It was a stormy decade for the global manufacturing sector. Due to severe recession, there was choking of the demand and manufacturing employment fell down at a high speed in advanced economies. Manufacturing still remains precariously important to both the developing and the advanced world. Manufacturing continues to provide a pathway from ration agriculture to growing incomes and living standards. On the other hand, it still remains a crucial source for innovation and competitiveness. The manufacturing sector has changed by bringing both opportunities and challenges. Neither the business leaders nor the policy makers can rely on old responses in the new manufacturing environment.

Manufacturing is the future of global growth and innovation. Today, manufacturing is contributing to the global economy and will probably unfold over the coming decade.

  • The role of manufacturing is changing. In today’s advanced economies, manufacturing promotes innovation, productivity and trade more than the growth and employment.
  • Manufacturing is diminutive. With five distinct groups of industries, it is a diverse sector with specific drivers of success.
  • Manufacturing is introducing a dynamic phase. It is predicted that the global manufacturers will have significant new opportunities in a much more hazy/ hazier environment.

Changing Role of Manufacturing

It is seen that manufacturing continues to grow globally. The relative size of the manufacturing sector varies with its stage of development in an economy. As the economies industrialize, manufacturing employment and output both rise rapidly. But once manufacturing’s share of GDP increases, it falls in an inverted U pattern. This arises because the consumers have more money to spend on services. Manufacturing becomes a source of growth and employment and consequently the growth in the sector is accelerated.

Manufacturing and services are independent and fundamentally offbeat sectors. From logistics to advertising, everything makes up an increasing amount of manufacturing activity. Hiring in manufacturing may hasten, and some nations may even boost net exports. Whether in production or nonproduction roles, manufacturers will still continue to hire workers. As a result of ongoing productivity improvements, accelerating growth in services, and the force of global competition in the long run, manufacturing’s share of employment will remain under pressure. It will help  the advanced economies to train in activities which require more skills.

Manufacturing is Diminutive

It is not possible for two manufacturing industries to be exactly alike. It always differs with more or less labor, and more or less knowledge-intensive. Some of them depend massively on transportation, while for others, closeness to the customers is a serious affair. After analyzing the five board manufacturing segments, different production factors are being influenced. The largest segment by gross value addition includes industries such as autos, chemicals and pharmaceuticals. These industries rely massively on global innovation for local markets. The second largest segment is regional processing, which includes industries such as printing and food and beverages.

Entering a New Dynamic Phase

A new global consuming class will soon emerge in near future. The majority of consumption will take place in developing economies. It will create rich new market opportunities. Demand is fragmenting in established markets, as customers ask for greater variation and more types of after-sale service. A rich pipeline of innovations in materials and processes- from nano materials to 3D printing to advanced robotics promises to create fresh and new demands and drive further productivity gains across manufacturing industries and geographies.

These opportunities arise in an extremely challenging environment. In some low-cost labor markets, wage rates are rising rapidly. It creates an environment that is far more uncertain than it was before with volatile resource prices, a looming shortage of highly skilled talent, and heightened supply-chain and regulatory risks.

Manufacturers and Policy Makers Need New Approaches and Capabilities

It is necessary for the companies to develop highly detailed understanding of specific emerging markets, as well as the needs of their existing customers. An agile approach to the development of strategy will also be required using scenario planning rather than point forecasts. They will have to make big bets on long-range opportunities, such as tapping new markets in developing economies or switching to new materials, but must do so in ways that minimize risk.

A critical challenge for manufacturers will be to approach footprint decisions in a more nuanced way. It is seen that labor-intensive industries will almost always follow the path of low wages. But in case of others, with more complex needs, they must weigh factors such as access to low-cost transportation, to consumer insights, or to skilled employees. The result could very well be a new kind of global manufacturing company- a networked enterprise that uses “big data” and analytics to respond quickly and decisively to changing conditions and can also pursue long-term opportunities.

The policy must be grounded in a comprehensive understanding of the diverse industry segments in a national or regional economy, for policy makers. The long term goals for growth, innovation and exports are best served by supporting critical enablers for manufacturers. It is helping them to forge the connections they will need to access rapidly growing emerging markets.

Two key priorities for both governments and businesses are education and the development of skills. Companies have to build their R&D capabilities, as well as expertise in data analytics and product design. They will need qualified, computer-savvy factory workers and agile managers for complex global supply chains. In addition to supporting ongoing efforts to improve public education- particularly the teaching of math and analytical skills- policy makers must work with industry and educational institutions to ensure that skills learned in school fit the needs of employers.

The key drivers for manufacturing in the near future are demand, technology and innovation, global competition and changing nature of work. It is also important for the policy makers to be more sophisticated. There will be an increase in number of consumers till the next decade. Technology and innovations are not going to stop. There are tremendous amount of innovations that we are going to see along business innovations. A new era of global competition can also be seen in the future. The change in the nature of work will affect the manufacturing sector. In all, we can declare that the upcoming era of global growth and innovation in manufacturing is on its way.

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