Localised manufacturing Is this the path to sustainable development?
Globalisation 1970s / 1980s / 1990s / 1950s / 60s 80s 90s 2000s Post war recovery Growth of conglomerates Privatisation of national assets Outsourcing / down sizing Off-shoring• 2000 – 2009: 5 five fold increase in Chinese exports • 3.9% to 9.7% of the global export market• Shipping containers lined up reach 1/3rd way to the moon Real political and social benefits from global wealth distribution
We have reached another watershed - we are living in unprecedented times.• Longest and deepest financial crisis of a generation• Threat of man made climate change• Record number of people on the planet• Drive for ethical purchasingPublic increasingly recognise the need for sustainable development Climate change Social accountability Economic Food polarisation shortage Ecological imbalance Social imbalance Energy security Water shortage Poverty
The balance is changingOffshoring Localised manufactureLow cost skilled labour Quality perceptionLow cost shipping Cultural challengesAvailability of resources Lead timesChasing growth markets Supply chain stockAvailability of skills
The balance is changingOffshoring Localised manufactureLow cost skilled labour Labour cost inflation (China >20%)Low cost shipping Transportation / oil price inflationAvailability of resources Local job creationChasing the growing markets Rebalancing import / exportsAvailability of skills Rebalancing service / manufacturing Currency depreciation Ethical behaviours impact brand value Need supply chain responsiveness Climate change
Early signs• Since 2010, US has grown 300,000 manufacturing jobs – First growth since 1990s• 37% of large US manufacturers either planning or actively considering bringing back production (BCG survey, 2012)• With shipping cost inflation of 5% pa and wage inflation at 30% pa, by 2015 it will be just as cheap to manufacture in North America for local deliveries as in China (Economist, 2012)• Job creation prime political issue Global economic crisis is driving new behaviours
What is localised manufacturingRebalancing of centralised / local production Industry and application dependant Economy of scale Local responsiveness Centralised skills Local jobs in response to local demand Reduced financial risk
The debate• Is this trend a good thing for sustainable development?• How can policy makers create the environment to support?• What do businesses need to do to capture the benefits?• What do we all need to do to promote this change?