Industry 4.0 Impacts

Announcer:

Welcome to The Sound of Automation, brought to you by Clayton & McKervey, CPAs for growth-driven businesses.

Denise Asker, Director of Mkt. & Practice Growth:

Hey, Bryan. Good morning.

Bryan Powrozek, Sr. Manager Industrial Automation:

Denise, how are you?

Denise Asker:

Good to see you. It feels like it’s been a while.

Bryan Powrozek:

Welcome back from Florida.

Denise Asker:

Why thank you. Glad to be here. It’s what, 38 today?

Bryan Powrozek:

Exactly. Pretty similar to what you had in Florida, right?

Denise Asker:

For sure.

Bryan Powrozek:

At least at the beginning.

Denise Asker:

It was. That’s true. I was looking at the agenda and it looks like you’re talking about the very large topic of Industry 4.0.

Bryan Powrozek:

Exactly. The big umbrella that covers everything.

Denise Asker:

Yeah. Tell me why you chose that topic. I mean, there’s a million reasons, but I’m curious why you chose it for this. And then my second question is how is that impacting small to mid-sized companies?

Bryan Powrozek:

Yeah. Obviously when we’re thinking about this and we wanted to have Tom on. Tom’s a great friend of the firm. And everybody talks about Industry 4.0, right? And it probably means something different to every single person who hears it. So you can think about the technology aspect of it. There’s the robotics, the blockchain, all those different things.

Bryan Powrozek:

But really, to me, the part that I see impacting folks and really changing the way we do businesses, okay, we’re no longer constrained by our old technology, our old way of doing things. So it shouldn’t just be a matter of, “Okay, I’m replacing this human operator with a robot, and the process is going to keep going the same way.” It’s knowing that, “Okay, if I’m doing it with a person, they have certain skills and capabilities and things they’re going to do better than a robot. And conversely, the robot’s going to do things differently and better than the human.” So don’t just replace one with the other. Figure out, “How do I adapt my process to get the most out of whatever I’m using?”

Bryan Powrozek:

So in talking with Tom a while back, he talked about this Project DIAMOnD that we’ll get into during the podcast. But it’s one of those things, right, where he said, “We want to take 3D printing and find a way to change the game, and find a way that we can use this in a different way that people aren’t really thinking about.” So I think it’s an exciting idea that people can hopefully take away and think about and say, “Okay, well, yeah, how can I take some of these technologies within my business and do things differently?”

Denise Asker:

Great. Well, I can’t wait to hear about it.

Bryan Powrozek:

All right.

Denise Asker:

I know we’ve got a lot of topics to cover over the course of this podcast in Industry 4.0, so we’ll start with Project DIAMOnD. Tom Kelly from Automation Alley.

Bryan Powrozek:

All right, here we go.

Denise Asker:

All right. Okay, bye-bye.

Bryan Powrozek:

Bye.

Bryan Powrozek:

All right, welcome to The Sound of Automation. Joining me today is Tom Kelly, the CEO of Automation Alley. Tom, how are you doing?

Tom Kelly, CEO Automation Alley:

I’m doing great. Thanks for having me, Bryan.

Bryan Powrozek:

Thanks for coming. Obviously, we’re based here in Metro Detroit, so I think most of our listeners in the area probably are at least aware of Automation Alley, probably even members of Automation Alley. But for some of the folks that might be listening outside the state, can you just give us a little bit of the background on what Automation Alley is, what the focus is?

Tom Kelly:

Yeah, so Automation Alley is all things automation, right? You can get that. But automation, how we thought about automation years ago has kind of morphed into what we call Industry 4.0. So Automation Alley is really Michigan’s Industry 4.0 knowledge center.

Tom Kelly:

What is Industry 4.0? It stands for the fourth industrial revolution. First was steam. Second was Henry Ford and the assembly line meeting electricity. The third was computers and robotics coming on the scene. Now, this fourth industrial revolution is the digitization of everything. The digitization of everything really blows up business models as we understood them through these other industrial revolutions.

Tom Kelly:

The risk is every revolution has played out over decades, but at the end of those decades, the players that succeeded going forward were not the players that came in in the dominant positions. That’s the risk Michigan has because we invented the second industrial revolution, we own the third, and now this fourth looks a lot different and we’re not very well-prepared. So Automation Alley helps companies navigate this Industry 4.0 technological shift.

Bryan Powrozek:

Yeah, and we’re going to touch on one of those shifts here in a minute, but as you say, you think about what happened with Henry Ford and the assembly line, right? You completely change the way… The vehicle no longer sat stationary and was kind of cobbled together by-

Tom Kelly:

That’s right.

Bryan Powrozek:

… expert craftsmen. So it’s being able to not only take these technologies we’re looking at and saying, “Okay, I’m going to replace this human with a robot,” but it’s saying, “Hey, the robot can do completely different things than the human operator can do, so let’s rethink the whole process.” And we’ll touch on that in a little bit here.

Tom Kelly:

You bet.

Bryan Powrozek:

But this is one of the challenges and the blessings of podcasts. This will exist forever, or at least as long as we continue to host it. But you mentioned to me yesterday, for companies in the area, and we’re recording this in February of 2021, there’s a new program with MEDC that you guys are offering.

Tom Kelly:

Yeah. Bryan, I’m glad you bring that up. Automation Alley has partnered with the MEDC, the Michigan Economic Development Corporation, and also partnered with MMTC, the Michigan Manufacturing Technology Center, to make sure that every manufacturer in the state understands what this Industry 4.0 shift means, what this digitization means for their business. Because of that, the MEDC has granted us funds to extend free memberships to all manufacturers in Michigan.

Tom Kelly:

This is really newsworthy because there are 12,000 manufacturers in Michigan, about 10,000 of them are really small and don’t really pay attention to what’s happening in the world around them. They’re focused every day on putting fires out in their manufacturing plant. And it’s so critical that we get the information to them so they can make good choices.

Tom Kelly:

So as Michigan’s Industry 4.0 knowledge center, to be able to extend membership to all of our manufacturing community, and then have that community talk to each other and say, “What’s working? What’s not working?” it’s really powerful. So we’re delighted to be able to do that. And we want everybody to pay attention and say, “Wow, I didn’t know that existed. Let me get in touch with Automation Alley to do that.”

Bryan Powrozek:

Actually, yeah, so they… I mean, just go to the website, get a membership and-

Tom Kelly:

Just go to automationalley.com. That’s right.

Bryan Powrozek:

Excellent, excellent. Let’s get into the exciting stuff here. This is really something. And when I look at what’s happened over the last year with COVID and the pandemic and all that, and there’s been a lot of negative things that have happened. A lot of people out of work, a lot of all that stuff. But there’s also some really cool things that have happened.

Bryan Powrozek:

I think the Project DIAMOnD that you guys at Automation Alley have put together is one of those cool things, right? That it’s taken concepts and things that have been around, right? 3D printers. 3D printers have been around for a long time now, but you’ve come up with a new way. Kind of like I talked about there with the Henry Ford and the assembly line, taking this thing and now making it something else that we couldn’t have done before without some of these Industry 4.0 technologies like blockchain and additive manufacturing and stuff.

Tom Kelly:

That’s right.

Bryan Powrozek:

So give us a little background on Project DIAMOnD.

Tom Kelly:

Yeah, so Project DIAMOnD, we call it a project, right? Because it’s a work in progress. But Project DIAMOnD evolved because of COVID because of the federal CARES Act.

Tom Kelly:

Oakland County was the impetus behind this and they said, “We know we need ventilator parts.” You’ve got to go back to April of last year when Ford and GM both got $500 million contracts from the federal government to make ventilators. And we said with Oakland County, “We can build something extraordinary. We can build a network of additive manufacturing printers and put them in the hands of all the smalls, and then have the smalls band together and behave as a very large, and we can print anything we want if you have an additive manufacturing machine.”

Tom Kelly:

So Project DIAMOnD stands for Distributed, Independent, Agile, Manufacturing on Demand. The Project DIAMOnD, we’re able to get printers, these additive manufacturing printers to 300 manufacturers between Oakland and Macomb. Macomb County joined us in this effort as well. Half of all manufacturing occurs between Oakland and Macomb County. So we’re seeding the market.

Tom Kelly:

And these manufacturers now, they’re small, they’re little manufacturers who never even had dabbled in 3D printing before, and now they have these 3D printers. And we’re able to stitch them all together, any network that allows us to have them behave as one large tier one. When we need to, we can produce 300 parts at a time. And if those parts take an hour or a day, you can extrapolate out just how big you can be. So we’re very, very proud of what we’ve done, but we’re most proud of the community that is now being built around Project DIAMOnD, because what these small manufacturers are realizing is innovation, they can control their innovation now. They can experiment. They can see parts that are on their machines and say, “What if I could print that? What would happen?” And we’re actually seeing these stories begin to come out around Project DIAMOnD. Very, very exciting project.

Bryan Powrozek:

Yeah, no, it’s funny because it’s almost like it seems like to some extent, 3D printing was a novelty, right? You’d go on YouTube. You can find all sorts of people printing up all sorts of different things out of plastic and that. But as you said, you get these things in the hands of engineers, and their minds start going all over the place of, “Hey, I’m no longer constrained by I can produce this on the mill or the lathe, and so I’ve got to have draw that I can take the part out.” So you see them inventing tools they can work with or replacing, like you said, “Hey, we used to have to do this in three pieces because of how it was manufactured. Now we can do it in one.”

Tom Kelly:

Absolutely.

Bryan Powrozek:

You shared with me an example yesterday, and beyond just functional combinations, there’s some cost savings behind it too, right?

Tom Kelly:

Yeah, so I’m not going to disclose the company, to avoid the embarrassment. But we have all these companies, hundreds and hundreds of manufacturers coming into Automation Alley, picking up their supplies, talking with me. I love talking with every one of them. They all have a story to tell. I want to share just one.

Tom Kelly:

Guy came in. He’s the owner of a manufacturing firm, small. He was against additive. The reason why was because he was like, “I don’t know what to do with it. I mean, it’s like a boondoggle. Why would I give this to my engineers?”

Tom Kelly:

So he got this Markforged printer, which is carbon fiber, production-capable printer. His engineers looked at it and we forced every manufacturer to print what we call a badge, which is a way for us to prove that they know how to use their printer. And he said, “Tom, I printed the badge and I couldn’t believe how functional it was and how strong it was. So we looked at our machine and there’s a part we’re buying that’s a stainless steel valve and we pay $99 for it. We thought, ‘I wonder.'”

Tom Kelly:

So they took their drawing, they converted it to 3D printing. They made a carbon fiber valve and they tested it for 42,000 cycles, which apparently to him was a huge number of life cycles. And he said, “This is incredible.” He said, “Guess what, Tom? I went from paying $99 for that one small stainless steel valve. I can now print it myself. Guess what it costs me?” He was so proud of this. I said, “What?” He said, “A buck.”

Bryan Powrozek:

That is amazing.

Tom Kelly:

$1 of material on his machine. And he said, “I’m now a believer. And I have my engineers are now scouring our machine, thinking of all the things we can do with this printer now.” That’s the kind of metamorphosis that we need to see in the community around Industry 4.0.

Bryan Powrozek:

Yeah, and having a few of my clients who actually received the printers as well and have been working with them, similar stories, right? I think when you look at it initially and you say, “Okay, it’s a $20,000 price tag,” whatever it is. Am I going to invest this, thinking, “Well, maybe my folks will use it. Maybe we’ll find an application for it.”? As a business owner, yeah, that’s not a risk maybe you’re willing to take, especially in a pandemic when you’ve got salaries to pay-

Tom Kelly:

Absolutely.

Bryan Powrozek:

… and things like that. But every single one of them. I’ve got one who texts me probably every other week with something new they printed off, a new concept their guys are going with. And really, I think the next level of that is getting people to start thinking about, “I’m no longer constrained by what a mill or a lathe or an injection molding die can do.” And really learning… Like we were talking about, there are software applications out there that’ll say, “Okay, this is the part you want to make. Well, here’s some different configurations of how it can be done in a 3D printer.”

Tom Kelly:

Yeah, and what’s really cool about Project DIAMOnD, Bryan, is… So we’re Michigan’s Industry 4.0 knowledge center. We are shouting from the rooftops, “You have to pay attention to additive. You have to pay attention to artificial intelligence. You have to pay attention to VR and AR and all these technologies that are coming.” They don’t care. These manufacturers don’t pay attention to us necessarily, even though we like to think they do. Who they pay attention to is their other manufacturer owners that are small and struggling every day to find that way to stay profitable and viable. It’s that community now that’s saying, “Hey, we got our printer from Automation Alley. Look at all the cool stuff we’re doing.”

Tom Kelly:

So every other week, we have lunch and learns where just that community comes together, those 300 manufacturers, and they share stories of what they’re doing. It’s a collaborative bunch. That’s really, really cool because that’s what we want to seed is the network, the community, the collaboration. And we’re going to grow this community 300 to start, but the idea is to build on this and have anybody with printers be able to join our network and collaborate with others.

Bryan Powrozek:

Yeah, because that’s really phase two, right? It started, phase one was the Markforged, because obviously, you need that common language and everybody, you know what the hardware is going to do. But now phase two is really open it up, right?

Tom Kelly:

Absolutely. Because we’re going to need soft plastics, hard plastics, all kinds of different materials that need to be made. Markforged does a great job with carbon fiber and with metal printing, but we need all kinds of different companies with different assets, different 3D printing capabilities to come to the table.

Tom Kelly:

One thing I didn’t mention was for these 300 manufacturers, we also bought two very large-scale metal print farms. Two of the manufacturers agreed to put these print farms in their facilities and make them community assets. So now 298 other small manufacturers now have access to a million dollars worth of metal printing fabrication. So they can experiment on their printer. They can print it in carbon if they want to. If they need to print it in metal, which is usually out of the reach of small manufacturers, we now have two metal print farms. So it’s really changing the face of manufacturing as it’s viewed in Michigan here.

Tom Kelly:

We are so delighted to be on the forefront of this experiment. And it is an experiment. So we’re not trying to make this… As a nonprofit, we don’t have a profit motive. We merely have an innovation motive. Let’s innovate and win together, and that’s our job. So it’s liberating in a lot of ways.

Bryan Powrozek:

No, and it’s amazing to me, sitting here thinking that that was all accomplished in 12 months. Or even less than 12 months.

Tom Kelly:

It was accomplished in four months. Four months. We got our contract from the federal government in Oakland County on August 15th, and we will place our last printer probably in the next couple weeks here.

Bryan Powrozek:

Yeah. I think you had mentioned… Was it General Motors had set up a hub of about 30 printers, right?

Tom Kelly:

They have an innovation center out of Warren, and they’ve put 30 printers in there. We say, “Yeah, that’s impressive. That’s a lot of capacity.” But it puts in context just how much capacity we just put into the Michigan market.

Bryan Powrozek:

Yeah, 10 times that.

Tom Kelly:

10 times that. All smalls. Smalls tend to be the players that build the jobs, stay in Michigan, educate our children. It’s the smalls you want to nurture. But the smalls didn’t know how to play on this big 3D printing stage, and we just gave them license to do so. We’re so excited to just learn what they’re going to learn, and see if we can do a better job of saying, “Okay, what’s the 301st printer look like? What’s the 600th printer look like?” Right? If we get to that point, we’ll change Michigan forever. We’re so thrilled.

Bryan Powrozek:

Yeah, and the technology piece aside, I mean, the rate at which the technology is changing is amazing. The part that we often see that’s playing catch-up is exactly what Automation Alley did right here. How do you take this technology and create an innovative new process with it?

Bryan Powrozek:

I think about if I’m a business owner and I’m investing $20,000 into my printer, I’m going to do everything I can to maximize that printer and get my return on investment. I’m not necessarily going to think, “Hey, I need to talk to my buddy down the street and get him to get one too, and then let’s come up with a way we can network those two together.” So that, to me, is kind of the beauty of Automation Alley.

Bryan Powrozek:

I think we see this somewhat from our side as CPAs is we get to see what a lot of businesses are doing and what works, what doesn’t work. So you guys could kind of stand above the fray and say, “Hey, look, here’s this blockchain networking technology we’re going to implement over the top of this. You guys just need to participate and provide us the resources.” That, to me, is the big takeaway that I see that, “How do you now take this…” Okay, so this is printers. This is just one example.

Tom Kelly:

That’s right.

Bryan Powrozek:

So now let’s look at… And something we talk about a lot within our client base is you take a system integrator, for example. They maybe started out as a controls company or a machine builder. And because there was enough requests from clients, they added the controls piece, or they added the machine build piece. But that’s not their core strength. Well, now you can almost use that same networking technology and say, “Hey, I’ve got this job and I’m going to take care of the controls, but I need someone to build the machine.” Okay, it goes out to the network. The next hand comes up and now it’s the whole rising tides raise all ships, right?

Tom Kelly:

That’s exactly right. Something you touched on that’s important is most 3D printers sit idle most of the time. That is very costly. They’re like cars. You drive them 4% of the time. 96% of the time, they’re in your driveway or at your place of work. 3D printers function a lot like that. They say, “Well, they’re good for prototyping. Hey, we did this. We had a big prototyping project. Okay, that’s done,” and now there’s nothing.

Tom Kelly:

You have to get these printers to be productive. We want these printers to function like cash registers. So the joke we make is I want the business owner at this manufacturer to look over and say, “Hey, my printer is going again. I don’t know what it’s making, but it’s making me money.” Right? Because you can do that. Once you build a network like this, you all can participate and you want that printer just humming all the time. The only way to do that is to be collaborative, not competitive.

Bryan Powrozek:

Yeah, exactly. I think you used the example yesterday when we were talking that if I’m one of these small to midsize manufacturing companies and this lead comes in the door, need 10,000 pieces. Okay, that’s going to take me three years to print. I can’t take that order. But now, and that’s really where Automation Alley hopes this goes, right, is that the members of the network are the ones bringing in the work and it’s like, “Okay. Hey guys, we’ve got this 10,000 piece order,” goes out to all 300 machines. And it’s a different way. Now you’ve got everybody feeding the sales pipeline and you’re able to do what you’re talking about there. Keep that printer going full time. Yeah, it might not be printing stuff for my customers, but it’s getting utilized and there’s profit sharing and all that goes along with it. So yeah, it’s exciting.

Tom Kelly:

It is exciting. Yeah, we’re looking forward to where this goes, and that’s why we call it specifically Project DIAMOnD. It’s a grand experiment. Let’s put a man on the moon, so to speak, and do something really extraordinary for Michigan.

Tom Kelly:

Because I think over the last couple decades, manufacturers in Michigan, the small ones, have felt battered and tired. And everything’s about leaning and being 10% less expensive than the year before. It’s just a constant struggle. But they’re great innovators and they never had a mechanism really to unlock that innovation in a way that allowed them to control it. 3D printing does that. So if anybody’s listening in manufacturing, I don’t care if you’re in Michigan or not, if you’re a small manufacturer, you need to understand 3D printing, you need to understand additive, and you absolutely need to make sure that you know what your business model will look like around that, because that is the future.

Bryan Powrozek:

Yeah. And in a way, this just kind of dawned on me as we were talking here, but tying it back to that MEDC grant, right? It’s kind of the same thing. There’s probably a lot of businesses out there who’ve been like, “Yeah, I’m aware…” And I know. We talk to a lot of businesses in the industry. “Yeah, I’m aware of Automation Alley. We’ve never really gotten…” Well, now you’ve got a chance to get involved and see.

Bryan Powrozek:

These are really the things, again, like I said, you sit above the fray. So these are the things Automation Alley is able to bring to the table. And now the business owners, they don’t have to go out and research these things on their own. You’re bringing the content to them. You’re showing them what’s out there. I’ve attended a lot of the Tech Takeovers that members put on. We’ve put on some ourselves. It’s a great way to share knowledge and just work with other people in the space who are struggling through the same problems you’re struggling through.

Tom Kelly:

That’s right.

Bryan Powrozek:

And more minds come up with better ideas, more ideas. So-

Tom Kelly:

Well, Bryan, it’s almost unmanageable today. Technology is moving so fast that we need people like Clayton & McKervey that say, “Hey, we understand this sliver of the market.” But when you talk about all of the technologies like I said, AI, and VR and AR, and industrial internet of things, and new materials that are coming, it’s no longer can one company handle their own R&D and understand the decisions they need to make. They need a community. That’s why Automation Alley…

Tom Kelly:

We have a 20-year history, but Automation Alley, only for the last four have we been trying to be Michigan’s Industry 4.0 knowledge center. So a lot of people have preconceived notions of what Automation Alley is or was. And what I’m saying is look at us again, because you will be shocked to understand or learn what we’re doing today and how we’re building a community around understanding the rapid pace of change around technology.

Bryan Powrozek:

Excellent, excellent. Well, Tom, hey, I really appreciate the time today, and I hope the audience listening out there take away a few things. And for those of you out there who aren’t involved in Automation Alley, or maybe you were and you dropped away, like Tom said, check it out, come back in. There’s a lot of exciting things going on right now and you don’t want to miss out. You want to be part of that.

Tom Kelly:

And you can’t beat free. Come on.

Bryan Powrozek:

Exactly.

Tom Kelly:

If you’re a manufacturer.

Bryan Powrozek:

Exactly.

Tom Kelly:

Yeah.

Bryan Powrozek:

Exactly.

Tom Kelly:

Well, thank you, Bryan. I’ve really enjoyed being here today.

Bryan Powrozek:

Excellent. Thanks, Tom.

Tom Kelly:

Thank you.

Bryan Powrozek:

Bye.

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