on  2012-04-24   6:46:04 ET  Reply   Untrace   Trace   Private Reply  


#37. To: CZ82 (#35)

The only reason they were able to do that was because of what they took from Germany at the end of WW2....

and we didn't?

lucysmom  posted on  2012-04-24   9:08:52 ET  Reply   Untrace   Trace   Private Reply  


#40. To: lucysmom (#37)

The only reason they were able to do that was because of what they took from Germany at the end of WW2....

and we didn't?

We did, but we kept using and expanding on what knowledge we got from the Nazi's... But it seems like the Commies either couldn't figure out how to keep using that knowledge, or they decided stealing others technology was easier.... OR..... maybe it was both because they weren't teaching people to critically think or think outside the Commie Mantra box!!!! (Kinda like our current school systems)....

CZ82  posted on  2012-04-24   16:52:15 ET  Reply   Untrace   Trace   Private Reply  


#42. To: CZ82 (#40)

But it seems like the Commies either couldn't figure out how to keep using that knowledge, or they decided stealing others technology was easier...

The Soviet commies stopped being commies more than 20 years ago (please try to keep up). Since then, they have been dealing with fallout from taking the free market, privatization road.

lucysmom  posted on  2012-04-24   17:15:23 ET  Reply   Untrace   Trace   Private Reply  


#47. To: lucysmom (#42)

The Soviet commies stopped being commies more than 20 years ago (please try to keep up).

Ohhhhh, then why are they crawling in bed with your messiah????

CZ82  posted on  2012-04-24   19:33:12 ET  Reply   Untrace   Trace   Private Reply  


#48. To: CZ82 (#47)

lucysmom: The Soviet commies stopped being commies more than 20 years ago (please try to keep up).

CZ82: Ohhhhh, then why are they crawling in bed with your messiah????

Try to keep up??????

LMFAO!!!!

Just because the official "commie" government collapsed, doesn't mean the people who've been in power (via that same corrupt government) have really gone anywhere...

Hmmmm Vladimir Putin was running the KGB. And now he's running the entire COUNTRY.

So much for the loony bitch and her attempts to "keep up."

LMAO.

Capitalist Eric  posted on  2012-04-24   19:44:23 ET  Reply   Untrace   Trace   Private Reply  


#54. To: Capitalist Eric (#48)

Just because the official "commie" government collapsed, doesn't mean the people who've been in power (via that same corrupt government) have really gone anywhere...

Hmmmm Vladimir Putin was running the KGB. And now he's running the entire COUNTRY.

The same people may be running the government, and the government may be just as corrupt as ever, but it ain't communist any more. (Where did you get the idea that only communist governments could be corrupt?)

The Russian economic system has "Made is America" written all over it.

Gaidar, Chubias, and Vasiliev studied Western models of capitalist economies and similar economic reform efforts, specifically the reform efforts of economist Jeffrey Sachs in Poland. Sachs had implemented “shock therapy” programs and policies in his efforts to convert the Polish economy to a market based economy. His shock therapy programs involved the rapid conversion of all property and assets to private ownership. Shortly after learning about Sachs's rapid conversion programs, Gaidar invited Sachs to advise Yeltsin’s new economic team, which Sachs quickly accepted.[1]

Harvard Project

With the collapse of the Soviet Union, one of the highest ranking individuals in the U.S. Treasury, Lawrence Summers, was called upon to facilitate the transition in Russia's economy. Summers had close ties with Harvard University as an alumnus and professor. He also had close ties with Andrei Shleifer, an economist at Harvard. Shleifer was sent to Moscow by the World Bank to facilitate the conversion of the Russian economy. Additionally, Shleifer directed key elements of the reform effort of the Harvard Institute for International Development.[1]

HIID advised the Russian government on privatizing its economy and on how to create capital markets, as well as how to develop the necessary laws and institutions to regulate them those markets. This project, which was contracted to HIID by USAID became known as the "Harvard Project". Though USAID contributed more than $40 million of U.S. government funds to the activities of HIID in Russia, there was little supervision of activities by the United States government.[1]

While Andrei Shleifer technically led the Harvard project on behalf of HIID, his presence in Moscow was limited as he supervised the project from HIID’s headquarters in Cambridge, Massachusetts. Shleifer’s wife, Nancy Zimmerman, a hedge fund manager, became involved in the project, reflecting some of the conflicts of interest.[1] Unable to spend the necessary time needed in Russia, Shleifer appointed Jonathan Hay to supervise the day-to-day operations of the project. Hay had been an associate of Shleifer, as well as an associate of Sachs. It helped that Hay was fluent in Russian. Though Hay appeared a valid candidate for the vital position as HIID supervisor of activities in Russia, he lacked practical experience.[1]

lucysmom  posted on  2012-04-24   20:16:49 ET  Reply   Untrace   Trace   Private Reply  


#60. To: lucysmom (#54)

(Where did you get the idea that only communist governments could be corrupt?)

I never said that. As usual, you're trying to change the subject to something more manageable.

The Russian economic system has "Made is America" written all over it.

Keep 'brandishing your ignorance," loonybitch. Until you actually learn something about economics, and perhaps even go to the country in question, you're just another uninformed dupe regurgitating the propaganda you've been spoon-fed.

What make you think your opinion has any value?

Capitalist Eric  posted on  2012-04-25   12:23:44 ET  Reply   Untrace   Trace   Private Reply  


#61. To: Capitalist Eric (#60)

Keep 'brandishing your ignorance," loonybitch. Until you actually learn something about economics, and perhaps even go to the country in question, you're just another uninformed dupe regurgitating the propaganda you've been spoon-fed.

You can't resist an opportunity to attack, however you never offer a counter argument.

Talk about changing the topic to something more manageable, the thread topic isn't me, Eric.

If you don't agree that the Russian economic system was planned with the help of American economists, then offer up some information that refutes my statement. If you think the Russian economic system is still communist, then tell us why.

lucysmom  posted on  2012-04-25   12:38:44 ET  Reply   Untrace   Trace   Private Reply  


Replies to Comment # 61.

#62. To: lucysmom (#61)

however you never offer a counter argument.

Objective fact needs no argument.

Were you one to educate yourself, embrace reality instead of ignorance, than you would be worthy of consideration.

Again: What makes you think your ignorant opinion has any value?

Capitalist Eric  posted on  2012-04-25 12:52:34 ET  Reply   Untrace   Trace   Private Reply  


End Trace Mode for Comment # 61.

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