Manufacturing Redefined

Whole lot of speculation going on these days in Greece, whether it is a good option to return to the Drachma because it will boost our exports bla bla bla…

The 2nd industrial revolution is over. People have to realize that. Tons of CO2 emanating from factories still exist, but as technology moves forward the input that these factories will need is electricity to power up monitors and computers. The assembly line workers will eventually get fewer and fewer so the main argument of exiting the Euro currency to boost our exports is not valid. Anyway, we have never been a member of the surplus countries that massively export because our competitive advantage is tourism. Not a devalued currency to boost our exports. No further explanation is needed on this point.

After this small parenthesis, I would like to comment on a new concept brought by the 3rd industrial revolution called 3D printing. This could be a long term growth recipe for making Greece competitive since it has tons of human capital which include educated engineers, technicians and researchers that could be the “assembly line” workers of the following decades. 3D printing is a process of making three dimensional objects from a digital file. The process is achieved using additive processes, where an object is created by laying down successive layers of material. The most substantial difference between this concept and traditional manufacturing lies on the fact that in the latter workers remove, cut, drill (subtractive process) whereas the former is an additive process.

Now is time to be specific. Location: Greece – Year: 2012 – Potential benefits for the country

  • One very cool attribute of these machines (3D printers) is that their average total cost (ATC) is not affected by economies of scale. Which means that to produce 1 item or 1000 is the same thing. Compare this machine that can replicate a broken door handle for you (by submitting input to the machine i.e its blueprints or a 3D Scan) .  Now imagine “asking” the factory to build just one for you. The customized mold that they have to create for you might cost thousands of euro. On the commercial side a lot of businesses are making parts of their production through the use of 3D printing – Aircraft parts/ Auto Parts / Furniture / Dental Parts (e.g dentures, orthodontic aligners) , even human tissue.
  • Save cost on materials purchased since 3D printers use the exact materials needed and nothing more. Just an example: In the Aerospace/Aeronautical industry around 90% of the production is regarded as waste after cutting, assembling etc. Thus only 10%-20% makes it through which eventually makes Vilfred Pareto even more famous. Greece has a great supply of scientists and educated people that can operate machinery and software of that kind thus introducing a new era of production/manufacturing/exporting
  • Another benefit for our country would be that products could enter faster in the economy. An American startup in 2010 had been able to market ipad covers using 3D printing only 4 days after the launching of the Ipad. All that without the need of capital in order to construct factories to build products, take permissions from local authorities etc.
  • Labor cost as a percentage of the total cost of production is decreasing (see china), nevertheless, businesses try to repatriate their factories from Asia back to their homeland. An IPAD of 16GB in 2010 had a selling price of 499$ from which cost of materials was 154$ and total labor costs 33$ from which 8$ attributed to China. The rest went to suppliers.
  •  Greece don’t even need to do this transition. The road of relocating (or creating) the methods of production in countries where there is human capital is a recipe for long term growth. Outsourcing production just for cheap hands is not going to last long. Asian countries are more than a cheap labor haven. Cities like Shenzhen are industrial complexes, including high-end infrastructure, abundance of suppliers, partnerships opportunities that help other businesses, not just cheap labor.
  • This technology enables us to move from a mass production economy to a mass customization one. And because we don’t rely so heavily on the former, it will not be hard to include that one. Ok but customize what? From ipad/iphone covers to stylish furniture to replacing an old car’s mirror that has been out of production are few examples among thousands.
  • Mass customization production is a potential untapped market for startup entrepreneurs. Buying 1-2 of these machines and receive orders from people locally or from around the world is what describes the word efficiency. Make your garage your office!

I would like to stay laconic therefore these points might seem sufficient to make a difference concerning a new way of manufacturing. Proactive countries, governments and entrepreneurs will not lose that chance.

 

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