Localised manufacturing

Is this the path to sustainable development?

Globalisation

1950s / 60s 1970s / 80s

1980s / 90s

1990s / 2000s

Post war recovery

Growth of conglomeratesPrivatisation of national assets

Outsourcing / down sizing

Off-shoring

Real political and social benefits from global wealth distribution

• 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

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 purchasing

Public increasingly recognise the need for sustainable development

Social accountability Economic

polarisation

Climate change

Ecological imbalance

Social imbalance

Water shortage

Foodshortage

Energy security

Poverty

The balance is changing

Low cost skilled labourLow cost shippingAvailability of resourcesChasing growth marketsAvailability of skills

Offshoring Localised manufacture

Quality perceptionCultural challengesLead timesSupply chain stock

Low cost skilled labourLow cost shippingAvailability of resourcesChasing the growing marketsAvailability of skills

Labour cost inflation (China >20%)Transportation / oil price inflationLocal job creationRebalancing import / exportsRebalancing service / manufacturingCurrency depreciationEthical behaviours impact brand valueNeed supply chain responsivenessClimate change

The balance is changing

Offshoring Localised manufacture

• 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

Early signs

Rebalancing of centralised / local production

What is localised manufacturing

Economy of scaleCentralised skills

Local responsivenessLocal jobs in response to local demandReduced financial risk

Industry and application dependant

• 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?

The debate