UK Manufacturing and Future Opportunities in the Global Economy

One of the key features of the latest globalisation phase is themanufacturing value chain, due to improvements in the global transport infrastructure, advancements in information and communication technologies and significant process in the elimination of tariff and non-tariff barriers, manufactures are able to now separate different parts of the manufacturing value chain which also allows them to carry out particular economic activities in different locations around the world.

In addition to having competition from other leading manufacture companies such as the United States, France, Italy and Germany, Manufacturers in the UK are now having to face an increase in competition from developing economies. The developing economies are steadily moving up the value chain into higher value activities and industries, manufactures in developed countries and the UK have made a response to the rise in globalisation and the increased international competition which is done by outsourcing and offshoring to developing countries lower value activities in the company’s value chain such as production. Because of this Increased international competition, it has enabled them to enhance their productivity and also reduce costs whilst at the same time being able to gain important access to fast growing emerging markets.

The manufacturers in developed countries have sought out to differentiate themselves further, they have done this by steering away from the traditional business strategies that are based around the sale of a certain particular product to new models where the sale of the said product is integrated with combined services- this trend is referred to as the ‘servitization’ of the manufacturing industry. In 2005, the UK manufacturing sector accounted for around 14% of the total of service exports. Over the next few decades, the domestic and global demand for products and services is predicted to change, this change will be driven by a number of factors including: rising incomes, increase in demand for higher environmental standards and greener products, demographic and lifestyle change, continuing technological progress and rapid growth in emerging markets. The activities in modern day manufacturing now involves high levels of technological and non-technological innovation including the investment in skills, knowledge and intangible investment such as branding, software, marketing and training. This has resulted in the development of new, better quality, more sophisticated products and more innovative business models and processes.

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