Strategic CIO // Executive Insights & Innovation
Commentary
5/27/2014
09:06 AM
Alain Louchez
Alain Louchez
Commentary
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Aging Workforce Will Drive Internet Of Things Progress

Countries like Germany, facing worsening demographics, are embracing smart manufacturing. Here are three ways the US can help its manufacturers do the same.

and grow. The Small Business Administration (SBA)'s Small Business Investment Company (SBIC) program provides an interesting model for public-private funding partnerships. In recent years, the agency took critical steps to raise the SBA guarantee on loans made by private banks and to reduce fees. But broader action is needed.

Corporate venture capital isn't ignoring the Internet of Things, however. The likes of GE, Intel, and Cisco are financing IoT-related activities. In Germany, Siemens Venture Capital, the corporate financing arm of Europe's biggest engineering company, announced in February the launch of a $100 million fund to back early-stage startups working in industrial automation and other digital technologies that can transform manufacturing. At the same time, the Securities and Exchange Commission is proposing to increase access to capital for small companies by easing regulation of smaller securities offerings.

Expertise: Small companies need technical support to implement new technologies, and one critical source is from the National Institute of Standards and Technology's Hollings Manufacturing Extension Partnership. Started in 1988, MEP expanded to have at least one center in all 50 states by 1996. The centers are backed by federal, state, and local funds, plus fees from manufacturing clients.

For example, the Georgia Manufacturing Extension Partnership (GaMEP), a program of Georgia Tech's Enterprise Innovation Institute, specializes in helping SMEs in areas such as lean production and process improvement, quality management, energy management, sustainability, and business growth.

More recent government initiatives related to smart manufacturing include the launch of "Advanced Manufacturing Partnership" Committees, similar to Germany's efforts. Another is the creation of Manufacturing Innovation Institutes, the first one being established in 2011. These regional hubs accelerate development and adoption of cutting-edge manufacturing technologies.

Training: As companies introduce technological innovations on the plant floor, employees need more training, but many companies are reluctant to invest. In a 2012 survey of Georgia manufacturers, 24% noted technical skills as a top concern, yet 27% reported not spending any funds on employee training. Spending on human capital is contingent upon some distant ROI, so there's a role for schools and government to communicate about the potential and capabilities of Internet of Things technologies as key to transforming the manufacturing sector. In April, for example, the Georgia Tech Manufacturing Institute (GTMI) received a National Science Foundation grant to train undergraduates, particularly military veterans and minority students, in advanced manufacturing science, technology, and entrepreneurship.

It has often been said that "demography is destiny." In Europe and parts of Asia, Internet of Things technologies are part of an effort to overhaul manufacturing processes to bring about operational efficiencies and meet these areas' demographic challenges. In so doing, companies in these markets sharpen their competitive edge. Shrinking domestic demand in those countries resulting from shrinking populations impels manufacturers to find markets abroad, thereby adding competitive pressures in the US market.

Reading the demographic tea leaves tells us that American manufacturers will compete with international firms that are lean, efficient, and driven. But it's not too late to take notice and take action.

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Alain Louchez is the Managing Director of the Center for the Development and Application of Internet of Things Technologies (CDAIT) at the Georgia Institute of Technology (Georgia Tech). He chaired the Telecommunication Union (ITU) conference, on "Internet of Things: Trends ... View Full Bio
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DDURBIN1
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DDURBIN1,
User Rank: Ninja
5/28/2014 | 11:07:57 AM
Re: Aging workforce

It's always about the money while trying to make it look like something else to justify corporate greed and self center actions.  Remember when just about every fortune 1000 company offered a non-contribution pension because their employees where so "valued" and their most important asset?   Now that we've had a corporation friendly government for the past 30 years there are no rules left to favor the aging worker.

DDURBIN1
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DDURBIN1,
User Rank: Ninja
5/28/2014 | 10:18:25 AM
USA ahead of game on aging workers

Over the past 15 years or so investment in automation is what's kept the US ahead of the game on productivity, and there's no reason not to expect the same with the use of the cloud.  In addition, the US Supreme Court pretty much took the fangs out of the Age Discrimination Act of 1967 when it ruled in favor of IBM over a mass lay off of workers age 50 and older in a class action suit solving IBM's aging worker base problem, just replace them with younger workers.  As a result of this ruling, it's getting rarer and rarer to find any personnel in large corporations over the age of 50.

Laurianne
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Laurianne,
User Rank: Author
5/27/2014 | 1:23:56 PM
Re: Aging workforce
The author urges US manufacturers to consider what rivals are doing abroad with regard to IoT. That is competitive context, not a call for outsourcing. Another employment reality about the upcoming demographic shift is the US will have a large older population that will need personal care -- and we're not ready with robot nurses yet.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
5/27/2014 | 12:39:29 PM
Re: Aging workforce
This isn't about looking overseas for those lower cost resources, though, it's about automating in response to scarce talent/high labor costs. It makes the case that other countries could get a jump on advanced manufacturing because they're short on labor. 
keitha0000
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keitha0000,
User Rank: Strategist
5/27/2014 | 11:52:48 AM
Aging workforce
I find the disconnect -- between the aging workforce alarmists and the swaths of older unemployed workers looking for work -- to be very interesting. And it applies to IT as well. And it's not all about older workers not having the necessary skills (although, that does play a role). A great example is the mainframe industry where offshore outsourcing, primarily to India, is the trend. Mainframe shops cry about the lack of resources, while LinkedIn is packed full of experienced workers looking for work.

I think the real story is about industry looking for cheaper resources...
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