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Is 2011 the Year of Change?

Posted By Paul Tate, December 30, 2010 at 12:36 PM, in Category: Global Value Networks

Looking forward to 2011? So, how do you rate your business prospects for the year ahead? Are you optimistic? Cautious? Concerned? Ready for anything?

2011 certainly begins with the welcoming sounds of optimism from across the global manufacturing sector. Almost everywhere you look – in the U.S., much of Europe, and in the major economies of Asia and the Far East – manufacturing indicators are trending upward.

In Germany, business confidence is now the strongest it has been since unification. In the U.S., more than 80% of senior manufacturing executives in a recent survey said they are very or somewhat optimistic about their businesses for 2011. In the U.K., manufacturing output for November was the highest in 16 years, according to consultancy Markit, and the Confederation of British Industry reported that manufacturers expect production to rise "solidly" over the next three months on the back of strengthening demand at home and abroad.

Even in Japan, where the sector has been lagging for most of the year, industrial production rose in November for the first time in six months. That same month, Singapore’s manufacturing output rose a staggering 40% over the previous year. China also saw a continuing rise, although activity slowed a little by year-end.

So, could 2011 be the year of change for manufacturing as it emerges from the recessionary years, leaner and fitter than ever, ready to boost output again, and once more focusing on growth over the next 12 months?

“Manufacturing is getting sexy again,” declared British manufacturing advocate and former U.K. Government Trade Minister Lord Digby Jones, to roars of applause from 450 of the nation’s finest, gathered recently to celebrate the 2010 Manufacturer Awards in the U.K.’s industrial heartlands.

After years of upheaval and contraction in many industrial sectors, such bravado makes for a welcome change. But realistically, manufacturing is not out of the woods yet – and there may be one or two shocks still to come.

Rising raw-material, energy, and fuel costs may have a significant impact over the next year. Unemployment levels are still high in many developed economies, including the U.S. And in Europe, there are still a number of countries coping with the economic backlash. Greece and Ireland have already had to go cap–in-hand to secure bailout loans. Portugal and even the once-mighty Spain look set to be next on the list, and Italy remains unsteady, to say the least.

And where is this new growth going to come from? All of the major indications so far are that significant increases in consumer and industrial spending will not be found in the Western economies in the year ahead – but rather in the emerging markets of Asia, South America, and the Far East. That’s where most GDP growth is, that’s where most industrial expansion is happening, that’s where consumers will be spending their money, and that’s also where Western manufacturers will be investing in new production plants and supply chain networks to capture their share of the world’s fastest-expanding markets.

What’s more, the year could finally see a global power shift in manufacturing that sets a new industrial foundation for the decades to come. Back in July, economic analysis firm IHS Global Insight in Lexington, MA, suggested that 2011 may be the year China finally overtakes the U.S. as the global leader in manufacturing output. Its analysts estimate that the value of China’s manufacturing output was around $1.6 trillion in 2009, while the U.S. was only slightly ahead at $1.7 trillion. And with Chinese growth rates up in the teens for some months (nearly 17% in May this year), plus a fast-growing domestic market of 1.3 billion consumers wanting more and more manufactured products, 2011 may well see a seismic shift in the global manufacturing landscape.

But whatever the year ahead may bring, the good news is that it seems we’ll all be part of a growing industry again, even though much of that initial growth may be in new and emerging markets. But isn’t that what global manufacturing is all about? Wherever you’re based, today’s success depends increasingly on developing flexible business and manufacturing strategies that can grasp growth opportunities, wherever they may be in the world.

What do you think? Where do you see growth in the next 12 months? Is 2011 a year of change for our industry

Tell us your views in the comments box below.

Or take part in our Outlook 2011 Poll: http://www.surveymonkey.com/s/MWZRLTZ

Or join the discussion on industry prospects for 2011: “Is the Table Set for Growth?”

Paul Tate is Executive Editor of Manufacturing Executive.

Written by Paul Tate

Paul Tate is Research Director and Executive Editor with Frost & Sullivan's Manufacturing Leadership Council. He also directs the Manufacturing Leadership Council's Board of Governors, the Council's annual Critical Issues Agenda, and the Manufacturing Leadership Research Panel. Follow us on Twitter: @MfgExecutive

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