By Peter Marsh
In uncertain economic times, many countries are looking to manufacturing to provide useful growth and employment. Barack Obama and David Cameron in the US and UK are both long-time converts to the “pro-manufacturing” argument. Narendra Modi, India’s new-ish prime minister, has espoused a “Make in India” programme to give his country a lift. In Nigeria, Goodluck Jonathan has instituted the “Nigerian Industrial Revolution Plan” to do much the same.
A key to all this interest is that the “manufacturing” most nations are interested in is different to the sort of production operations that dominated in the past. Old-style manufacturing in the shape of big, inflexible, polluting factories is not what these countries have in mind. More important are small, nimble companies applying new technologies and business methods. These can be applied to suit the requirements of customers both at home and thousands of kilometres away. A set of new themes are important. They include: “tailoring” goods to meet individual needs; blending different technologies to create new products with outstanding properties; using the power of the internet plus other digital techniques to provided new capabilities; combining production with services; and running factories so as to have a minimal negative impact on the environment. Uniting the old and the new elements is one unchanging characteristic. Manufacturing is at heart very simple: it’s about adding value to the world’s limited stock of materials to make useful things. Perhaps this is why the topic remains fascinating, several thousand years after manufacturing in its earliest forms started up.
In the light of this interest, it seemed a good time for the Vienna-based United Nations Industrial Development Organisation to organise a five-day training workshop to explore some of the themes. Unido exists to provide ideas and support to the 150 countries outside the 50 or so nations of the so-called “developed world”. Accordingly, attending at the meeting in Hernstein Castle near Vienna were industrial policy representatives from the governments of an intriguing range of about 25 countries. Included in the group were people from nations such as Malaysia and India which already have many top performing industrial businesses. Also attending were individuals from countries including Sudan, Jordan and Paraguay where most production businesses are considerably behind the global leaders in terms of technology, know-how and market reach. There was one senior policy maker from China. China is the world’s biggest country as measured by manufacturing output. But across Chinese manufacturing, technology capability – as well as productivity, or output per person – are both low by the standards of the world’s top industrial players. China knows that – for all the progress it has made in the past 15 years – it needs to alter its approach to manufacturing. It needs to bring in new ideas and make a break with some past practices. To provide insights to this disparate group, I was among a small team of outsiders invited to the gathering. My main role was to impart ideas about the theme of the “new industrial revolution” which I believe are important to stimulating manufacturing growth just about everywhere.
One of the difficulties in doing this is in relating business ideas imported from Western Europe and the US to countries whose stages of development are different. Some country representatives at the workshop complained that some of the policies being discussed might have a chance to work in a relatively stable country – but were hardly applicable to nations such as Pakistan where terrorism and poverty cause immense disruptions. Suggesting ideas that might be applicable to nations with a range of different cultural and economic backgrounds is a big task. Signifying this rather bleak mood, one African industrial entrepreneur recently complained to me: “The question is whether African countries can launch new technology. My answer is it’s impossible. There is a poor climate for referencing
It is possible, however, to find some more upbeat views. The representative at the Unido event from one Asia country with a relatively poorly developed manufacturing sector told me: “Discussing ideas here has given me more information and knowledge. I think the event is very useful for me as a policy maker. I’ve now got some good ideas to develop manufacturing in my country.” Another policy maker – from Africa – said: “It’s senseless to be too negative. We can try out some ideas. Some will work, some won’t. But there is enough basis in other nations’ experiences for us to make an attempt at implementing some useful initiatives.”
Following on from this more cheerful assessment, what are the basic policies that countries should focus on? The first objective should be to understand the forces behind the new industrial revolution. A key to this is the coming together of the 3Cs – connections, creativity and customisation. Connected manufacturing – combining information pathways and supply chains for goods – is now the name of the game for all the world’s top industrial businesses. Globally linked manufacturing leads on to other new ideas, from the “internet of things” (connecting up machines and products via automated data networks) to services such as maintenance, equipment monitoring and design that can be done at some distance to where products are made.
There has been a burst of creativity in manufacturing, chiefly linked to the ability to merge different technologies including software, electronics, mechanical engineering, new materials and bio-science. This leads to all sorts of novel product variants in fields from medical equipment to aircraft. Customisation describes the ability to configure products – plus accompanying services – to suit the needs of the individual rather than the mass market. Customisation can now be done efficiently and fast, without huge costs either to the industrial company, or to person or business that buys the product. 3D printing – “additive manufacturing” – is one new technique that helps the trend towards customisation.
A second area is to focus on is finding and publicising “role model” companies. Such businesses have understood the elements at work in 21st century manufacturing. They have used new ideas to develop decent products and with them provide jobs and wealth. It is vital both to identify good companies – often operating in small niche sectors and which are far from household names – and to investigate how they operate. Such “exemplar” companies can sometimes be fairly large and operate on a global scale. One firm of this type is Crompton Greaves, an India-based company making electrical equipment. (Crompton Greaves’ factory in Belgium is shown in the picture at the top of this page.) There are plenty of examples of much smaller businesses that are also doing well. Included here are Goppion, an Italian company that makes specialised museum display cases, and Vitsoe, a UK shelving and furniture producer. From the less developed world comes the example of IMI Electronics, a company in the Philippines. The stories behind these model companies illustrate the paths that other businesses can take. They also shed light on some of the detailed policies – linked to training and skills for instance – that governments should be implementing to give such companies a chance to thrive.
A third policy thrust is for companies to get right three basic strands of management practice. They need to set great store on recruiting excellent people. Such individuals should be versed in both technical disciplines and the elements of human behaviour needed in good organisations. The companies must set up the internal infrastructure needed to allow such individuals to thrive and develop, rather than become bored or demotivated and want to leave. Businesses should learn now to transfer technology in a useful way and combine it with other areas of expertise where necessary. (Firms sometimes can success through inventing their own technologies – but it is by no means vital.) The enterprises also need to understand they are in a globalised world. That means learning about competitors and suppliers which can be based far away. They need to use the forces of globalisation to their advantage, rather than wait for their rivals to do so. As they peer into the future it is important for companies – and the governments whose actions shape the economic and regulatory framework behind them – to choose the right approaches to 21st century manufacturing. Then – as the new industrial revolution gathers speed – both the companies and the countries where they are based will stand the best chance of succeeding.
TO SEE PETER MARSH’S PRESENTATION TO THE UNIDO MEETING CLICK ON THE FOLLOWING LINK Technology, Innovation and Organisational Changes in 21st Century Manufacturing, Unido workshop on manufacturing in developing countries, Vienna.