The objective of the future of manufacturing initiative
is to really explore how the global manufacturing ecosystem is evolving.
We will see an accelerated process of manufacturing,
especially high technology manufacturing, moving towards Asia.
We see a lot of instability and we see currency both fluctuating
but more importantly we see exposure to currency
creating some real issues for global multinationals.
There is a rigorous debate in the U.S about "does manufacturing actually matter?"
Well the manufacturing sector in every country is critical
because it delivers an R&D base that actually provides skills
for a whole range of other industry sectors.
Development is about the accumulation of very large set of capabilities
that go into making a very large set of possible products.
Countries that have many of these capabilities are able to make many things.
There are certain competencies associated with the manufacturing
of certain advanced products that are in fact very important,
and if the United States or any other nation loses those competencies
it can affect the overall competitiveness of the nation.
There is a key challenge for businessmen to engage their cooperation
in strengthening their capacity to innovate.
There is some innovation that happens that allows us to substitute the scarce resources
that are causing the problem for something new and different.
What it is going to lead to is an explosion in materials science.
Free trade makes an economy better, it makes it stronger, educates its people,
it also allows goods to transfer around the world.
With the terrible earthquake in Japan, people became far more aware
of the effects of disruptions on the global supply chain.
Some of the manufacturing jobs are going to move from Europe and United States.
These flows always follow the path of least resistance
in terms of financial ecosystem, regular ecosystem,
education, infrastructure, whatever that might be.
In order to prevent the companies evacuating to overseas country from Japan
is to give incentive to industry again.
The biggest challenge now is to get the industry policy settings right.
We need governments to have the political will to work with the private sector
and organize labor.
The planning at a government level is very, very important
and that is what China does well.
There are certain places that make certain things much better than other places.
Enterprises don't need to be located in one place.
They can be deconstructed and add capabilities located in various parts of the world.
If you take a look at the way an Airbus airplane is made
there is over 27 different countries that take part in that manufacture.
We are seeing labor rate arbitrage fading.
We are seeing greater exposure to currency volatility.
These factors may combine to actually re-aggregate some value chains.
It is hard to compete with the scalability that China brings.
It is hard to compete with the scalability that Brazil has.
It is hard to beat the scalability that India has.
So there are certain common denominators in terms of mass production
that drive while larger countries in the technology sector
will probably have a larger share of that industry for awhile.
I think the first thing governments should have to look for is
what are they going to be good at?
what type of education do they have for their people?
what type of job skills do they have?
what type of natural resources do they have?
what type of government regulation?
and who they want their products to go to in the world?
Low cost manufacturing where the driver is to get the lowest possible labor cost.
It is short sighted. It is not sustainable.
It doesn't drive quality or certainty of supply.
So those countries and those companies that can figure out a way
to either acquire, develop, and retain the most talented workforces
appears of they're going to be the winners.
How do we get this whole skilling process in place?
The potential is there,
we got a large number of young Indians graduating out of colleges, universities,
but there is a big gap between the knowledge that they have
and the knowledge that is required.
The government is very keen in strengthening the capacity of workers
through an expansion of vocational training.
India is now building its next big surge into manufacturing.
We are like a glass which is ֲ¾ empty
and we have to fill it with a new manufacturing.
Labor and business working together can drive the enabling legislation,
the industry policy, to insure advance manufacturing.
And any country that is not driving advanced manufacturing
is going to miss the boat.
We are structuring a dialogue series with a framework
that helps to parse through the issues
and bring business leaders and government leaders together
to achieve a better collective understanding.