Xometry CEO Randy Altschuler: “The impact of COVID-19 on manufacturing will pale in comparison to climate change. We better be ready for it.”

We’ve all been where Randy Altschuler was a few weeks ago, typing with unbridled passion, and perhaps some fury, into a small rectangular box, a portal to thousands, maybe millions, of other eyes.

None of the remarks that are left lingering in the draft box or discarded in the virtual dust bin will have been quite as coherent and persuasive as the Xometry CEO’s published post last month.

In his article, penned amid a global pandemic that has crippled supply chains and threatens to floor economies, he argues for a national industrial policy, specific to the United States but one that could be attributed to other regions around the globe, that localises manufacturing with the support of the government, investors and consumers.

Speaking to TCT earlier this month, Altschuler would elaborate on his vision, harnessing his decades’ worth of experience, his ‘front-row view’ of the industry’s response to COVID-19, and his awareness that this is not the last major threat the next generations of manufacturers are going to face.

Xometry, a manufacturing marketplace that produces parts via a growing network of service providers supporting additive and subtractive techniques, has, like many others, felt obliged to mobilise its capacity and serve needs it’s quite frankly not used to as the virus continued to spread. Altschuler described the last couple of months as ‘exhausting’ and ‘frustrating’. The feeling of the former has helped shape his views on what must change, while the feeling of the latter was channelled, and well restrained, when sharing his thoughts on social media. What spurred those emotions is the ‘Wild West’-like procurement of materials and the over-stretched logistics of pulling them from one location to the next.

“That saying, ‘no good deed goes unpunished’, it is, in this instance, absolutely the case. You have to do it, you want to help, but it’s just so unpredictable,” Altschuler levels. “A lot of the materials that are required, the PPE, are in short supply, so even if you have a manufacturer set up, and that manufacturer is ready to go, even if you have the order from the customer, you can’t get the material. Then, we’re utilising Asia for things that we don’t manufacture in our network, like face masks, ear loop masks, and the logistics has been a killer. There have been huge delays, massive confusion; the Chinese, the Americans, everyone is to blame with changing regulation and rules. And you already had this backlog of stuff that hadn’t shipped from China because of their shut down, so everything is moving very slowly. It’s unchartered territory for us.”

In normal times, Xometry runs a business that uses artificial intelligence to price up customer orders and distribute jobs to a manufacturer that is best suited to produce the components and meet the deadline, taking into account things like capacity, certification and ‘what kind of parts each manufacturer likes to manufacture.’ A network of 4,000 manufacturers across the United States, Europe and Asia works with this model to serve more than 25,000 customers; some of them largest in the world, not many of them in the hospital supplies business.

It has meant a lot of new, and probably not likely returning, customers these last couple of months, requiring parts that Xometry and its partners don’t typically manufacture. Meanwhile, some of its larger customers have been participating in ventilator and major PPE projects and have also called on Xometry’s capacity to lend them a hand. Unsurprisingly, and even despite many of the additive manufacturers within Xometry’s network being used to working agilely and digitally, the learning on the job that has been required has compounded the frustration and exhaustion. It’s also left Altschuler in no doubt that things have to change.

When something like the COVID-19 pandemic happens, your life is going to be devastated if your own country cannot produce what you need. 

For decades the manufacturing sector in the United States has been growing smaller, with contract manufacturing jobs being lost and much large-scale, high-volume production being outsourced to lower cost locations in Asia, for example. It has been seen with the smartphones and computers of Apple, sunglasses of Ray-Ban, and the footwear of New Balance and Adidas, including the latter’s Futurecraft 4D shoes. And it has contributed to the United States industry stagnating, while China’s has grown to take on more than a quarter of the world’s manufacturing – displacing America as the largest manufacturer in the world in 2010.

The concurrent contraction of the US manufacturing has been significant. An Information Technology and Innovation Foundation research paper written by Robert D. Atkinson, et al, in 2012 presented some revealing figures: From 2000 to 2011, the rate of job loss in the manufacturing sector was 3.1% per year, compared with 0.5% per year from 1980 to 1999; an average of 1,276 manufacturing jobs were lost every day from 2000-2012; and a net of 66,486 manufacturing establishments closed (from 404,758 in 2000 down to 338,273 in 2011) – an average of 17 fewer establishments each day from 2000 to 2011. The study put this down to ‘the failure of US policies; for example, underinvestment in manufacturing technology support policies, and the expansion of other nations’ mercantilist policies.’

“The high-volume stuff is moved to places where the cost advantage of the labour force is just too compelling,” Altschuler says, “so the American manufacturing landscape is dominated by these small machine shops or jobs shops. I would suspect it’s a similar story in the UK and throughout the world in more expensive locations. One concern as a result of the COVID pandemic is that these small shops that represent the backbone of our domestic capability here in the United States are going to be driven into bankruptcy.

“Unless we step up and make a conscious effort, we’re going to lose even more of our domestic capability. The same thing will happen in other countries. And, ironically, that will make this supply chain problem even more acute when the next pandemic or similar Black Swan supply chain event occurs.”

Between the pandemic and a decades-long pattern of outsourcing manufacturing, the ideas that can help the US revitalise its manufacturing sector from a single mind are multiple. The combination of these two factors has exposed the shortfalls of centralised and just in time manufacturing infrastructure and left many populations at greater risk as the COVID-19 virus spread across the globe. It doesn’t need to be this way. Between the public sector, governments and educators, and the private sector, enterprises and investors, there are ways to reconfigure how a country supplies its own demand.

“It’s not jingoism or ‘I like don’t like these foreigners’, it’s recognising that when something like [the COVID-19 pandemic] happens, your life is going to be devastated if your own country cannot produce what you need. As we’re stuck at home, and the economy is in freefall, that is very apparent.”

Read more: 

Starting with supply chains, which many manufacturers will already be re-assessing as a result of CO2 targets, if not more urgently as a result of the last few months, the manufacture of products is regularly outsourced to save on labour cost, with much of the machinery and materials required coming at similar prices, but with the risk of supply chain disruptions and the need for transportation, usual by air, there are two more cost factors that, Altschuler believes, ought to be considered.

“It may look like something from a less expensive location overseas – it might be 50% less expensive – but if you factor in some percentage chance that there could be a supply chain Black Swan event like we’ve had now where there’s no supply chain available, that’s worth something and that needs to be put into the equation,” he says. “Similarly, we’re not baking in the cost of the pollution and the impact of the carbon with parts travelling great distances. When you do that, the absolute cost of something in Asia versus the UK or Western Europe or the United States, [goes up].”

While Altschuler hopes, with these considerations taken into account, that manufacturers would be encouraged to move back to a more domestic-focused production of goods, he also suggests there needs to be a degree of government regulation to ensure ‘every country has some critical capability’ to meet their own demand, particularly in instances like the COVID-19 crisis. And, although a difficult thing to ask of people and understanding the way people make purchasing decisions, he says consumers need to be prepared to pay a little bit more should the upheaval have cost implications for manufacturers.

Beyond the people who set the tone and the people who represent the demand, Altschuler also has thoughts on public market investors.

“[They] need to value manufacturing at a higher premium,” he says. “The multiples that manufacturers trade at pale in comparison to tech companies, but, in the end, we can do without Facebook, we can’t do without our PPE or our powder or our cars and other things that have to be made. That’s not valued in the public market. The world’s most valuable companies are not manufacturers. They probably should be.”

Along these lines, as Altschuler highlights how manufacturing is ‘critical to our continuation as a species’, he emphasises the importance of education of the next generation and inspiration to pursue careers in manufacturing. A lack of skilled workers within a population only encourages the outsourcing of production to other quarters that Altschuler would like to be reined in. He wrote last month how enormously proud he would be if his three children followed him into the manufacturing space. By the time they get through school, college, and pick up their university degree, or learn their trade through an apprenticeship, the industry should be operating rather differently in his eyes.

I think 3D printing on its own which will empower more local manufacturing.

Having set up a network of thousands of manufacturers across three continents, the company is already championing local manufacturing, while also supporting the kind of small manufacturing firms that make up many domestic capacities, including the US. Xometry not only assigns jobs to these firms based on their capacity but allows its partners to lean on the company’s larger balance sheet to invest in new tools that will enable them to grow their capabilities. And with the network ever-expanding, and the equipment at its disposal increasing, local manufacturing becomes much more of a reality.

In the last 18 months alone, for example, Xometry has integrated HP’s Jet Fusion technology and Carbon’s Digital Light Synthesis to the network’s repertoire, onboarding two new processes that the company previously didn’t offer. The two technologies complement an extensive portfolio of injection moulding, CNC manufacturing, sheet metal, urethane casting and 3D printing equipment. Among the latter, Direct Metal Laser Sintering, Fused Deposition Modelling, PolyJet, Selective Laser Sintering and Stereolithography were already available. Not just looking to cover all bases, Xometry believes the capabilities of 3D printing technology will be significant in facilitating local manufacturing.

“I think 3D printing is something on its own which will enable and empower more local manufacturing. It creates a more efficient supply chain and, frankly, it’s also good for the environment – you don’t need to be travelling, sending goods overseas or in big planes, if you’ve got a local 3D printer,” he says. “I think that train has already left the station; 3D printing will continue to evolve over time and play a more prominent role in overall manufacturing.”

Though Xometry stands in good stead when it comes to having a flexible supply chain and being in close proximity to its suppliers and end users, the impact of the pandemic has ‘magnified the need 1,000%’ for Altschuler. A horrible event, he continued, but an opportunity to take stock of how a society and its industries function. He points to the ‘staggering’ value lost in the last couple of months because countries were left scrapping for PPE and other equipment as a result of their reliance on China’s manufacturing capacity and wonders what even a fraction of that figure would do if invested in education or in infrastructure.

Reflecting on the last 40 minutes of conversation, Altschuler recognises the grand plan requires many architects – it not only needs people to part with money, but it needs governments to set policy and future iterations of the regime to stick with said policy – but he feels the importance cannot be stressed enough, particularly as the COVID-19 pandemic is not the last contemporary challenge for an industry that contributes 12% of global greenhouse gas emissions.  

“Pettiness knows no greater friend than politics, but I hope we can be bigger than that. I know that we have to be bigger than that. The world has ground to a halt because of this threat and it doesn’t matter if you’re a Republican or Democrat, Labour Party or Conservative Party, everybody has responded and that gives me hope that we have an ability, as humans, to go beyond our own ideologies,” Altschuler concludes. “I’m hoping this is the beginning of a global recognition that we have to make these investments together. It cannot be specific to any one government or party or ideology, it has to be done by all of us.

“The pandemic will pale in comparison to the impact of climate change – it will only be solved with worldwide attention and investment. We better be ready for it.”

Source link

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *