Tevhnologies Added
  • Innovate

Hans Praat: 'Made in Holland' - on the manufacturing industry in the post-corona era

Hans Praat 2021 02 Hans Praat

On Easter Monday, at the depth of the corona crisis, the Financieele Dagblad (FD) published a fine article portraying Technologies Added from Emmen as the epitome of the manufacturing industry in the post-corona era. The NOM stood at the cradle of this eye-catching initiative, which transformed the old Philips factory in Emmen into a common place where 'the new generation of manufacturing companies,' according to the FD, produce together under one roof. Nothing in China, but simply in the Netherlands. And not on your own in a small factory on the local industrial estate, but with like-minded entrepreneurs in an advanced 'fully digitalized' Smart Factory.

Will Technologies Added become the new normal for the manufacturing industry?

My posting of this FD message on LinkedIn was read more than 12,000 times within one day and re-shared by many celebrities in our industry. Granted, the Netherlands was compulsorily sitting at home due to the lockdown, but so much attention? Apparently the article struck a nerve. One of the lessons of the Corona crisis is that the manufacturing industry has become far too vulnerable and that the way it organizes itself is not too good for this world. Not intentionally, but that is how it has grown. Many products go around the world three times before they are used for a short period of time and then end up in landfills. That has been chafing for some time. The corona virus may provide the push needed to turn things around for good. Never waste a good crisis.

There is more to it

To estimate the impact of corona on the manufacturing industry, we need to include other trends. In fact, there is much more going on. We are on the eve of the "Fourth Industrial Revolution," (digitization, autonomous products and processes) and the contours of the wave after that ("Green Industry") are already cautiously becoming visible. I dared to put everything into one diagram anyway. Not scientifically based, but it helps to see what the connection is and to determine the direction in which it is heading. In outline, of course.

Smart Industry HUB

The way the manufacturing industry has organized itself around the world since the 1980s is the outcome of three popular strategies: global manufacturing (producing for the whole world), the strategy that companies focus on their core business (and thus outsource everything) and global sourcing (bringing in suppliers, especially from low-wage countries).

We are in for a treat, as all three principles are at risk.

Producing closer to home

The first is global manufacturing. Back in the days of standard products ("One size fits all"), it was perfectly possible to reach as large an area as possible from one place, preferably the cheapest. If possible, the whole world. All balls to cost reduction! That works great in a predictable world and when little changes. Today, however, we are seeing more and more configurable products (standard products that are customer specific) or short cycle products. Matter of more affluence and picky consumers. If you make non-standard products, you better be close to the market, and preferably to markets where the trends are set.

So: global manufacturing is slowly giving way to decentralization. Perhaps even the breaking up of large factories into smaller cells so that products can be made closer to the market. This is not to say that there will soon be no more global flows of goods. Many products contain specialized, often standardized, components. Think of displays, power supplies or ICs. These are made in specialized factories and thus traded globally. They are and they will continue to be. The products made with these, and everything it takes to complete them (frames, housings, internal transport systems, etc. etc.) can go to the region. There are exceptions to that too (take Iphones or ASML machines) but that still leaves a lot. The question is how far this will go. Romantics dream of local-for-local production. I don't think that will pan out; after all, a copier is not a head of lettuce. Producing for one's own region is more obvious. And then we are well placed in the Netherlands, because our region is the prosperous and trend-sensitive North/West/Middle Europe.

Looking a little further ahead, things get even more interesting. Customized products on an industrial scale? The use of biomaterials and circular products? If these concepts become leading, and who is against that, more and more will be organized on a regional scale. That will make us happy.

Self-reliance comes first

"The Independent firm. Manufacturing after corona." I can already see the management best sellers over the counter. Many companies face a difficult dilemma. Once upon a time, as much work as possible was shifted to specialized and independent suppliers so that companies could have their hands free ("flexibility"), invest less and create economies of scale in the supply chain. We are now being hit hard by corona with the downside. Companies have become vulnerable and will undoubtedly make other considerations in which self-reliance will play an important role. So why not go back to the old days of in-house production? I don't see that happening any time soon. In the smart factory era, production is a matter for professionals, you don't just do it on the side.

Collaborating with suppliers from your own region

Moreover, Corona further fuels the discussion on Global Sourcing. It is that we are in a crisis, otherwise I would say: the timing could not be better. The model was coming to an end anyway. In ten years, global wealth inequality will have disappeared - who is against that? - so the basis for bringing in suppliers from far away will disappear. China already doesn't even want to be the "factory of the world" anymore. Moreover, public opinion will question the high social cost of Global Sourcing. So I wouldn't base my business model on that.

Fortunately, the solution is in sight. Thanks to Industry 4.0, everything that is now made in China can soon be made in our own region under at least the same conditions, and at much lower social costs. That is an excellent opportunity for Europe, and for the Netherlands, to further develop the supply sector. There is good money to be made in this and it will create many wonderful new jobs.

Products that are good for the world

The big winners of the corona crisis are companies that make products that are good for the world. I think public opinion is going to be harsh on nonsense products and products with a sky-high footprint. You don't necessarily have to support that, but it's being enforced step by step. By consumers, financiers, employees who may or may not want to work for you, new companies that make better products than old-timers, and you name it. We see many new products at NOM that distinguish themselves on the basis of social added value. So I guess that will be the new standard. The business model of the future is in the corner of circular and "refurbished" products, platform products, anything CO2 neutral and "Made in..." the country you live in. Pretty simple, then, to predict the future.

Best of both worlds

Back to Technologies Added, held up by the FD as a textbook example of new manufacturing in the post-Corona era. Of course, we couldn't agree more. The new company in Emmen, on the site of the old Philips factory, was set up with and for the new generation of manufacturing companies that are looking for an organizational model that is better suited to this zeitgeist, especially post-corona, and that is future-proof.

With Technologies Added, the partners share a common factory, as an alternative to having their own factory or outsourcing the work to an independent supplier. Actually quite a simple and obvious solution. Companies keep a grip, in an economically responsible way. So Technologies Added's pitch reads, "It works like your own factory, but it's organized like a shared facility." We are now two years on the road. The partners wouldn't want it any other way. Sharing is becoming the new having, even in the manufacturing industry.

Technologies Added is also a great example of a production facility that works for the regional market. For us, that is mainly Central and Western Europe. That fits best with the partners' focus on the serial assembly of configurable (customer-specific) products. It is still a challenge to involve as many suppliers from the region as possible for this. We are working on that; just a matter of time.

Finally, Technologies Added brings together companies that make beautiful products that fit perfectly into the sustainable society, in the fields of the new mobility, water technology, energy systems and smart outdoors.

In the factory of the future, of course, belong companies of the future.


Hans Praat works at NOM and is program manager of the Region of Smart Factories (RoSF) fieldlab, he is involved in Technologies Added from NOM and also quartermaster of the Northern Smart Industry Hub.