Below is a great article that my brother sent me about all the incredible things happening in American manufacturing today. Sound boring? Far from it. The software company hackathons we have seen in the tech industry recently are now coming to USA manufacturing.
Rapid change, time to market, and continuous disruption; get used to them. Make sure you are on the right side of this immense change coming NOW.
Rule #7 from my book The Fantastic Life: Stay out of the Gap
By keeping up with current trends in the world, you can be better prepared to stay out of the gap, and position yourself on the side you want to be on. Even when the big change is not in your industry, by staying informed you can expand your value and be ready for whatever comes next.
WELCOME TO THE MAKER-INDUSTRIAL REVOLUTION
HOW GENERAL ELECTRIC, LOCAL MOTORS, AND AN ARMY OF DIY INVENTORS ARE REBUILDING AMERICAN MANUFACTURING
By Tom Foster
Posted January 19, 2015
Jonathan Robert Willis
Justin Blair, a maker at FirstBuild, operates the Maxiem waterjet in the shop space of GE’s microfactory, where products are made in low volume.
This past February, in a nondescript industrial building near downtown Louisville, Kentucky, a few executives from GE Appliances set out to stage the division’s first hackathon. Louisville is home to the appliance manufacturer, but rather than hold the contest at headquarters, the executives decided to mount it offsite, in partnership with LVL1, a local hacker collective. For the past four years, the few dozen members—artists, mechanics, IT guys, retiree hobbyists, and even a few of GE’s own engineers—have congregated in a grimy workshop to make anything from weather balloons to a fire-breathing robotic pony. That weekend in February, they would get to exercise their creativity a little differently.
For the contest, GE Appliances donated refrigerators, ranges, and other devices to LVL1, and over 48 hours, teams of hackers raced to imbue them with elaborate new functions. Although the division spends plenty on R&D, Kevin Nolan and Venkat Venkatakrishnan, the heads of technology and R&D, wanted to see what out-of-the-box ideas the crowd might have.
The results were variously silly and useful. One modified refrigerator dispensed soda cans from a chute, like a vending machine. Another used a nitrogen cylinder for home-style flash freezing. (“It had a big sign that said this product is dangerous—that was its selling point,” Nolan says.) The winner, though, was an oven with a bar-code scanner capable of reading and perfectly executing cooking instructions encoded on packaged foods. To demo the product, the leader of the team, Chris Cprek, a University of Louisville staffer and one of LVL1’s founders, created a bar code with baking instructions for a raspberry pie and used his hacked-together oven to bake the dessert right on the workshop floor.
Why couldn’t GE build a more nimble product-development pipeline, and why couldn’t smart makers have an ongoing role?
To the executives at GE, Cprek’s hack came as a wakeup call. The idea for a bar-code-scanning oven had come up in internal ideas sessions before, and they knew it had great potential. In retirement communities or urban food deserts, such an appliance could help people eat healthier meals without requiring much time or expertise. And yet, the concept had never left the brainstorm stage at GE. That’s because, for giant manufacturing companies, putting something into a production run is a giant gamble. Navigating the obstacle course of requisite departments (R&D, design, prototyping, market research, manufacturing) can take years, and tooling a factory line can cost tens of millions of dollars. That the executives were now staring at a working prototype of an idea they already liked—and it hadn’t come from them—made them wonder how much innovation they were letting slide by. Why couldn’t they build a more nimble product-development pipeline? For that matter, why couldn’t smart hackers like Cprek have an ongoing role?
Six months after the event, Nolan and Venkatakrishnan tell me the story of the hackathon in a new GE-owned hackerspace called FirstBuild. Partly inspired by the LVL1 contest, FirstBuild launched with the help of some of the biggest names in the U.S. maker movement—primarily Local Motors, anopen-source automotive manufacturer, but also the 3-D–printer companyMakerBot and the makerspace chain TechShop. FirstBuild will serve as a bridge between the hacker movement and the mass market. The organization pairs a global online community with a 33,000-square-foot public hackerspace and small-scale factory. As ideas bubble up from the crowd, either from the online community or in the hackerspace itself, the creators can team up with GE designers and engineers to build prototypes. If enough interest for those prototypes develops online, FirstBuild will put them into a limited production run for sale under its brand. If those products do well, they could graduate to GE and go into mass production.
Jonathan Robert Willis
Engineers Justin Brown and Tim Gillespie talk in front of an audio speaker thay made in FirstBuild’s workspace.
The FirstBuild community went live in May, and when Cprek posted his bar-code oven, it quickly became the most-commented-on concept on the site. He is now working with GE engineers to turn it into an actual product. That would be a big deal for Cprek, but more to the point, it would be a big deal for GE. If the company can harness the brains of makers around the world and speed their ideas into testing and production, it could become the fastest, most innovative home-appliance maker in the industry. And if the FirstBuild model works for appliances, couldn’t it then apply to GE’s other, larger divisions, such as aviation, health care, and oil and gas? For a company widely regarded as a proxy for American manufacturing, such an experiment could mean a lot more than an improved bottom line. It could help accelerate a new movement in U.S. industry, one in which jobs and innovation come back to stay.
An American Manufacturing Revival
The story of American manufacturing is, in many ways, the story of GE’s Appliance Park. Built outside Louisville in the postwar boom of the 1950s, the factory park served a rapidly sub-urbanizing population with a steady stream of gleaming refrigerators, stoves, washer/dryers, and dishwashers. A symbol of American industrial might, the park was so big it had its own zip code and post office. At its peak, in the early 1970s, it housed 6 million square feet of building space and 23,000 employees a day. From one end of the parking lot to the other was a full mile, with stoplights.
Three decades later, Appliance Park had just 1,300 employees. Buildings sat empty, their roofs collapsing and plumbing inoperable. “It was depressing,” says Nolan, who has worked at GE for 25 years—his entire career—17 of them at Appliance Park. “Building Two was closed for like 15 years. It was dark and scary; you didn’t want to go back there.” Other buildings housed antiquated production lines that built the company’s least-sophisticated machines.
“We think the new intellectual property is speed. People who can move fast are going to win.”
In large part, that decline can be traced to a single root cause. Through the eighties and nineties, millions of American manufacturing jobs went overseas. Lured by low labor costs and cheap taxes, many companies pulled out of American manufacturing centers such as Detroit, Cleveland, Pittsburgh, and, of course, Louisville. To do otherwise would have been uncompetitive, something shareholders don’t care for.
Yet as the years wore on, the very move that heightened competitiveness began to erode it. The outfits that did the contract manufacturing for U.S. firms—Samsung and LG, for instance—began making high-quality, competitive products themselves. What’s more, rising fuel and labor costs started to erode outsourcing savings, while innovation and speed to market suffered. With U.S. design and engineering teams separated from manufacturing by 5,000 miles, companies were stuck with slow, inefficient operations that too often turned out subpar products.
Jonathan Robert Willis
From left: FirstBuild’s TouchFlo Disposer; Chillhub, a USB/Wi-Fi-connected fridge; an oven designed for easier cleaning and simpler, safer access to food while cooking.
For GE Appliances, the situation got so bad that in 2008, GE CEO Jeff Immelt considered selling the division outright. Instead, he decided to double down. Immelt committed $1 billion to reviving Appliance Park, taking advantage of its skilled labor force and the proximity to customers. Since 2010, more than 3,000 people have found employment at the reinvigorated factory park, and every building hums with modern production lines.
Like any GE factory, the new Appliance Park was devised as a bastion of “lean thinking”—a disciplined approach to efficiency, continuous improvement, and rapid iteration that Toyota made famous. But going lean was only a partial solution to GE Appliance’s woes. To avoid discarding ideas like the bar-code oven, GE Appliances also needed to act more like a start-up. “If you want to build minimum viable products and fail fast, and you’re trying to make a million dishwashers . . . that’s not going to happen,” Nolan says.
Around the same time that Nolan and Venkatakrishnan were first flirting with the hackers at LVL1, Beth Comstock, the chief marketing officer at the GE mother ship, began to wonder what benefits the maker movement might hold for a major manufacturer. Comstock has the easy smile and calm confidence of a natural networker, and she makes a point to introduce Immelt to unconventional thinkers, just to feed his curiosity. For one of those meetings, she brought in Jay Rogers, the founder of an Arizona automaker called Local Motors. Rogers wowed Immelt with his model for community-based product development and small-scale, distributed manufacturing. An Iraq war veteran with a Harvard MBA, Rogers didn’t look or sound like a business hippie. What he explained, leaning into the conversation with a Marine’s intensity, was a highly disciplined process that just happened to be the exact inverse of everything GE traditionally did.
Obama: “[Rapid prototyping] would save taxpayers billions of dollars—but it also could get technology out to the theater faster, which could save lives.”
Local Motors uses an online platform to crowdsource vehicle-design and engineering ideas, which it then prototypes in small, open-access factories (there are currently three, and the company plans to open as many as 100 in the next 10 years). The process shouldn’t work—design by committee is usually a recipe for dulling ideas, not sharpening them—but Local Motors has achieved some interesting successes. By using in-house expertise to channel the wisdom of the crowd, the company launched the world’s first open-source vehicle—a street-legal, off-road rally car with the comfy interior of a commuter car—a series of special-interest motorcycles, and the world’s first 3-D–printed car. It took much less time than it would’ve taken traditional automakers, and because Local Motors doesn’t need to tool up giant factories, it did so at a fraction of the cost.
Along the way, Local Motors also forged a few high-profile partnerships, most notably with the Department of Defense’s advanced research branch, DARPA, for which it enlisted its community to design and prototype a high-speed recovery and resupply vehicle for combat situations. Within four months—ahead of the deadline—the company delivered a vehicle called a FLYPmode. Upon being presented with the prototype, President Obama gushed, “Think about it: Instead of having a 10-year lead time to develop a piece of equipment, if we were able to collapse the pace at which that manufacturing takes place, that would save taxpayers billions of dollars—but it also could get technology out to the theater faster, which could save lives.”
Unsurprisingly, that kind of success caught the eye of GE. “We figured, if it’s good enough for the DOD, it’s good enough for us,” Comstock says. So GE Appliances approached Local Motors with an offer for a formal partnership, excited at the prospect of simultaneously saving billions while becoming more nimble. For Rogers, the partnership would be a way to prove, on the biggest stage, that his model is something more than a novelty. But before signing, he had a condition. Rather than employ select parts of the Local Motors model, as DARPA and other partners such as the truck maker Peterbilt had done, GE Appliances would have to re-create Local Motors entirely. “I’m not doing anything unless you are all in,” Rogers said to Immelt. FirstBuild was born.
The Future Of Innovation
The night before the FirstBuild grand opening, the bar at the 21c Hotel in downtown Louisville is buzzing, and a veritable Super Friends of the maker movement stands clustered at its center. Bre Pettis, founder of MakerBot, wears a bushy new beard and mop of salt-and-pepper hair to go with his chunky geek glasses. Jay Rogers stands opposite him in a flight-suit-style jumper with the Local Motors insignia embroidered on the breast. TechShop CEO Mark Hatch is here too. They’ve just come from a dinner with Nolan, Venkatakrishnan, Comstock, and a few other members of the GE brass.
About a month earlier, at the White House’s inaugural Maker Faire, GE announced that, along with Local Motors, it was bringing MakerBot and TechShop into the FirstBuild fold. MakerBot’s 3-D printers will allow members of the FirstBuild workspace to quickly prototype parts. “But the really exciting part will be getting existing MakerBot users involved,” says Pettis. By posting projects to the company’s popular community website, Thingiverse, FirstBuild will dramatically increase its reach. In turn, thousands of MakerBot users will get new, real-world projects to work on.
For TechShop, which operates a chain of maker workshops in cities like San Francisco, Austin, Pittsburgh, and Detroit, the partnership is also a means to engage its community. In each TechShop location, a dedicated kiosk will grant makers access to FirstBuild projects. “It gives the community a purpose,” Venkatakrishnan says. “We throw open a CAD [Computer Animated Design] model and say, ‘Here’s what we’re working on, and here are the problems or questions. How do we figure these out?’”
At The Workbench
Jonathan Robert Willis
Maker Keith Wait at work
That focus on openness has been good for the maker community. “FirstBuild has been a great resource for us,” says Cprek, who spends about an afternoon a week physically working on his barcode-scanning oven. “They have all these people around who have formal training, like former GE engineers or GE proper. They know the ins and outs of manufacturing and they’re great folks to bounce stuff off of.”
But that spirit of openness raises some questions, too. If FirstBuild is an incubator for potentially important innovations, doesn’t such transparency tip off the competition? “That’s something the company has to wrestle with,” Nolan says. “But really, what’s the future of intellectual property? The IP [intellectual property] system was built to spur innovation, but there’s an argument now that the opposite is happening—that it’s stopping people from innovating [because of bureaucracy and excessive litigation]. The whole maker movement is looking that in the face. And we can’t sit in a closet and ignore what’s happening. We think the new IP is speed. People who can move fast are going to win.”
To reward contributors (whose ideas are the very engine FirstBuild depends on for that speed), the outfit has adopted the Local Motors payment method. Contributors receive one percent of the sales proceeds from their work for three years, and they get to keep the IP; if Samsung wants to buy their ideas the day after they give them to FirstBuild, nobody’s stopping them from cashing in. To manage this system, FirstBuild tracks those contributions that become part of a final product and values them separately. Since most contributors will design product modifications rather than entirely new products, they will be paid one percent of the value of that particular modification, not of the whole thing.
It’s unlikely anybody is going to get rich on that system—other than, perhaps, GE. But it’s also unlikely an individual maker would have access to trained designers and engineers and a GE Appliances production line. “Look, every inventor has a dream that their idea is going to be big,” Nolan says, “but trying to do that on your own, it’s very hard to scale. That’s what we know how to do. Literally five miles from FirstBuild we have six million square feet of factories.”
“If we can do it here, we can do it anywhere.”
From the outside, it sounds like a tremendous amount of work to manage payments to thousands of contributors, but GE Appliances stands to gain a lot. If a successful FirstBuild product makes it to a production line in Appliance Park, the division will still have to spend millions to set up a supply chain, make molds and dies, and configure the heavy equipment. But that product will already have been market-tested and refined in a low-volume facility—a tremendous advantage. “Big companies don’t have a way to work in low-volume scenarios,” Nolan says. “Start-ups are used to it, and they have trouble growing up. Big companies are used to high volume, and they have trouble starting up.”
Take, for example, Cprek’s oven. It would have taken two years and up to $12 million, Venkatakrishnan says, to get it into production. By comparison, he estimates that developing the product and making 20 test ovens to sell through FirstBuild will take no more than six months and $300,000. The investment in eventual mass production (if it happens) will still be expensive, but it could come more than a year and a half sooner, with much less risk of failure. As Jay Rogers puts it, “We’re going to see if we can make an elephant dance.”
Challenges And Opportunity
In September, GE agreed to sell its appliance division to the Swedish company Electrolux—and FirstBuild along with it. It was a blow to supporters but hardly a referendum on the idea. If Nolan sees FirstBuild as a laboratory for product innovations that could spread to Appliance Park, Comstock sees it as a laboratory for process innovation that “will spread to other parts of GE.” What’s more, while FirstBuild proper is being sold, the actual partnership with Jay Rogers and Local Motors is with GE corporate, so efforts to expand the relationship continue. “FirstBuild came together so quickly that it’s already a beautiful proof point,” Comstock says. “A lot of other GE engineering teams have gone to Louisville to figure out how they can adapt it.” She says the company will roll the FirstBuild model out in other divisions, perhaps even before the end of the year.
Rogers sees opportunity in every sector of GE’s $150 billion business. But the model of crowdsourced innovation and manufacture goes well beyond one company, he says. Any enterprise shackled to a slow and expensive production model could benefit from low-cost, fast-paced innovation. Indeed, if outsourcing was a major source of competitive advantage over the past 30 years, rapid innovation, low-risk manufacture, and proximity to markets could take its place over the next 30 years. For American manufacturing, that bodes well. The nation is still home to the world’s largest markets and manufacturers, and it still harbors some of the brightest, most entrepreneurial minds. The FirstBuild model brings those elements together in a system that could fit any number of organizations. As Rogers says of GE Appliances, “If we can do it here, we can do it anywhere.”
As for FirstBuild, in the time since the online community launched in May, it has signed up several thousand members—many more than expected—and the response has been good. “For makers, if you’re looking to take something to the next level,” Cprek says, “to dot I’s and cross T’s, with the intent to push out into a much grander venture, then FirstBuild is great.” To better channel the energy of the crowd, it even issued two official challenges. One is to design a fully functional microkitchen for tiny apartments in dense urban areas, and the other is to dream up a new way to grill indoors that doesn’t fill a house with smoke. Both have already produced promising designs.
Nolan, meanwhile, proposed an idea of his own to the FirstBuild community. He wants to create a robotic pizza that can measure the exact conditions within a restaurant-grade pizza oven, so that the company can re-create that process in a home oven. An engineer by training, he’s letting his hacker flag fly and chasing an idea just because he thinks it’s awesome—something that, it’s safe to say, he hasn’t done in ages. “I’m from New York, and you get the best pizza up there in the Bronx,” he says. “Those ovens get really, really hot, and there’s a bunch of folklore about the convection that happens in there. So we want to go to the best pizzeria and put a digital pizza in the oven and get a reading. What’s really going on?” More to the point, he says, “Why can’t we build that?”