General Electric broke ground today for its brand new Welland, Ontario, Brilliant Factory located just across the Canadian border from Buffalo New York.  The diversified manufacturing conglomerate indicates that this plant, when operational in approximately 20 months: “will strengthen the base of North American manufacturing and equalize the region’s ability to compete where direct labor costs are cheaper.” The decision to move the plant to Canada from a previous U.S. location was politically charged.

According to a GE Reports commentary, the new factory will produce massive Waukesha branded natural gas powered reciprocating engines that are primarily utilized in petroleum and oil and gas exploration. The plant will further produce other components for GE’s Transportation, Oil & Gas and Power business units. What makes the facility different is that production equipment machines will have embedded sensors with the plant connected to GE’s Industrial Internet via use of GE’s Predix software platform. Near real-time streaming data from production processes will then be available to manufacturing and product engineers allowing quicker needed changes to production and faster prototyping and commercialization of parts. GE’s $165 million investment in Weiland follows plans to build similar “brilliant factories” in the U.S. including Greenville, South Carolina.

GE’s chief manufacturing scientist is quoted in the commentary as noting that with the application of these combined technologies, factories no longer need to be sourced where labor is cheaper. Instead, they can compete where educated workers can make the most of advanced technology, and where opportunities can be leveraged to shorten supply chains and reduce inventories.

However, there are obvious realities to smarter plants that will leverage streaming data, constant feedback loops and advanced analytics.  According to the GE commentary, the new plant will employ 220 highly skilled employees.

The Waukesha branded engines were previously produced at a factory located in Waukesha Wisconsin that employed a reported 350 employees. That plant began operations in 1910. In September 2015, GE indicated plans to move the facility to Canada citing concerns over the U.S. Congress’s failure to re-authorize the U.S. ExportImport Bank.  At the time, a senior GE executive indicated: “We believe in American manufacturing, but our customers in many cases require Export Credit Agencies financing for us to bid on projects. Without it, we cannot compete, and our customers may be forced to select other providers.” Since that time, the U.S. Congress has yet to re-authorize the bank.

The news came as an unexpected shock to both factory employees and local community residents. President Barack Obama toured the Waukesha Wisconsin plant in January 2014, praising its worker apprentice training and re-education programs, calling them a model for the U.S.

GE has made an obvious bold move from two dimensions. One is an effort at self-demonstrating the benefits of GE’s termed Industrial Internet powered by the Predix operating platform in its owned production operations.  The other is straddling the political waters of demonstrating an ongoing commitment to both U.S. and North America based production and the realities of a global economy that must deal with international financial and labor markets.

How both turn out is a matter of time.

Bob Ferrari