The future of the manufacturing industry

 The following blog was posted on the World Economic Forum blog by Tiffany Misrahi. She is Research Analyst, Global Agenda Councils at the World Economic Forum.

The manufacturing industry is not well understood. Yet, this industry is of strategic importance to the development of both emerging economies and developed markets. While manufacturing is not the solution to all problems, it is an innovative and high tech industry that generates many job opportunities.

Manufacturing is no longer what it was in the 19th century; it is not dirty or reserved for blue collar workers. Think of the high tech and innovative products now manufactured around the world, like iPhones or Dyson vacuum cleaners. Indeed, modern manufacturing contributes to economic growth and raises both the technological stock and skills of a country. It is the backbone of any industrialized society and still today can be a strategic advantage for countries worldwide.

I am not disputing the fact that manufacturing has become less strategically important for some countries. The facts are there – look at the United States for instance: in the 1950s, 30% of GDP came from manufacturing, compared to 12% in 2008. Nonetheless, I believe that, in the next 10 years, manufacturing will regain importance and be perceived as sector that can bring a competitive edge. It is already happening: the Obama administration took the decision earlier this year to make manufacturing one of the United States’ key priorities.

As countries face high unemployment rates, they are likely to turn to labour-intensive industries such as manufacturing. For example, in 2011, India revealed its strategic framework – the Twelfth Five-Year Plan – of which manufacturing is a key component. The country will work to increase the share of manufacturing to 25% of GDP by 2025 and generate 100 million additional jobs. Similarly, the growing middle class in China, India and Brazil means that there will be a greater need for consumer goods and thus for manufacturing.

In addition, world population will continue to grow, consumer expectations are set to boom and supply chain complexity will only increase. In this context, the manufacturing sector will need to become an innovative, demand-oriented industry. Both corporations and governments should work closely to ensure that quality is up to international standards and jobs are created. Manufacturing cars has safety implications that manufacturing clothes does not.

The world’s complexity and interconnectedness demand a new type of model and solutions for the industrial sector. This is exactly what the Global Agenda Council on Advanced Manufacturing is working on. A new model for manufacturing will not come from one stakeholder, but from a multistakeholder dialogue accounting for all relevant issues affecting the sector, including the rising middle class in emerging economies, innovation, job creation and skills gaps, trade policy, supply value chain evolution, environmental impact and more. Take a look at the Forum’s industry project video on the Future of Manufacturing here.

Originally posted on February 10th, 2012. Thanks to Unite’s Martin Scanlon.

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