Much of the conversation, formal and informal, at the Mackinac Policy Conference on Mackinac Island has focused on the existential question of whether Michigan is prepared for the future.

Most understand the answer is resounding no on education and infrastructure. But for Tom Kelly, executive director and CEO of Automation Alley, the state’s historic automotive sector automotive isn’t prepared, either.

The Troy-based business association recently released a study on Industry 4.0, the idea that we are in a fourth industrial revolution in which the internet and automation transform manufacturing, and the results show just how unprepared Michigan’s host of small- to medium-sized auto suppliers are for the changing manufacturing landscape.

“I’m not sure we can move fast enough to get the (small manufacturers) to adapt,” Kelly said. “They must act, but they have no excess capital to invest and no excess talent to create.”

Automation Alley revamped itself two years ago to move beyond a networking organization into a convener of ideas to spark Industry 4.0 preparedness, but it’s up against a tough battle.

Michigan’s smaller suppliers, those family-run companies that supported the ideals of Michigan’s manufacturing might, are faced with the rapid digitization of the auto industry with very little means to accomplish the goal. Automation Alley hopes to educate them on what investments they must make.

They remain hesitant, Kelly said, because they are performing well now and are skeptical of the impact digitization and automation will have on their business plans. But those changes are coming, and without rapid adoption, Michigan’s aging manufacturing infrastructure will force automakers and large suppliers to invest elsewhere. Because it’s cheaper.

“We’re going to lose out to Mexico or the Southern U.S.,” Kelly said. “It takes massive investments in existing plants to adopt Industry 4.0 processes. It’s cheaper to build a new plant in South Carolina or Mexico than it is to rehab an old one. We have no state strategy to help these companies adapt. Our leaders are focused on new startups or diversifying into new technologies, but they need to recognize the digitization of industry is completely disruptive, but if we move fast enough it’s an opportunity.”

Kelly is calling or a tighter collaboration among industry, government and educators to help the state as a whole rapidly increase adoption.

But the state and its industry leaders remain tangled in solving the fundamentals of Michigan’s broken education system. Kelly believes those are also linked to Industry 4.0.

“School’s aren’t keeping up. We need to gamify everything and teach these kids with the technology of the future, so the companies of the future will be prepared,” Kelly said. “They are scared to blow (the education system) up, but trust me, it’ll blow up all on its own if we don’t act. Maybe things will change when today’s youth gets into leadership. I just hope it’s not too late.”

Automation Alley will convene industry leaders in November at its Integr8 Conference in Detroit to tackle the concept of preparing companies for Industry 4.0.

Source: Crain’s Detroit Business

Rick Williams

Rick is the Managing Partner of Polk and Associates and Director of our Attest, and Manufacturing services divisions. He earned his Bachelor of Science degree in Accounting from Western Michigan University and earned his Accreditation in Business Valuation from the AICPA and is a Chartered Global Management Accountant. Rick is a member of the Michigan Association of Certified Public Accountants, American Institute of Certified Public Accountants, AICPA Forensic and Valuation Services section, Michigan Manufacturers Association, MMA Tax Policy Committee, SAE, Affordable Housing Association of Certified Public Accountants, and Automation Alley.

RWilliams@polkcpa.com