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As part of ‘Making Tax Digital’, an initiative to make tax administration more effective, the UK government is opening a consultation for the design of a digital platform for filing corporation tax

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The circular economy: Enabling the transformation to circular business

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The future of manufacturing in five points

Using figures from the WEF’s The Future of Manufacturing report, we look at the key ways in which the sector will change in the coming years

The manufacturing industry is likely to change rapidly over the next few years as innovation and a heightened productivity rate develop the sector

Smaller but more significant

Manufacturing’s share of the global economy has been on the slide for decades, and the sector’s share of employment to GDP has fallen from 27 percent in 1970 to only 17 percent in 2010. The decline is indicative of the sector’s heightened productivity rate, in that fewer workers are responsible for greater output. Metrics such as manufacturing as a percentage of GDP, therefore, stop short of adequately representing growth in a sector that is producing ahead of employment gains.

Capability ahead of competitiveness

The focus for many in manufacturing today and in the years ahead will be on innovation, given its importance in adding value to products. The focus falls in line with a wider trend in manufacturing, as companies tend increasingly towards capabilities ahead of cost competitiveness. This approach means that the sector is subject to sudden transitions as opposed to linear development, throughout which time advanced techniques are often facilitated by a supportive working environment.

Pre- and post-production advantage

The fabrication and production stages of manufacturing leave little to choose between in terms of cost among today’s leading manufacturers, whereas the pre- and post-production stages present the greatest opportunity to differentiate one product from another. R&D, branding, marketing and design are the areas where the most value is created, and whereas in years passed companies have looked to cheap labour in gaining a competitive advantage, these methods of manufacturing are close to becoming standardised.

Industrialised vs industrialising

Industrialising economies account for a greater share of the world’s manufacturing base today – in keeping with a trend that started gaining momentum at the turn of the 21st century. At the same time, the shrinking role of industrialised nations shows how companies are, increasingly, looking to expand their supply chains internationally to improve processes. Industrialising nations also occupy a larger share of manufactured exports, up from 14 percent in 1997 to 32 percent in 2012.

Developed recovery

Beginning at 128 million in 1970, the number of manufacturing jobs stood at only 93 million in 2010, and the figure in advanced economies has suffered spectacularly at the hands of the financial crisis. However, employment is expected to tip 100 million in the years ahead, as the recovery in Europe and the US gains momentum. In contrast to developing countries, the bulk of the jobs will be in R&D, training, transport, wholesaling and retailing.

Link to The Future of Manufacturing report