The Future of Manufacturing — Analysis from Professor Gary Gereffi

What is the future of manufacturing? Gary Gereffi, director of the Duke University Center on Globalization, Governance & Competitiveness, has been researching the competitive strategies of global firms, the governance of global value chains, industrial upgrading in East Asia and Latin America and the emerging global knowledge economy. Professor Gereffi recently answered this question in a short video. The following is a transcript from the video.

“The future of manufacturing is a topic that many international organizations, including the World Economic Forum, have been focusing on over the last 10 years or so. It was driven initially by the global economic recession of 2008/2009 that caused many countries that were involved in export orientated industrialization — in Asia and Latin America especially — to re-think their strategies. What has been happening since is that the big emerging economies like China are starting to turn inward. Their export industries are being re-directed to local economies. The same is true for Brazil, partly because demand in the US and European markets isn’t there.

The consequence for the US is to think about how to reign in these global supply chains and manufacturing back to the US economy. I think there are a few trends that we would be able to anticipate on the future of manufacturing.

There are a number of US companies that are bringing manufacturing back to the US. General Electric is a key example. Apple is starting to bring back smart phone manufacturing to the hemisphere and the US. The chains that many countries aren’t anticipating is bringing back manufacturing to the US will mean far more automated production than the industries had in place when they left the US 20 years ago. So yes, we can bring manufacturing back, but that doesn’t mean we are going to have the same number of jobs. We will have fewer jobs, higher skills and better pay but it won’t replace manufacturing employment.

I think another aspect of the future of manufacturing is that production activities are going to be increasingly linked with high value pre and post-production services. I think we have to put together the supply chains that were fragmented when US manufacturing beginning in the 70s and 80s began to move offshore for low cost production and other countries began to re-bundle those supply chains in terms of adding forward and backward links. If we bring those same industries back to the United States, we have to learn how to manage those industries in a new way and we have to create the workforce that is going to be required. But I think that the manufacturing is going be production plus key high-value services. So basically from a supply chain point of view we have to re-bundle the manufacturing and services’ value chains in a variety of key US industries and that is probably going to take 5–10 years to do.” — Professor Gary Gereffi