Over the last few months, there have been a number of surveys indicating that global manufacturing output is increasing.
Last month, the Federal Reserve announced output gains compared to a year ago across multiple manufacturing sectors and another example is the Confederation of British Industry (CBI), which released its latest monthly industrial trends survey, highlighting that UK manufacturers are enjoying another month of sector growth and the strongest rebound in two years.
What’s behind the positive growth in the manufacturing industry?
One of the factors behind this positive growth is, I believe, the fact that a number of countries are seeing the value of added skills and intelligence in the manufacturing processes, in essence de-commoditizing their products. With exports and local demand increasing, I get the sense that these countries are increasingly looking inwards, committing to pulling themselves out of recession. I see much more products labeled proudly as being domestically made rather than imported. This is a clear pull on public heart strings, in effect appealing to customers interested in contributing to an improved economy. After all, as a consumer, I am far more likely to buy products that are made in my country if the price differential is minimal.
Earlier this year, Alastair Sorbie talked about the reshaping of the UK manufacturing industry, which is helping fuel this economic revival. The Far East is still seen somewhat as a cheaper location for mass manufacture and general sub-assemblies, although rising freight and wage costs may see this perception change. In the meantime, final assembly is increasingly being handled on home shores, where greater product customization and innovations are handled. This business model is often referred to as individualize-to-order or mass customization. Other businesses are manufacturing items abroad but differentiating their offerings by focusing on measurable customer service initiatives that add value to the product.
Legislation in a number of countries is also driving this onshore manufacturing revival. Legislative and private sector initiatives are both causing businesses to embark on corporate social responsibility initiatives to track and measure the sustainability of their supply chains and manufacturing operations. This drives increased opportunities and revenue streams potential for companies manufacturing things domestically, eliminating carbon impacts from shipping and moving manufacture to environments with stringent environmental controls that may be absent in developing nations.
A good example of a traditional manufacturer who’s expanded its business
IFS customer, Tomra Systems, is a good example of a traditional manufacturer that has expanded its business by providing more sustainable service-based solutions, delivering recycling machines that enable customers to return used beverage containers for recovery and recycling to retail outlets. The company provides fast and efficient service to its 60,000 machines installed in 45 countries worldwide.
For the stores that use the machines, the importance of swift service cannot be underestimated. Research shows that consumers who return empties purchase up to 52 percent more than other shoppers. For this reason, rapid resolution of faults and swift delivery of spares are crucial to the retailer. This is where Tomra’s service organization plays a critical role, and this maintenance component is an increasing revenue stream for the organization. This naturally requires advanced service management software capable of managing aftermarket service as a profit center.
Do you agree?
In my opinion, these are clearly areas that offer a chance for global industrial manufacturers in the developed world to add enough value to compete in a global market. An added intelligent layer in the final assembly stages of product manufacture and aggressive aftermarket service and support are both methods that can represent meaningful product differences. They will no doubt see be strategic factors for manufacturers to consider as they plan for future growth.
Do you agree with this or have you a different opinion?