BRITAIN, like many other countries, has gone through a period of huge deindustrialisation. Nearly 9m people were employed in British manufacturing in 1966; by 2011 fewer than 3m were. Manufacturing’s share of the economy is around 10% today, half what it was in 1990. In different countries, from rustbelt America to rustic China, a chorus of voices is urging government to boost domestic industry so that it makes more stuff. The trouble is, according to a study published in Britain on October 30th, most policymakers don’t understand modern manufacturing, let alone how technology is transforming it.
In Britain and elsewhere the days of grimy smokestacks and oily rags have long gone. In the future many manufacturers will not even have a factory, according to the report, which was commissioned by the British government from expert panels made up of 300 business people and academics*. Their verdict: “Manufacturing is no longer just about production. Production is now the core of a much wider set of activities.”
Manufacturing has traditionally been considered to be a process that turns raw materials into physical products. Nowadays, though, the physical part of production is at the centre of a much wider value chain. Manufacturers are increasingly generating revenue from other activities, many of which are categorised as services. As the report points out, 39% of British companies with more than 100 employees derived value from services related to their products in 2011, up from 24% in 2007.
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