The Rise of the Internet of Goods: A New Perspective on the Digital Future for Manufacturers >> HOME


Public Policy to Encourage the Internet of Goods

iStock-621474914-web.jpg

It is suggested in this report that a new vision for digitizing manufacturing requires the combination of digitized distribution, digitized production, and new types of manufacturing platforms. The result will be a new geography of manufacturing. Many factories will make customized or small batches and serve regional rather than national or global markets. Production facilities will cluster with ecommerce fulfillment centers to make manufacturing/distribution hubs.  

As the Internet of Goods takes hold, three factors will play a powerful role in determining the geography of production:

  1. Is the local workforce prepared for the new model of digitized manufacturing and distribution?
  2. Is there support available for local entrepreneurs to start new digitized manufacturing businesses, or digitize and expand existing ones?
  3. Is the local regulatory environment conducive to new manufacturing facilities?

Each of these three factors can be affected by state and local policy. Let’s examine each of these in turn.

WORKFORCE POLICY

The Industrial Revolution of the early 20th century saw a rapid shift to assembly lines rather than craftwork. More engineers were necessary, but the new mode of production did not require most workers to be trained in engineering. Rather, they had to be comfortable working with machines. This new skill led to higher wages since workers became more productive.

In the same way, the new wave of digitized manufacturing will require more coders, but most workers will not need to have coding skills. Instead, workers in digital factories will have to be tech-enabled, in the sense that they have to be comfortable working with technology and robots.

To develop a workforce to support local digitized manufacturing, states, and localities should prepare to shift their training and community college programs to help workers become tech-enabled. In some cases, it may be appropriate to give training incentives directly to companies that adopt digitized manufacturing techniques.

SUPPORT FOR LOCAL ENTREPRENEURS

The rise of local manufacturing will be driven by collaboration, in effect, between entrepreneurs who start up local digitized factories making new products and global manufacturing platforms anchored by larger companies. That means there will be a role for states and localities to support manufacturing entrepreneurship.

This support can come in two forms. First, capital in the form of loans or grants should be made available to local manufacturing startups. Second, and perhaps equally important, potential entrepreneurs need a chance to experiment with the capabilities of the new technology. States that want to encourage manufacturing entrepreneurs should set up centers with the latest 3D printing and robotics equipment. That will give everyone an opportunity to get in on the ground floor of wealth creation.

REGULATORY IMPROVEMENT

Over the years, manufacturing has been the subject of many state and local laws and regulations dealing with zoning, occupational health and safety, pollution, and noise. Such laws and regulations are addressing important issues.

Still, the new wave of digitized manufacturing may not pose the same environmental and siting issues as the factories of the past. State and localities that want to be leaders in digitized manufacturing should embark on a serious program of regulatory improvement—systematic examination of existing regulations to see which ones are obsolete, and which ones can be improved for the new era.