Manufacturing is still a dynamic industry sector, report shows

November 21, 2012

U.S. manufacturers that feel that the best days of the industry have passed and that innovative manufacturing strategy is only delaying the inevitable, will be pleased to know that a recent report shows the sector to be one of the most dynamic in the world.

According to the Washington Post, the study by the McKinsey Global Institute shows that U.S. manufacturing is far from being in the doldrums and is an active driver of productivity. While this is good news for companies that have been reticent about looking to the future, the report does reveal that traditional manufacturing jobs may not be coming back.

The research conducted by the MGI, an in-house think tank of McKinsey & Company, showed that manufacturing contributed 20 percent of global economic output in the ten years leading up to 2010 and 37 percent between 1995 to 2005. While this looks like a drop in global manufacturing strategy, the report also shows that advanced nations reduced their workforce by up to 24 percent, with companies embracing new technologies and innovative business strategy to maintain production levels.

"Manufacturing makes outsized contributions to GDP," said James Manyika, one of the authors of the report. "It makes outsized contributions to overall productivity growth. It drives prosperity. But purely on employment, it has been declining over time."

This leads to a public perception that the manufacturing industry is struggling. Again, the findings of the report show that although the jobs may have changed, the level of education and expertise required to work in the industry has changed. The traditional blue-collar position is being replaced by engineers and technicians, with 30 percent of current manufacturing jobs now taken up by sales, marketing and engineering design.

The industry has slowly introduced differing levels of automation, but robots and machines are not very good at designing a product or implementing a business strategy. The report estimates that 55 percent of U.S. manufacturers are now global innovators in fields such as semiconductors, medical devices and advanced goods. The upshot of this increase in technical ability is that the manufacturing worker of the future is more likely to wield a clipboard than a welding torch.

"Companies must develop a highly detailed understanding of specific emerging markets, as well as the needs of their existing customers," concluded the authors of the report. "They will also require agile approaches to the development of strategy and nd they will have to make big bets on long-range opportunities."