Germany, in particular, is getting its groove back with manufacturing exports driving the country’s current economic upswing.
There are about 2.5 million manufacturing businesses in Europe, which account for 22% of Europe’s gross national product. It is estimated that 70% of employment in Europe is related to manufacturing, with each manufacturing job supporting an additional two jobs in manufacturing-related services. So manufacturing looks to be pretty fundamental to Europe’s economic wellbeing.
There is much talk about where it is going in today’s (and tomorrow’s) global economy. There is competition from all sides – from low-cost emerging economies and from other developed economies leading through innovation. Most of the talking heads are in agreement that the future should be focused on high-value activities. Although all types of manufacturing are present in Europe, the future is not too favourable for low-value, labour-intensive activities unless they are there to serve local markets. Manufacturing in Europe is now mainly high tech.
The term ‘manufacturing’ is going through a rebrand: the old manufacturing was all about production, mass production being the typical reference point. In the new definition, production is just one aspect of manufacturing, which also incorporates research and development, design, logistics and distribution, sales and marketing, and services provision. This makes manufacturing much more sexy and in line with Europe’s high-tech ambitions.
Europe will always be a manufacturing location. It is a huge market and certain types of products are best made close to or in this market. It is also abundant in technologies with strengths in environmental technology, nanotechnology, materials technology, biotechnology, and information and communications technology. All are likely to have an impact on manufacturing processes. New business models are being introduced with virtual and flexible production networks that are changing the organisation and spatial distribution of manufacturing.
Perhaps the new symbol for European manufacturing is in the booming electronics sector in eastern Europe. In particular, the manufacture of liquid crystal display televisions is proliferating there – sleek, high tech, high definition and soon to be hanging from your living room wall. A bright picture indeed.
Douglas Clark is director of Tenon techlocate, the London-based location consultancy of the Tenon Group, a UK national firm of accountants and business advisers.