US Industry Review: Industrial Design
- ardybad
- Dec 11, 2016
- 15 min read
Original Title: Industry Investigation: Industrial Design
Author: Achmad B. Djauhari
Course: Managing with Technology
Instructor: Michael Thomas
Date: December 11, 2016
Industrial Design and Its Competitive Environment
Industrial Design encompasses creations in making and evolving designs and specifications to meet the value and shape of products. Industrial design serves the automobile, furniture design, and consulting services. These services involve applying materials, shape, color and finish. The outcome products should be able to satisfy needs, market, and efficiency in production, distribution, usage, and maintenance (Barnes Report, 2016).
From the economic perspective, O'Hollaren (2016) indicated that since the national unemployment rate reduced, consumer expenditure has raised along with per capita disposable income because of the economic recovery in the last five years. Due to the growing consumer expenditure, demand for the U.S. automobile industry also rose at exceeding $1 trillion over the five last years to 2016. The automobile manufacturing increased to approximately $120 billion, which affected the overall industry growth, because it frequently contributes to employ the service to assembly new cars, in the same year. Additionally, enhancement technology in the automobile industry has sped up the design process within the industrial design; it affects the design innovation as well as consumer preference swiftness.
The increasing productivity in automobile manufacturing design has encouraged an environmental concern among consumers. Such an industry is urged to develop a friendly environment to reduce carbon footprint as a result of the manufacturing operations. Philips' Green Manufacturing 2015 program, for instance, was purposed to minimize the environmental effect of twisted carbon emissions, dropping plant waste, and controlling water usage on its amenities. This program successfully supported industry growth, and other companies in the manufacturing sector implemented it in the last five years.
Steady demand from the markets aided in keeping profit margins high until 2016. The profit improved from over 6% to 7% over the past five years. Moreover, unpredictable trends in petroleum and electricity costs, industrial design reduced the income consumed on utilities and rent at a 3% rate in 2016. The industry has grown its focus on more significant workers that take a growing share of the total income despite healthy profit margins.
Looking at the industrial design industry estimation, Table 1. indicated that the total sales trend over the five years to 2017 would increase approximately $2,000 million (Barnes Report, 2016).' O'Hollaren (2016) projected that the total number of industry enterprises would decline, reaching 11,000 firms within 2016. On the other hand, the number of workers in the industrial design is anticipated to increase by 25,000 workers, who are fascinated by industry growth projections, in the same year. Nevertheless, most of the increased-employees have come from giant companies because of the rising focused landscape of the industry. Since the industry players compete to interest and keep highly-trained employees, they are predicted to offer up the salary. Regarding the total industry salary, it would rise to 4% in the next five years (O'Hollaren, 2016).
The industrial design satisfies its market by designing specifications and models for mass-produced items for its customers in manufacturing and professional service areas. The industrial design industry has been using increasingly as a result of improvement in the global economy, changing consumer preferences, and quick technology changes. Therefore, this industry has grown fast approaching $2 billion in 2016 (O'Hollaren, 2016). Based on the previous economic position, the industrial design industry was forecasted to bring potential growth into the U.S.
Goffin and Micheli (2010) suggested that the industrial design industry can create success in terms of building brand products. To achieve the goals, researchers recommended that managers and designers should effectively work to determine creativity and innovation. The study found that the most innovative companies are not the one that has the best design team or marketing; yet, it is the one that can profit by using cross-functional division as an inspiration for creativity. Also, the most creative firms are not the organizations with the best marketing, R&D, or design; yet, they are the ones that can benefit from cross-divisions, which develop creativity and productivity altogether (Goffin & Micheli, 2010).
In making a new product, most of the pre-production on the product will be evaluated within management and design departments through the new product development phase (NPD). In the NPD phase, designers and managers should actively engage in sorting out some barriers and aspects such as culture and languages before they bring the final product to the market, the researchers stated. Besides, recognizing the culture and obstacles, management is able to utilize the industry to create unique items. Management and other teams in the NPD phase need to comprehend the character of both cultures and languages as they can conceivably bring innovation and improvement (Goffin & Micheli, 2010).
Major Industrial Design Players
The industrial industry has small-medium and large players in the U.S. market. Figure 1 shows the three respective companies based on their most significant market shares compare to small and medium firms combined.
CH2M Hill Companies Ltd.
CH2M Hill Companies Ltd. (CH2M) is headquartered in Englewood, Colorado. The company is one of the largest in the industrial design industry that offers program management, design, planning, and construction services. It creates design and amenities for the automotive, consumer products, nanotechnology, and manufacturing industries. CH2M also makes approximately $5 billion in revenue in 2015 (O'Hollaren, 2016). The report stated that the acquisition of Halcrow Group also contributed to the increasing income of 27 % in 2012. The income is expected to grow, particularly in concentrated markets.
Bureau Veritas
Bureau Veritas is founded in Fort Lauderdaleheadquartered, in 1828. It is one of the leaders in industrial design in the U.S. and worldwide. The business service areas involved in supply chain optimization, product testing, factory valuations, and consulting services (O'Hollaren, 2016). The researcher indicated that the business has a track record regarding leading in an environmentally sound and efficient manufacturing production system. Bureau Veritas is also the top contributor to Engineering News Record's Firms publication. The company revenue was over $5 billion in 2015, according to the report. It was forecasted to increase over 2016, exceeding $170 million. Bureau Veritas concentrates on penetrating new markets. The firm has specified that it will enter the automotive and agribusiness markets in the future. The statement was expected to lead the business to become more focus on such industries in universal.
IDEO
IDEO is a worldwide design company headquartered in Palo Alto, California. The company runs design consultation to the private sector and the public. It focuses on supporting its customer product development, communication design, user experience, and hospitality. Also, the business involves areas such as food and beverage, finance, and environmental design. Unique products that IDEO created are not limited to Western Digital's MyBook external hard drive and Lincoln Motor's MKC luxury crossover. Moreover, O'Hollaren (2016) estimated that the IDEO income would rise to $140 million over 2016 due to the rising of the amount of leisure and recreational products needed. The business also plans to engage in industrial design to help hardware makers such as Google and Apple.
Frog Design, Inc.
Frog Design is a worldwide design company that was established in Germany, 1969. Recently, the company is located in San Francisco with 17 global branches from the U.S., East Asia, Middle East, and Europe. With approximately 1000 workers and 1.5% market share, Frog Design runs as a group of the Aricent Group, which is an electronic manufacturing service provider. The company serves clients such as Apple, Microsoft, and G.E. to design their consumer and electronic products. Frog Design is forecasted to gain over $34 million in 2016, according to O'Hollaren, (2016).
Other
In this industry, no company dominates the total market share. The industrial design industry is mostly segmented with many businesses that also provide various services besides industrial design such as consulting. Those businesses are not limited to small to medium size companies that run similar services.
Industry Environment
The main clients of industrial design are mostly electronics, automobiles, medical equipment, and furniture. These include the sub-industry within industrial design fields. Figure 2 represents the industrial design market share in 2016. Most market share is acquired from the automobile and electronics industries. Other market shares are from various industries that also contributed heavily to the auto industry (O'Hollaren, 2016).
Automakers cooperate with industrial design to differentiate their products. The Automobile industry obtained more than 30% of the industry revenue. Several numbers of prestigious carmakers work together with external industrial design to combine high-performance engineering and outstanding design. Consequently, automobile companies continue to earn a high demand for the Industrial Design industry. The overall auto industry is predicted to increase by 6% in 2016 (O'Hollaren, 2016).
In the Electronics field, the U.S. industrial design creates electronic devices such as laptops and smartphones. Most companies rely on the industry for product design and innovation. Large enterprises in the electronic industry remain to make a massive investment in developing new products that are hoped to have new customers. Therefore, the electronics market grew by over 17% in 2016. Furthermore, O'Hollaren (2016) claimed that the medical equipment industry recently earned over 15% of the industry income. The production of medical equipment has presented a viable source of income for the industrial design industry since healthcare experts require innovative and advanced medical equipment. Designers are hired to develop the functionality and usability of such devices.
Furniture producers are one of the main clients of industrial design as well. Looking at the' clients' performance, local furniture companies decreased, resulting in the furniture industry's market share has plummeted 7% this year. In fact, the end-users of furniture companies demand such durability of materials and attractiveness design; therefore, furniture makers have contributed to giving a high demand for industrial design to develop the targeted products, O'Hollaren (2016) stated.
The other industries, which contribute to the second-highest market share, are companies that manufacture consumer goods. Consumer goods makers, such as tools and toys, need the industrial design to design their unique products. Creators of consumer goods, their industry market share income has fallen since they have allocated the manufacture offshore. Industrial design helps manufacturers of equipment and packaging as well. These various clients are valued to contribute almost 30% of industrial design income (O'Hollaren, 2016).
Financial Performance
Based on costs structure and other expenses, rent, and utilities used approximately 3% of industry income, according to O'Hollaren (2016). Depreciation was exceeding 1% of the industry income and include investment in computers, software, and other technology used in design plans. The industry players are suggested to invest in advanced technology to survive in their business continuity. Figure 3 exposes that the income marketing aspect was almost 1%. Moreover, advertising was a significant factor that most of the industry players invest. I.T., professional services, communication, insurance premiums, and administrative costs are the other expenditure that the industry should spend.
Additionally, the overall industry has a low level of capital intensity. O'Hollaren (2016) explained that "for every $1.00 spent on labor, only $0.02 is spent on capital investment." Capital expenditure is mainly focused on computers and design software, which help to reveal the design concepts. The industry needs high levels of training by most industrial design, and the creative process is carried out based on customers' specification requirements. Based on Figure 3, wages were the highest revenue both from sector and industry costs. Collectively, the industry needs a creative process that needs creative people and software.
The industry revenue follows global macroeconomic trends because of the extensive use and acceptance of the industry by downstream markets. Consequently, the industry has a moderate level of revenue volatility. The industrial design sector is affected by Research and Development (R&D) expenses by large company players that spend and earn profits (O'Hollaren, 2016). Additionally, when the end-customers buy more products or services, companies are more confident to invest in developing new products, which raises demand for the industry.
Applications and Technologies
There has been a level of mechanical improvement in the industrial design industry. The industry is labor-intensive and intensely relies on creative people. Investment in technology is frequently focused on buying digital software, which helps the designers to produce the real product, as industrial design companies have operated computerized. Big companies utilize a blend of various software to particular accomplished tasks. In making an imaginative product outline, the industry will first conceptualize the setting to which the product is applied, and communicate the focus to the public where the concept is being reviewed. Moreover, experts will review the design through a prototyping design phase before it is manufactured into mass production (O'Hollaren, 2016).
Industrial design is one of the industries that use technology intensively, particularly for a mass production process. Kurvinen (2005) examined that the industry should be aware of the life cycle of products as well. Despite the production approach appears focusing only on visual design, this industry is concerned about authority in which integration is needed for the engineering process.
WIPO (n.d) showed that the number of industrial design applications worldwide from 2000 to 2014 is significantly getting higher. Figure 4 demonstrates, the opportunity to develop enhancement in the industrial design industry is achievable by the industry players. In addition, three large software makers involved in the industrial design industry, such as Dassault Systemes, Adobe Systems, and Autodesk.
Figure 5 describes how much the three most prominent major players acquire their market share. First, Dassault Systemes established in Velizy-Villacoublay, France, in 1981. The company delivers product lifecycle management solutions and 3D modeling. It makes software for a product lifecycle process. The program can be used for design, create a 3D model, assess virtual testing, and manage and optimize such projects. The business products include SOLIDWORKS and CATIA software. SOLIDWORKS does all of the design algorithms. It allows engineers and designers to create 3D designs as well as the occupation for data management, electrical design, and simulation. CATIA, on the other hand, brings top-line 3D computer-aided design.
In fact, Dassault Systemes earned $3 billion in income in 2015. Next, Adobe Systems Inc. (Adobe), a computer software company, was built in San Jose, CA, in 1982. Adobe generated an income of over $4 billion in 2015. The business is managed into three reportable segments: digital marketing, digital media, and print, and publishing. It both markets and licenses its products by business-to-business (B2B) distribution via a network of distributors, independent software vendors, and original equipment manufacturers.
Lastly, Autodesk, Inc. (Autodesk) is a professional 3D design and engineering application that helps clients to manufacture, architect, build, construct, share the result into prototypes. The firm operates through segments including architecture, engineering, construction, and manufacturing. Autodesk's target customers are companies or individuals who subscribe to its licenses and subscriptions for software products and services (MarketLine, 2016). In addition to the industry market share, the biggest number is acquired by numerous amount of small to medium-sized companies that contribute to either design or manufacturing in a different type of target market at more than 70% (LeClair, 2016).
Collectively, according to Statista (n.d), most software makers made approximately $10 billion in revenue in 2014. Figure 6 shows that the total income from design, editing, and rendering software steadily increased between 2009 and 2014.
Standards as The Industry Applies to Technology
Recently, most companies began to take advantage of using advanced software such as computer-aided design (CAD), in imaging and producing their products. Computer-aided design for industrial design (CAID) software is a software system that delivers computerized for developing industrial design products ranging from color and materials to the concept stage. CAID is a productive tool in creating an innovation project. In the industrial design industry, a comprehensive investigation of the product functions, principles, the shape must be studied very well. CAID technology has unique benefits than conventional industrial design. Designers can freely express an innovative idea to show their talents via the program. CAID can improve product design, reinforce market attractiveness, and product features comprehensively. The software verifies and optimizes the quality of conception via advanced design tools. The design can easily be changed as needed.
According to Jon Peddie Research (n.d), CAD software market value will significantly increase over the next three years to 2019. The researcher also illustrated in Figure 7 that market value in the CAD software industry would reach over $9 billion in 2019. CAID has made an advancement in the design because of the continuous development of the computer software industry. Today, the relationship between design and engineering is closer and quicker. Additionally, it has condensed the product development cycle and improved the efficiency of projects. The program also removes numerous phases of the traditional design, particularly changes and adjustments, due to the advancement of the algorithm in it (Yao, 2013).
Sales and market share are distinctive results in which they show value in a product. Clients' assumption of value creation is how well a product demonstrates needs and expectations the value captured. As product design encompasses translation to technical solutions into products with features that enhance value for consumers, it is one such firm capability that can affect firm-level outcomes. From a company's viewpoint, design means synergizing involvements from engineers, product developers, and industrial design that take advantage of design abilities to create valuable products (Jindal, Sarangee, Echambadi, & Sangwon, 2016).
Design engineers are called to assume an authoritative part in innovation since they are currently noticeable as trendsetters, who are the critical partners in regards to informing the recent trend in the industry. Design engineers are exceptionally profitable concerning recognizing business opportunities and setting new goals as they can quickly handle issues. They will suggest the essential discussion, the complete procedure of product plans, and their coherence in the field. It is fundamental for them to be required in projects from the earliest starting point because the way an issue is drawn close to the earliest starting point is crucial (Cazorla, Fuentes-Durá, & Sarrias, 2016).
Design is a procedure for adjusting the questioning environment to the physical and psychological needs of people. Mainly, designers will concentrate on the items in which the customers face, such as the impression of products. Their direct relationship with contemporary projects are the objects that make designs where industry-related has a beneficial quality of designs; therefore, the improvement of products shows which aspect designers can avoid. Industrial design is applied to adjust products that can be made modernly to the physical and psychological desires of buyers (Cazorla, Fuentes-Durá, & Sarrias, 2016).
Innovation and Trends
Innovation is a core that is needed in the industrial design industry to survive. Design is liable for majoring the built-up object and atmosphere in connection to individuals, which should satisfy the diverse new demands (Cazorla, Fuentes-Durá, & Sarrias, 2016). The industrial design industry has always been dealing with changing consumer needs from an aesthetic design to advance technology. Tilley (2014) found that by applying designers' skills to engineering procedures, industrial design companies have made mass-produced objects more efficient. Many manufacturing companies with CAID software have created a 3D printer as a tool to prototype an object that can be generated by a smaller-scale manufacturing process. 3D printer technology has been around in the printing market for small and medium-sized companies.
While other software makers remain to focus on running the manufacturing and design process, Autodesk, as one of the major professionals in the industry, is working on blending conventional engineering in 3D printing. The company is cooperating with Lightning Motorcycle to expand the swingarm. The swingarm is the part on a motorcycle in which the rear wheel, is attached, to the frame. The Autodesk's swingarm is working on printing in plastic material. As a result, the next innovation on the 3D printing would be applied to a more sophisticated algorithm that integrates with the advanced design system on Autodesk's software (Tilley, 2014).
To satisfy end-customers, designers should evaluate responses through customer feedback or survey; especially, when major players are targeting the global market (Zhang, 2015). Designers are aware that the right materials, manufacturing, as well as technical capabilities, are needed to create a high-quality design. On the other hand, managers perceived the quality design should be functional and aesthetic in general. Unfortunately, managers may not notice about utilization regarding low-cost materials can lead to negative feeling to the overall product design; therefore, the product will be assumed bad by the buyers (Goffin & Micheli, 2010). This dilemmatic decision has contributed to the dynamic of the outcome product in which the firm's management, design, and engineering collaborate to balancing their authority.
The industrial design reflects design from the usability, ergonomics, and aesthetics of everyday mass-produced objects. Most industry players are intensively improving the design, function, engineering, and marketing of their products. Communicating new product design, the industrial design companies must be creative and determined (Tech Directions, 2015).
Conclusion
The industrial design focuses on providing design and manufacturing production before its affiliates industries sell the end-product to the end-customers. The industry mostly hires creative people to gather, research, evaluate, and prototype every pre-production of a product. The industrial design is supported by advanced CAD to reduce the conventional technique either in interpreting or manufacturing.
Besides, experts predicted that this industry would grow in the next few years. The improvement is also supported by several factors such as the increasing number of CAD software, the growing in the industry market value, and the changing demand for electronic devices. As the amount of salary in the design field is predicted to increase year-over-year, the demand for industrial industry jobs would increase as well.
Industrial design companies have been focusing on developing a more productive and efficient technique to generate an aesthetic design for a mass production market. Nonetheless, as advanced technology and software have been doing so, Autodesk as one of the leading software companies has been developing a new technique to produce the limited number of design objects via a 3D printer. A 3D printer can directly print a concept or prototype that has been designed on Autodesk software.
References
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