manufacturing | Paul Wallbank - Communications Professional

Formulas for successful crowdfunding

Crowd funding is proving to be a great way to raise funds for projects, but it isn’t without its risks

Pebble have achieved the biggest Kickstarter fund raising in the service’s history with a $14 million fundraising for its latest smartwatch.

Over at competing crowdfunding service Indiegogo Flow Hives, a Tasmanian beekeeping invention, has raised nearly five million dollars for its innovative beehives that put honey on tap.

Crowdfunding is fast becoming the way for smaller manufacturers to secure preorders from the market and secure scarce capital for the business.

Pebble and Flow follow the success of Ninja Blocks who have had two successful crowdfunding ventures and their CEO Daniel Friedman spoke to Decoding The New Economy last year about raising money for hardware projects.

Not every hardware crowdfunding project works out well though as Mark Pesce described in relating his experience with the failed Moore’s Cloud fundraising. Mark said he’d “rather eat a bullet” than engage in another crowdsourcing campaign given the pressures upon manufacturers to deliver.

As Moore’s Cloud shows there are risks and complexities in looking to the crowd to raise project capital. Even a successful campaign faces potential problems in completing the project and delivering a product that meets the expectations of those who’ve contributed.

Crowdfunding has opened a new way for artists and entrepreneurs to raise funds for their projects, like all tools though it does have it’s risks and isn’t for everyone.

Navigating a platform shift

Technology had dramatically changed the design industry, how does a company like Autodesk adapt?

One of the companies that defined the desktop computing revolution in the 1990s was Autodesk.

The company’s AutoCAD program bought Computer Aided Design to the masses and probably was the single main reason for the extinction of the drawing board in design offices.

In the post-PC world Autodesk itself is having to deal with a dramatically changed market as software moves onto the cloud, workplaces become more collaborative and the computing world becomes based upon mobile devices rather than static desktop computers.

As Autodesk’s Asia Pacific Senior Vice President, Pat Williams, described at the Autodesk University Extension in Sydney today there are three major disruptions happening to industry in general; to production, consumption and connections.

Disrupting design

“Technology and expectations are empowering users and disrupting how things are made,” Williams told the audience as he demonstrated Autodesk’s range of design, simulation and rendering tools that the company hopes will keep it ahead of a rapidly changing marketplace.

“How we make things and bring them to market is changing,” says Williams. “We simply don’t design, manufacture or even imagine the as-built environment as we have in the past.”

“The other thing that’s changing is how we connect and share ideas, which changes the way we create. No longer is the lone designer a reality we can live with any more.”

Along with connections between workers changing production and consumers sharing their experiences creating new consumption patterns, Williams also sees the connectivity between devices and materials as changing the way things are designed and manufactured.

“The way things connect with each other interconnect and relate is deeper than ever before. It’s getting easier to create complex systems that talk to each other and the design and physical use depends upon their interconnectivity.”

Williams echoes the ideas of designer Gadi Amit and materials engineer Skylar Tibbits on how smart materials are going to change manufacturing and design.

3D printing drives change

One of the big drivers of change in the design industry is 3D printing that allows both more complex components to be manufactured and will change some industries — most notably the construction industry as bricklaying, concrete pouring and formwork can be done by large scale printing.

Given the influence of the 3D printing, it’s not surprising that Autodesk have launched a hundred million dollar investment fund to help startups leverage the new technologies.

As one of the companies that benefited from the desktop PC revolution, Autodesk are finding themselves having to adapt to a very different marketplace. Their cloud based products will need to be nimble to succeed to in a very demanding and volatile marketplace.

Chinese businesses take on the world

Xiaomi and Lenovo’s appearance in the global smartphone rankings show the increasing confidence of Chinese businesses

We’ve looked previously at how Chinese manufacturers are moving up the value chain, proof of how PRC based companies are beginning to make their mark on markets are the latest smartphone IDC rankings.

Two Chinese companies, Lenovo and Xiaomi, entered the rankings with the latter recording a threefold increase on the previous year’s sales.

Remarkably, Xiaomi only had a few hours as number three in IDC’s global ranking as Lenovo closed its Motorola acquisition shortly after the release which pushed the combined company into third position.

Top Five Smartphone Vendors, Shipments, Market Share and Year-Over-Year Growth, Q3 2014 Preliminary Data (Units in Millions)

Vendor	2014Q3 Shipment Volumes	2014Q3 Market Share	2013Q3 Shipment Volumes	2013Q3 Market Share	3Q14/3Q13 Change
1. Samsung	78.1	23.8%	85.0	32.5%	-8.2%
2. Apple	39.3	12.0%	33.8	12.9%	16.1%
3. Xiaomi	17.3	5.3%	5.6	2.1%	211.3%
4. Lenovo*	16.9	5.2%	12.3	4.7%	38.0%
4. LG*	16.8	5.1%	12.0	4.6%	39.8%
Others	159.2	48.6%	113.0	43.2%	40.8%
Total	327.6	100.0%	261.7	100.0%	25.2%

Source: IDC Worldwide Quarterly Mobile Phone Tracker, October 29, 2014

The two companies illustrate the different strategies Chinese companies are making in taking on the world; while Lenovo is growing through acquiring ‘cast off’ operations like Motorola Mobility from Google and the various hardware arms of IBM, Xiaomi is growing through selling lower budget devices into East Asian markets.

Both approaches have their strengths and benefits and illustrate as much the diversity of the markets the two companies are chasing as much as the differing management philosophies of the business.

The other message from the respective successes of Lenovo and Xiaomi is that Chinese companies, particularly manufacturers, are increasingly confident in competing in the global marketplace.

Just as Japanese manufacturers found their feet in the 1970s with many becoming global brands and market leaders, we are seeing the same thing happening with the Chinese businesses today.

4D printing and the next generation of design – ABC Sydney

The future of design and 4D printing are the topics of today’s 702 Sydney segment with Linda Mottram

I’ll be on ABC Sydney this morning discussing 4D printing and the future of design as the Sydney Vivid Festival swings into gear.

Some of the areas we’ll be looking at in the spot that should start around 10.20am is what exactly is 4D printing, how can materials build themselves and how designers are creating more sustainable devices like Google’s Project Ara.

One particularly interesting Vivid session is the Electric Dreams to Reality session that will feature local entrepreneurs and makers explaining how they are using the internet of things and new design.

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on 1300 222 702 or post a question on ABC702 Sydney’s Facebook page.

If you’re a social media users, you can also follow the show through twitter to @paulwallbank and @702Sydney.

Building modern manufacturing

Western economies are looking at how to rebuild their manufacturing industries, Singapore and the UK are exploring disruptive technologies

Around the world manufacturers are wondering how they adapt to the rise of 3D printing nod the continued challenge of China’s low costs of production.

In Singapore, Reuters reports, the government is putting its hopes on new technology boosting the country’s manufacturing industry in one of the world’s highest cost centers.

“The future of manufacturing for us is about disruptive technologies, areas like 3D printing, automation and robotics,” EDB Managing Director Yeoh Keat Chuan told Reuters.

Britain too is experimenting with modern technologies as the BBC’s World of Business reports about how the country is reinventing its manufacturing industry.

Tim Chapman of the University of Sheffield’s Advanced Manufacturing Research Centre describes how the economics of manufacturing changes in a high cost economy with an simple advance in machining rotor disks for Rolls-Royce Trent jet engines.

“These quite complex shaped grooves were taking 54 minutes of machining to make each of these slots. Rolls-Royce came to us and said can ‘can you improve the efficiency of this? Can you cut these slots faster.”

“We reduced the cutting time from 54 minutes to 90 seconds.”

“That’s the kind of process improvement that companies need to achieve to manufacture in the UK.”

Interestingly many of those British engineers interviewed by Peter Day in the BBC report focus on China’s cheap labor as being the driver for moving up the value chain and automating

Dismissing China as purely a low cost producer a risk as Chinese manufacturers are working hard to move up the value chain as their aging populating erodes their labor advantage.

The last word though for Britain’s engineering sector has to go to Hugh Facey, founder of wire tool company, Gripple.

“Are you a rich man?”

“No”

“Do you mind?”

“I’m from Yorkshire.”

Both Singapore and the UK are working on establishing their positions in the 21st Century economy; both business owners and individuals have to give some thought on where they want to be.

For manufacturing, the rollout of new technologies means the industry is going to look very different in the next decade. It won’t be the only industry radically changed.

Does the motor industry matter in the 21st Century?

Is the automobile industry the driver for 21st Century economic growth?

One of the key drivers of Twentieth Century industrialisation was the motor industry. Today it’s an industry plagued by over production, distorted by government subsidies and increasingly dominated by a small group of major players.

In Australia, the Productivity Commission examined how the motor industry was evolving and its preliminary report (PDF) is a good snapshot of the current state of play in the global automobile sector.

Chronic worldwide overcapacity is what stands out most starkly in the report with most of the world’s manufacturers operating at less than the 80% production break even point that’s assumed in the industry.

Australia is a good example of how the motor industry was held as being essential to a country’s development. Like most of the world, the early Twentieth Century saw dozens of small automobile manufacturers pop up in the backyards of enthusiastic tinkerers – it’s like the surge in smartphone apps today.

Eventually only a handful survived the industry shakeout following the Great Depression and by the end of World War II the industry was largely dominated by US, British and European manufacturers, today that consolidation has increased with East Asian producers replacing the UK carmakers.

The lessons of World War II

One of the lessons from World War II was that having a strong domestic manufacturing industry was a nation’s strategic advantage. So governments around the world protected and subsidised their automobile industries along with other factories.

For Australia, bringing in the required labour to run those manufacturing industries was a seen as a key to the nation’s post World War II growth and it was one of the contributors to the country’s ethnic diversity that started to flower in the late 1970s.

Today the echoes of those policies remain with governments around the world still subsidising their motor industries despite the economic and strategic military benefits of automobile manufacturing being dubious at best.

Australia’s failure

In Australia the modest incentives provided by governments hasn’t been enough to keep local car plants operating, which was the reason for the Productivity Commission’s report into the future of the industry.

The report’s message is stark for Australia, as a high cost nation that hasn’t invested in skills or capital equipment there’s little reason for the world to buy Australian technology as there’s little being built that the world wants or needs.

With the nation’s advantages in agriculture and mining – not to mention solar power – Australia should be leading in technologies that exploit these advantages but instead the nation is a net technology importer in all three of those sectors.

To be fair to Australian industrialists, they responded rationally to government policies that favour property and share speculation over productive investment. Coupled with the drive to create duopolies in almost every sector of the Aussie economy, it didn’t make sense to invest when they could exploit domestic markets rather than invest in new technologies.

Becoming high cost economies

For nations moving up the value chain such as China, Thailand and Brazil; Australia’s failure to develop high tech manufacturing and inability in adapting to being a high cost economy is a powerful lesson in the importance of framing sensible long term economic policies.

The Australian Productivity Commission report illustrates how the motor industry does have a role in helping countries move into being industrial powerhouses, but once a nation becomes a high cost economy it takes more than dumb subsidies to maintain a competitive advantage.

Germany and the US illustrate this, and the fact both countries’ motor industries are running at greater than 80% capacity shows how their automotive sectors are evolving. It’s no co-incidence that electric car manufacturer Tesla Motor’s plant in Fremont, California was a former GM-Toyota joint venture factory.

As motor vehicles become increasingly clever so too are their manufacturers; unless car builders and governments are prepared to invest in the brains of their workers and modern technology then they have little future in the 21st Century.

For nations, the question is whether the Twentieth Century model of building a car industry is relevant in this century. It may well be that other industries will drive the successful economies of the next hundred years.

Cities of Industry

Governments are beginning to recognise manufacturing is part of any advanced economy, some though are struggling to abandon the last thirty years of ideology.

The latest Decoding The New Economy interview feature Laurel Barsotti, Director of Business Development at the City of San Francisco discussing how the city refound it’s entrepreneurial mojo.

A notable point about Laurel’s interview is how she has similar views to Barcelona’s Deputy Mayor Antoni Vives about the importance of industry to San Francisco.

For some time it was an article of faith in the Anglo-Saxon world that the west had become post-industrial economy where manufacturing was something dispatched to the third world and rich white folk could live well selling each other real estate and managing their neighbours’ investment funds.

“Opening doors for each other” was how a US diplomat described this 1980s vision according to former BBC political correspondent John Cole.

It’s clear now that vision was flawed and now leaders are having to think about where manufacturing, and other industries, sit in their economic plans.

Barcelona’s and San Francisco’s governments have understood this, but others are struggling to realise this is even a problem as they hang on to dreams of running their economies on tourism, finance and flogging their decidedly ordinary college courses to foreign students.

For some political and business leaders this is a challenge to their fundamental economic beliefs. It’s going to be interesting to see how they fare in the next twenty years.

Breaking the break-fix business model

Fixing broken products was a profitable business for many companies, the Internet of Everything is changing that industry model.

One of the most profitable areas for many companies has been in fixing broken products, now the internet of everything promises to put an end to that business model.

‘Break-fix’ has always been a good profit earner with business ranging from construction companies to washing machine manufacturers making good money from fixing failed products.

Speaking at a lunch in Sydney earlier today GE’s CEO of Global Growth and Operations, John Rice, described how the Internet of Everything is changing in the industrial landscape.

One of the big business changes Rice sees is in the ‘break-fix’ model of many industrial suppliers.

“We grew up in companies with a break fix mentality,” Rice says. “We sold you equipment and if it broke, you paid us more money to come and fix it.”

“Your dilemma was our profit opportunity,” Rice pointed out. Now, he says engineering industry shares risks with their customers and the break-fix business is no longer the profit centre it was.

Goodbye to the TV mechanic

This is true in many other industries as products become both more reliable and less economical to repair – the local TV repairman has largely vanished and the backyard computer support businesses are going the same way.

For many businesses, this means a change to how they service their customers and the nature of their operations. For many, it means close monitoring of their products will be essential to manage risk.

Rice also flagged how grid computing will improve the reliability of equipment and networks citing how giant wind turbine talk to each other.

“Every wind turbine has an anemometer on top that’s used to judge wind speed and direction,” says Rice. “If you had a problem with the anemometer the wind turbine shut down until someone could come out – maybe a week later – to climb to the top of the turbine, diagnose the problem and start the thing back up.”

“Today the technology is such that the wind turbines talk to each other so if you’re in a wind field of thirty turbines you don’t rely on one anemometer,” points out Rice. “This is a very simple example of machine to machine interface.”

Wind turbines and the road toll

Rice’s example of wind turbines talking to each other is similar to Cisco’s scenario of using the internet of everything to reduce the road toll where cars communicate with road signs, traffic lights and each other to monitor conditions on the highway ahead.

Those machines talking together also give early warnings of problems which reduces downtime and risk for industrial users, it also means less money for businesses who’ve made money from those problems.

Finding a role for Hong Kong in the China story

Hong Kong’s role in the China story as Shanghai rises is discussed by Brian Wong of Seacliff Partners.

The Chinese government’s declaration of a Shanghai Free Trade Zone recently made headlines with speculation the region might be exempt from the nation’s internet blocks.

For Hong Kong, the Chinese government’s move is another blow to the territory’s already declining position as the main gateway to the People’s Republic.

As part of the Decoding The New Economy series of interviews, I spoke to Brian Wong of Hong Kong’s Seacliffe Partners about the challenges facing the territory and the role the former British colony will play over the next few decades.

“Hong Kong, I think, is the perfect bridge between East and West, ” says Brian. “But I think Hong Kong has been in search since the change over in 1997 as to where it really wants to focus itself.

The territory is squeezed between Singapore that has established itself Asia’s leading financial hub and now is positioning itself as a creative centre and Shanghai which has become the new ‘Gateway to China’ with its domestic financial centre and deep water port.

Despite the challenges facing the Territory, Brian sees opportunities in the city’s cultural and business environments.

“One of the great things about Hong Kong still is its international community and its accessibility for creative types,” Brian says. “I think Hong Kong is starting to recognise this advantage.”

“You have a large base of Chinese based manufacturers looking to beyond just low cost OEM manufacturing, what they need is creative design and innovation. If Hong Kong can be one of the big suppliers of that then they have a really good opportunity.”

One area Brian sees Hong Kong has an advantage is in its developing a hardware hackers culture that fits in with the massive manufacturing hubs surrounding the territory along the southern Chinese coast.

“I went to a talk where there was a fellow from Mountain View, California who does a lot of product invention,” Brian tells. “He’s set up a lab in Hong Kong to do product innovation because although he recognises China has a low cost manufacturing base, he doesn’t want to live in Shenzhen.”

The challenge for Hong Kong is to encourage a more entrepreneurial mindset, Brian believes. He also sees Hong Kong having an opportunity in being a conduit for the Chinese diaspora looking at investing into the PRC.

Probably the biggest advantage Brian sees Hong Kong having are in its mature legal and capital markets that Shanghai and other Chinese centres lack – “these are world class,” he asserts.

Ultimately though it may be that Shanghai, Beijing, Taipei or Singapore aren’t threats to Hong Kong at all as each city becomes the centre of certain aspects of a diverse Chinese and East Asian economy.

“I think much like in the United States there is not just one financial centre – you’ve got Chicago, New York and you’ve got different roles for different cities, LA for media and San Francisco as the gateway into the United States.”

“There’s room for more than just one. The question is what does Hong Kong want to be and how does it want to be most valuable to the China story.”

Rebuilding American Manufacturing

The US textile industry’s recovery is an economic story of our times, it’s also one of our future.

US manufacturing is undergoing a resurgence, just without the jobs reports the New York Times in its story on the textile mills of South Carolina.

The decline and recovery of US manufacturing is a story of our times – the industrialisation of Asia, trade treaties such as NAFTA and China’s joining the World Trade Organisation all saw Western producers move their operations overseas.

A weakness with that business model are the extended global supply chains as goods spend months on ships following long manufacturing and design lead times, the exact opposite of what modern consumers are looking for.

Coupled with domestic manufacturers’ increased investment in automated systems which makes labour costs a smaller factor and the sums start adding up for making things in the United States.

Unfortunately for the workforce, those automated plants don’t require anywhere near the staff older factories employed and the skills required in today’s mills are substantially different from those needed in those of earlier times.

Most industries are encountering the same change and new technologies make the modern factory very different to that of a few decades ago.

The jobs aren’t going to come back in the numbers that were once employed, as the New York Times story illustrates with the decline in the working population.

Despite the recovery in US manufacturing, today’s industry is very different to what it was last century, something that’s missed by those advocating a return 1950s style government policies to protect jobs in sectors like car manufacturing.

Even if they are successful in rejuvenating local car factories, cotton mills or coal mines, the days of these plants employing tens of thousands of grateful cloth capped workers are over.

Those politicians whose ideology is based on the old model, or businesspeople who want to work in the old ways, are going to find the modern economy very difficult and challenging.

Image of cotton threads on a weaving machine through jbeeby on sxc.hu

Open source manufacturing

Open source hardware promises to change manufacturing and resurrect the art of soldering

Chinese business website Caixin Online has a great video on China’s Open Source Hardware Movement, this is an area that promises to change the manufacturing industry.

Open Source is the philosophy of sharing intellectual property and allowing anyone to improve the idea on the proviso they share their changes with the rest of the world.

The hope is that open sourced products end up being more reliable than proprietary designs due to scrutiny from hundreds, or thousands, of reviewers.

Until recently, open source has been largely restricted to the software world but now it’s moving into broader Engineering and manufacturing circles.

As the Caixin video shows, the open source hardware movement is introducing geeks to a tool which many thought was dead – the soldering iron.

I noticed this a week or so ago when I walked into a co-working space and found the lady I was meeting hunched over a soldering iron putting together a part for a quadcopter.

Right now soldering parts to build quadcopters or game controllers is just the beginning, the really interesting things start when open source meets 3D printing – then we’ll see some real game changing things happen.

Soldering iron picture courtesy of Bomazi through Wikimedia Commons.

Was the netbook the Trabant or Model T of the computer world?

After only five years the netbook computer comes to an end having being killed by tablet computers and vendor hostility. We will remember these systems as the Model T or Trabant of the PC world?

Taiwanese technology website Digitimes reports Asustek have shipped their last eeePC netbooks, bringing to an end a product that promised to change the computing world when they were first released in 2007.

At the time the eeePC netbook picked up on a number of trends – cheap hardware, the maturity of the open source Linux operating system, affordable wireless access and, most importantly, the accessibility of cloud computing services.

There’d been a pent up demand for usable portable computers for years but Microsoft and their hardware partners consistently released clunky, overpriced tablet computers that simply didn’t deliver on their promises.

For users wanting a cheap, fairly robust portable computer then netbooks were a good choice, at the price you could even risk having one eaten by lions.

Unfortunately for netbook a few things went against the idea.

Customers don’t like Linux

An early blow to the eeePC was that retail users don’t like Linux. Most computer users are happy with Windows and MacOS and weaning them off what they know is a very hard sell.

Sadly on this topic I have first hand knowledge having suffered the pain of co-founding a business in the mid 2000s that tried to sell Linux to small businesses.

Asustek discovered this when they found customers preferred the more expensive Windows XP version over the original Linux equipped devices.

Unfortunately Microsoft’s licenses damaged the economics of the netbook and held the manufacturers hostage to Microsoft who, at the time, wasn’t particularly inclined to encourage customers to use cloud services.

Manufacturer resistance

Microsoft weren’t the only supplier unhappy with netbooks. Harry McCracken at Time Tech describes how chip supplier Intel worked against the products.

For manufacturers, the netbooks were bad news as they crushed margins in an industry already struggling with tiny profits. However all of them couldn’t ignore the sales volumes and released their own netbooks which cannabilised their own low end laptop and desktop ranges.

In turn this irritated the army of PC resellers who found their commissions and margins were falling due to the lower ticket prices of netbooks.

The rise of the tablet

The one computer manufacturer who stayed aloof from the rush into low margin netbooks was Apple who had no reason to rush down the commodity computing rabbit hole. It was Steve Jobs who launched the product that made netbooks irrelevant.

“Netbooks aren’t better at anything… they are just cheaper, they are just cheap laptops” Jobs said at the iPad launch in January 2010.

Immediately the iPad redefined the computer market; those who’d been waiting a decade for a decent tablet computer scooped the devices up.

Executives who wouldn’t have dreamt of replacing their Blackberries with an iPhone, let alone using an Apple computer proudly showed off their shiny iPads.

The arrival of the iPad in boardrooms and executive suites also had the side effect of kick starting the Bring Your Own Device movement as CIOs and IT managers found that their policy of Just Say No was a career limiting move when the Managing Director wanted to connect her iPad to the corporate network.

Rebuilding PC margins

Around the time of the iPad’s released the major PC manufacturers declared a detente over netbooks and joined Intel in developing the Ultrabook specification.

The aim of the Ultrabook was to de-commodify the PC laptop market by offering higher quality machines with better margins.

While the Ultrabook has worked to a point, competition from tablet computers and the demands of consumers who’ve been trained to look for sub $500 portables means the more expensive systems are gradually coming down to the netbook’s price points.

Today’s Ultrabook will be next month’s netbook.

For the PC manufacturers, the lesson is that computers have been a commodity item for nearly a decade and only savvy marketing and product development – both of which have been Apple’s strengths – is the only way for long term success in the marketplace.

Those US based manufacturers who haven’t figured this out are only go to find that Chinese manufacturers – led by companies like Taiwan’s Asustek – will increasingly take the bottom end of the market from them.

The car industry is a good comparison to personal computers in commoditisation – with the passing of the netbook, the question is whether we’ll remember the eeePC as a Trabant, Model T Ford or a Volkswagen Beatle.