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Industry 4.0 catalyzes a new wave of efficient car manufacturing in the United States
The introduction of digital factories in the U.S. domestic auto manufacturing industry can save $32 billion in annual productivity improvements, accounting for 20% of calculated production costs. Now is an opportune time to invest considering factors such as rising cost pressures, plant utilisation rates exceeding 90%, and sufficient cash flow on the balance sheet. The U.S. is the ideal place: stable infrastructure, close value chain connections, educated workforce, leading IT technology and engineering expertise. The impact of digitalization in the automotive industry is often widely discussed in the end-consumer space. But the next digital revolution isn't about consumers, it's about productivity. 'U.S. domestic auto production is expected to save $16-32 billion per year, equivalent to 10-20% of calculated costs, and the above gains are made possible by what is known as the Fourth Industrial Revolution, Industry 4.0. New research by Roland Berger Analyzing the preconditions for these developments and comparing them with U.S. geographic factors, the unequivocal conclusion is that the U.S. is an ideal place to implement digitalization of manufacturing, with all the right conditions.” Manufacturing digitalization promises ample opportunities to improve Productivity and cost reduction. Compared to a traditional car factory, a digital factory can produce more personalized products on the same assembly line without incurring too much switching costs, while offering faster time-to-market and higher quality products. This leads to a better utilization of production capacity, a more optimal configuration of employees and factories. U.S. auto factories are expected to maintain a utilization rate of more than 90% in the next five years. That means the U.S. auto industry will reach full production soon. As Roland Berger analyzes, “Since OEMs need to invest in new factories and technologies, the digital factory is certainly the most likely option to meet these needs in the future.” Significant cost savings can be expected across the entire Value Chain. In the long run, the advantages of the digital factory can be summarized as follows: Can reduce manufacturing costs, such as through advanced robots, better overall equipment efficiency and employee flexibility; Can reduce logistics costs, such as through the introduction of more automated in-factory logistics ; Inventory can be reduced, e.g. through less safety stock and bullwhip effect; Integrated costs can be reduced, e.g. through smart products and smart modules; Maintenance benefits, through optimized spare parts inventory and dynamic optimization. The timing is right There are several reasons behind the need for the digital factory, such as market pressure on falling costs, increased productivity, and cheap energy. Coupled with abundant working capital and smooth financing channels for auto plants, these existing environments provide perfect conditions for digital manufacturing. There are 4 reasons why the United States is an ideal location for digital factory investment: Established technology centers such as Silicon Valley: The United States is the birthplace of eight of the world’s top ten IT companies. These companies work together to create technology clusters that can be used by the automotive industry. Modern Infrastructure and Proximity: To achieve 'just-in-sequence supply' between OEMs and suppliers, physical proximity is necessary, as can be achieved in the automotive industry hubs of Michigan and Southern California. Educated workforce: Digital factory operations require an educated workforce capable of adapting to the increasing reliance on information technology. There are more than 3,200 colleges in the United States, with more than 570,000 graduates each year. But the 'war for talent' is also intense and needs to be managed closely. Strong government support: The U.S. is an ideal place to invest in digital factories and also stems from various federal and local support (such as advanced technology auto manufacturing loan programs) to create the manufacturing base of the future. Digital Factory is the Next Growth Option for Native American OEMs and Suppliers Pilots and technological improvements to existing factories will continue through 2020. Wider application of standard solutions and gradual replacement of most machines is likely to occur around 2025. Ultimately, the true digital factory will take shape in 2030. To build a digital factory, companies need to actively develop their own digital factory ecosystem in advance. The battle for the digital factory has begun, and companies that want to benefit from the digitalization of manufacturing need to act now, including: identifying the digital factory technologies they need in their factories, evaluating these capabilities, and developing an Industry 4.0 roadmap that matches their actual situation . With strong manufacturing capabilities based on digital factories, 'Made in America' u200bu200bwill once again become a competitive and advantageous industry.