This is post is a summary of the chapter 5,with the title of, "Implications for policy makers." From the book with the title above, the same book of last week. Published in November 2012 at http://www.mckinsey.com/insights/manufacturing/the_future_of_manufacturing
Governments around the globe are under pressure to find ways to economic growth. Facing weak domestic demand, many policy makers have shifted focus to exports and to manufacturing. This has led nations to consider more active measure to support specific industries and sectors. As a result, we see increasing intensity in the already fierce competition among governments to attract and retain manufacturing companies and activities. In this chapter we conclude our analysis of the future of manufacturing with recommendations for how nations can develop policies and address the circumstances of their economies and the manufacturing industries they have or can attract. Good manufacturing policies are grounded in facts, performance and benchmarking data that establish a nation's starting point in global competition and an objective assessment of how trends in demand and other factors are influencing diverse manufacturing industries within the economy. We begin with a realistic diagnosis of what strengths a nation or region brings, as well as the weaknesses it needs to overcome and opportunities that can be exploited. A nation's comparative advantage are influenced by its endowments: its natural resources, the quality of its labor force, its energy, transportation, and finance systems. While certain physical endowments (e.g., iron ore and gold deposits, or geographic proximity to large markets) are immutable, many attributes evolve over time, reflecting the impact of government policy and companies actions. The depth of a nation's talent pool or the quality of its infrastructure is often a direct outcome of its policies. Endowments also shift as nations become wealthier. As incomes rise and low-cost labor is no longer a advantage, a nation's manufacturing mix shifts from labor-intensive industries to those that are R&D-intensive. Taiwan, followed this pattern and planned for the sequence in their industrial strategies, invested in creating a skilled labor force with strong engineering capabilities and introduced strong intellectual property protection. By themselves, however, good endowments do not guarantee strong performance and competitive advantage. How nations use their endowments and how they develop new capabilities often matter more. Japan, for example, lacks endowments of domestic energy assets, but policy has compensated for this gap. To help their manufacturers make the most of emerging demands trends, governments have several options. They can continue to provide financing for exports to developing economies. They can also play a role in connecting their exporting manufacturing companies to fast-growing markets by upgrading shipping or air-freight infrastructure negotiating trade agreements or helping to attract skilled talent. Governments can also help industry develop knowledge that will enable companies to succeed in new markets. Historically, manufacturing innovation has been the largest contributor to productivity growth across economies. Standards setting is a tool that governments can use to help commercialize innovation. Auto mileage standards and regulations on carbon emissions can provide the catalyst for products such as eletric vehicles or the adoption of green techniques. The skill challenge is already apparent in many sectors and is expected to get worse. With the increasing speed and complexity of industries, the need for more high-skilled workers is growing and shortages of workers with training in technical and analytical specialties are appearing. In the U.S. auto industry, 70% of executies surveyed, said they had trouble finding engineering and technical talent in 2011, up from 42% in 2010. In addition to efforts to improve public education, policy makers can help steer students into the appropriate fields. This can be done by providing accessible information about what workers at different occupations can expect to be paid, and how quickly new graduates are likely to be employed. Governments can prepare young people for emerging manufacturing jobs, develop vocational training that leads to industry and nationwide certification. A critical step is to build alignment around the economic goals. Governments at all levels have increased the odds of success by building solid private-sector support. When there is alignment by companies, workers, investors, and communities, strategies can have great impact. The German success in global automotive leadership, for example, depends in no small measure on broad support from governments, auto and auto parts companies, research institutions, employees, and the public. Tiny Oulu in Finland built a global mobile tech cluster through close collaboration between city government, local universities and Nokia. As the global economy continues to recover from recession, growth strategies are critically important. The damage inflicted on national balance sheets by debt crisis makes it more important than ever to spend public funds wisely, in this environment, ineffective and ill-conceived investments by governments will be doubly costly.
