Manufacturing industry of the future : fabs, labs and advices.

Manufacturing industry of the future is sometimes presented in the form of “fabless” businesses, i.e. businesses without factories, focused on design and depending on ever more competitive Asia for production. In reality, in 2012, labor costs in Bulgaria are lower than wages at Foxconn, in China. With wage inflation exceeding 10%, wages there are expected to be close to ours in 20 years. Cases of relocalization have already been observed. But it would be a mistake to view that as a sign of the spontaneous return of the manufacturing industry of yesterday, first of all because manufacturing industry is increasingly becoming a sort of “Manufacturing industry 2.0,” at once more integrated, open and spread out. Secondly, because although the return of manufacturing industry will depend on macroeconomic developments, the main factor will be strategic choices to be made in the coming years.
This manufacturing industry 2.0 is integrated into its environment. All at once, it offers equipment, computer systems and services meant to maximize asset productivity within each client’s specific context – for example, energy efficiency, usage rates of operating theatres or aircraft engine effectiveness. It further integrates environmental constraints throughout the lifetime of equipment, from production until recycling. Far from separating the design and production processes as does the “fabless” model, this model is founded on concept of “fabs, labs & advice,” in other words close cooperation among production centers, research centers and service centers.
Furthermore, it is integrated worldwide: relocalization to France will go together with the pursuit of a “worldwide value chain” rationale. Like the German automobile industry, which owes the growth of its employment rate in Germany to subcontracting in Eastern Europe, France must learn how to concentrate its resources on those parts of the value chain in which it can be competitive. To create jobs in France and promote exports, the country must be able to both import sensibly and attract companies that are capable of positioning France in the correct segment of this value chain.
Manufacturing industry 2.0 is open and based on partnerships between multinationals (who know how to manage large volumes and gain access to a worldwide market) and SMEs (with high-level technical expertise), between businesses (who innovate by transforming ideas into cash) and public research programs (who explore, transforming cash into ideas), and between the company and its clients (who contribute to defining new products). To make this happen, we must improve cooperation between research and business, as well as related funding. Aside from the research tax credit, funding mechanisms are sometimes ill-suited to large groups’ modes of innovation.
Manufacturing industry 2.0 is architecturally spread out. It offers less major equipment and more mid-size interconnected equipment networks. These smart networks make it possible to take full advantage of energy sources such as wind, solar or cogeneration, or systems that allow medical devices to communicate with each other and with doctors.
Like Germany for machine tools or France for aircraft engines, gas turbines or medical equipment, manufacturing industry 2.0 offers considerable potential. However, to fulfill this potential, we must adopt a strategy of “creative growth,” targeting first and foremost availability of competitive production factors (capital, skills, energy, public services, etc.). Next, it must be easier for businesses to put these factors together and combine them with imported components in innovative ways (simplicity of legal formalities, business creation, attractiveness for multinationals, facilitation of partnerships, etc.). Finally, access to high demand is necessary (opening up of trade in Europe and throughout the world). In other words, this strategy should provide fertile soil rather than declaring what kind of trees to plant!