Smart manufacturing and our future competitiveness

The manufacturing sector is changing everywhere, except in Africa. New concepts like New Manufacturing Economy (NME) are emerging and leveraging the increasing number of highly educated young people.

Africa has plenty of these graduates languishing in the streets, looking for jobs. What is lacking is someone to connect the dots and put Africa in manufacturing's driving seat.

According to Wikimedia, the NME describes the role of advanced manufacturing in the rise of the New Economy.

The term describes manufacturing enabled by digital technologies, advanced systems and processes, and a highly trained, knowledgeable workforce.

The new manufacturing economy integrates networks, 3D printers and other proficiencies into business strategies to further develop manufacturing practices.

In his column for the New York Times, Thomas Friedman references Lawrence F. Katz, who notes that hubs of "universities, high-tech manufacturers, software/service providers and highly nimble start-ups" are a needed economic development strategy.

This is very similar to NME even though that exact term is not used.

A Time magazine feature article, “What is Smart Manufacturing ?”, says that in the near future, the global manufacturing sector will look nothing like it does today.

Advanced manufacturing technology is rapidly transforming the global competitive landscape.

The companies — and nations — that act now to seize its promise will thrive in the twenty-first century. Those that are devoted to incremental change and fail to engage in smart manufacturing will rapidly fall behind.

Profound transformations are coming within this decade in the way goods are manufactured, changes that will fundamentally alter the worldwide competitive marketplace.

MANUFACTURING INTELLIGENCE

The Time article proposes that smart manufacturing technologies will drive these transformations in three rapid progressive phases:

1. The integration of all manufacturing data throughout individual plants and across enterprises will facilitate significant, immediate improvements in costs, safety and environmental impacts.
2. This data, paired with advanced computer simulation and modelling, will create robust “manufacturing intelligence” that will enable flexible manufacturing, optimal production rates, and faster product customisation.
3. As that manufacturing intelligence grows, it will inspire innovations in processes and products that comprise smart manufacturing’s promise — a major market disruption such as a $3,000 automobile or a $300 personal computer.

The article further emphasizes that the countries and companies that strategically start this journey toward smart manufacturing and are first to achieve “manufacturing knowledge” will earn long-term competitive advantages well into the coming decades.

A Wall Street Journal article, “Germany Bets on ‘Smart Factories’ to Keep Its Manufacturing Edge” highlights what the manufacturing of the future looks like.

The trouble with us is that we shall be in denial that old manufacturing practices employ more people without paying attention to the efficiencies that will make us more competitive than other countries.

SUGAR CANE IN MAURITIUS

The unions, without fully understanding exactly where the jobs would be lost and new ones created, opposed the use of machines in tea-picking, arguing that many people would lose jobs.

We are now paying for decisions that were not backed by any evidence. Our tea production is no longer competitive, and returns to farmers are dwindling.

The sugar industry is crumbling under the weight of escalating costs, lack of innovative production methods and the fear of any form of reforms.

We can borrow a leaf from other countries. Mauritius, which found itself in trouble with sugar cane production, is reversing its losses by focusing on large plantations after many years of producing sugar at $500 per tonne and selling it at $435 a tonne, reports the Inter Press Service news agency (IPS):

“To keep the industry alive, the government implemented drastic reforms. It centralised private sugar production factories and from the original 17 there are now four flexi-factories that crush cane, produce special and refined sugars, molasses, ethanol and renewable energy from bagasse — the fibrous pulp left over after cane is squeezed for its juice.”

ARCHAIC MACHINES

Soon they will also produce bio-plastic, reports IPS. The few smallholder farmers moved on while others were helped to set up eco-friendly methods that helped raise their incomes.

Any reforms that fall short of what the Mauritians did will be a waste of public resources. We lost the plot when we sold the molasses factory.

The Pan Paper mills, as well as our only oil refinery, are dead. The machines are too archaic and are only good for scrap metal. How did we not upgrade our production systems?

How come things worked well when Booker Tate managed Mumias? Is it too difficult for us to maintain, repair and innovate new ways of doing things?

Are we not able to learn from what the rest of the world is doing to be competitive? What is the benefit of the many benchmarking trips we make abroad when we cannot repair a leaking tap?

We need to answer all these questions when we take up positions of responsibility.

ENERGY NOT OUR ONLY PROBLEM

Until we take responsibility for our failures, even with a sound rescue plan we shall fall into the trap of blaming others for our own inadequacies.

This body of knowledge, about these manufacturing transformations around the globe, is not in our public discourse, including that of the Kenya Association of Manufacturers (KAM).

Indeed KAM has persistently sought to lower the cost of energy as if it is the only problem our manufacturing sector is facing.

According to the Kenya National Bureau of Statistics 2013 report, the manufacturing sector contribution to GDP worsened from 9.6 per cent in 2011 to 9.2 per cent in 2012, while the growth rate deteriorated from 3.4 per cent in 2011 to 3.1 per cent in 2012.

These adverse changes are attributed to high costs of production, stiff competition from imported goods, high costs of credit, and drought incidences during the first quarter of 2012.

WE STILL IMPORT 'MITUMBA'

Influx of counterfeits and volatility in international oil prices continued to affect the performance of the sector. Stiff competition and costs cannot just be dealt with piecemeal; we need to automate, be more creative with disruptive technologies and make bold policy decisions.

There is no justifiable reason why we continue to import mitumba clothes, cars and other accessories when we have preferential trade agreements like AGOA that can enable us to maximise on the economies of scale and lower the cost of manufacturing clothing.

We must wake up and make serious policy decisions like banning mitumba. New textile factories will come up with affordable clothing and no one will walk naked as a result of such a drastic policy decision.

What most people don’t know is the fact that majority of mitumba businesses are run by powerful cartels which benefit the most, while small traders hardly make any money.

DO THE 'OBAMA THING'

If we had the interest of people at heart, we would change technical schools into incubators or manufacturing hubs similar to President Obama’s National Network for Manufacturing Innovation (NNMI). It consists of regional hubs that will accelerate development and adoption of cutting-edge manufacturing technologies for making new, globally competitive products.

Over the last two years, he has acted to jump-start the network by launching four innovation hubs and initiating the establishment of four more, all by executive order while awaiting congressional action.

In my view, President Uhuru just needs to do the Obama thing through Executive order and we can start putting our youth to work.

I can attest to that fact because just last Friday, I took some of my 280 fourth-year entrepreneurship class students to the College of Agriculture and Veterinary Sciences, Upper Kabete, to show them opportunities in manufacturing with the research output from the college.

PASSIONATE STUDENTS

Our Lower Kabete campus is across the valley, barely two kilometres away, but these student have never been to Upper Kabete campus and hardly knew anything that went on there.

You could see the passion with which the students observed each pilot process. They want to design their own new products, but they will need an incubator to accelerate their ability to create new products.

The College of Engineering, where I have been working with Dr Kamau Gachigi, too has similar opportunities.

There is a need for a technology park, like in most universities, to accelerate new innovations through multidisciplinary approaches that remove silos that now exist even within one institution.

SHARE IDEAS WITH INDUSTRY

The role of universities is not just teaching and research; they also must foster synergies with the private sector as well as government to create a sustainable growth model.

Universities must provide the evidence for policy decisions, while seeking to understand the future direction of any industry through international collaborations and precipitate change at home.

There must be urgency to commercialise our research output through collaborative efforts, and share new ideas with industry. This how we can create the much-needed confidence to build competitive nations in Africa.

Julia Gillard, the former prime minister of Australia, said “Our future growth relies on competitiveness and innovation, skills and productivity... and these in turn rely on the education of our people.” We shall fail Africa if innovation, productivity and competitiveness are not part of our hearts and mind. 

Bitange Ndemo is a senior lecturer at the University of Nairobi's School of Business, Lower Kabete campus. He is a former permanent secretary in the Ministry of Information and Communication. Twitter: @bantigito