U.S. manufacturing ‘renaissance’ earns global praise

Energy, data management, and effective maintenance were three overarching themes from the 2012 Hannover Messe in Germany April 23-27. One other theme did emerge over the five-day event: the strength of American manufacturing and its renewed leadership role in the world.

With Europe struggling to find a more solid financial foothold and Asia wrestling with quality, safety, and productivity issues, the focus of the world’s admiration was on the United States. The country’s ability to emerge from recession and the relative strength of its economy were the envy of global manufacturers at Hannover Messe this year.

“When you look more in-depth at the business, the patterns have changed,” said Michael Ziesemer, COO and board member of German-based Endress+Hauser. “There have been weaknesses in southern Europe, but France and Germany are growing. We see some difficulties in China, but China is not as much of the locomotive of the world’s economy. The U.S. is absolutely great. The business climate is absolutely great.

“It is amazing to see flexibility of the U.S. economy. It is the best in the world. It is unparalleled,” he said. “Sometimes they do things terribly wrong, but then they bring things around very quickly. They’re growing in oil and gas, but also pharma, and food and beverage. We see the recovery in OEMs and machine building. The administration has pushed a sort of New Deal for industrialization. We’ve invested a lot in the U.S. and in our U.S. factories.”

One area Ziesemer cited was natural gas. The growth of the oil and gas business continues to be a crucial manufacturing issue worldwide in the coming years, Ziesemer noted. “Look at what has happened in the U.S. The U.S. turned from being a net importer of natural gas to an exporter. Amazing,” he said.

Ziesemer cited the energy issue as a crucial one facing manufacturers equally around the world. “Energy monitoring creates awareness about your consumption profile,” he said. “When I can take measurements, I can see that consumption was highest Tuesday morning. Why was consumption highest Tuesday morning?”

By improving the technical infrastructure around energy, Ziesemer said manufacturers can first understand and then reduce their energy spend. It also has a residual benefit around maintenance activities. “You can operate your plant closer to its optimal productivity, and its optimal energy efficiency,” Ziesemer said. “That means more precise measurements and more advanced control, and the investments are not big in order to do that.”

That point was echoed by Hannover Messe organizers, who coined the phrase “greentelligence” to talk about the concept of intelligent energy management. "Green technologies are a viable business model with the power to drive growth around the world. Industry has the solutions needed for achieving sustainability in manufacturing. And green technology can translate into higher profitability for industry," said Hannover Messe board chairman Dr. Wolfram von Fritsch.

The evolution of China

As the 2012 Partner Nation at Hannover Messe, China attracted a large amount of attention, including some protestors at the event’s opening ceremonies, where Chinese premier Wen Jiabao spoke. Those who are working in China now see a continued evolution of China’s manufacturing market, but those who see China poised to overwhelm global manufacturing heard that even the country’s leader thinks China is not quite ready yet.

While taking pride in his country’s rapid ascendancy as a manufacturing force, Wen told the opening ceremony dignitaries that China has a great deal to accomplish. “‘Made in China’ products are generally at the medium and low rungs of the international industrial chain, and have a long way to go to catch up with the advanced level,” Wen said. “China is confronted with major challenges and problems with industrialization, including an inefficient model for industrial development, lack of market competitiveness, weak capacity for scientific and technological innovation, and low efficiency in the use of resources.”

He also tried to reassure those who would invest in China over the thorny issue of intellectual property. “China will remain unchanged in its commitment to the basic state policy of opening up,” he said. “We will continue to improve our laws, regulations, and policies; expand market access; strengthen (intellectual property) protection; ensure there is a level playing field for all companies legally registered in China.”

Part of “opening up” means China also is adapting to global practices and standards. That’s a trend that Frank Spitzer, export sales manager for IFM Electronics, says will be a benefit for all parties.

“As manufacturers come into China, they bring with them international standards,” said Spitzer. “And as Chinese companies hope to match the quality of automation for export, it means they must make sensors to fulfill European or American machine guidelines.”

Companies such as IFM have brought automation solutions to China for more than two decades. While IFM’s primary goal is to improve productivity, a secondary benefit of automation for China is to address a problem common to Western manufacturers as well: a skilled labor shortage. “There’s a shortage of certain people, and labor costs are rising 15%-17% in some areas,” Spitzer said.

Spitzer believes India can be the next area of explosive growth in the region—the “next China,” in his words—once it overcomes its infrastructure challenges. “In terms of infrastructure and automation, they’re still 10-12 years behind, but their best is yet to come,” he said. “It is a very fast-developing market. We see the progress they are doing. The quality of their automation is changing, and their safety technology also is changing.”

The American presence

Even with the large praise heaped upon U.S. manufacturing at Hannover Messe, U.S. manufacturers continue to be underrepresented. Hannover officials noted that more than one-quarter of show attendees came from outside Germany, and that U.S. attendance was up from 2011. Delegations from states and cities around the U.S. were in a pavilion at Hannover this year, but they were a smaller group than that in 2011.

Nonetheless, Hannover officials and representatives of the U.S. government sought to continue to emphasize Hannover as a crucial destination to grow and develop American participation in global manufacturing.

“I believe most economists view it as the manufacturing sector vs. the service sector. A strong manufacturing sector does not come at the cost of the service sector. It is both,” said U.S. Ambassador to Germany Philip Murphy. “The reality of manufacturing today is that more intense collaboration is needed.”

Murphy said the Obama Administration’s Advanced Manufacturing Partnership is focused on developing more energy efficiency and on getting new technology to allow products to reach the market more quickly.

The interdependent relationship between Germany and the U.S. in manufacturing also was highlighted at a symposium at the event.

“There are 2,000 companies in Germany with American capital employing 800,000 people,” said Fred Irwin, president of AmCham Germany. “There are 3,000 companies in the U.S. with German capital employing 1 million people directly. It is the strongest bilateral partnership in the world.”

How far does that partnership reach? As Irwin noted, “If you look on (German chancellor Angela Merkel’s) desk, you’ll see a Dell computer powered by Microsoft.”

“We have nothing to hide. All of the positives, and all the areas where we seek improvement are there for world to see,” said Aaron Brickman, deputy executive director of the U.S. Department of Commerce’s SelectUSA program. “The U.S. is the leading recipient of direct foreign investment. We’re still the world’s top export market. We can’t say enough about manufacturing, and about the American renaissance of manufacturing.”

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