Journal Are We Getting Ready For The New Industrial Revolution? Part III

 

Are We Getting Ready For The New Industrial Revolution? Part III

02 September 2014

Roland Berger on European Reindustrialization

 

Let’s keep on elaborating on the topics I had covered on my previous posts on the re-industrialization.

 

I’ll begin from the speech Roland Berger has recently given in a presentation on the necessity of the European re-industrialization.

 

Europe remains, even in a recession, the largest economy in the world. However, most European Countries have lost ground over the last decade in terms of competitiveness - and productivity! -, with respect to the BRIC's (Brazil, Russia, India, and China) as well as to some Northern European Countries.

 

There are profound reasons explaining for this phenomenon.  However, although the trend seems unstoppable, there are also multiple reasons to break this vicious circle and to set the conditions for returning to the proliferation of the Industrial Sector at a pan-European level. Even though the model will be deeply different from the present or the past, this does not imply that there may not be a variety of high added value jobs.

 

Roland is calling Industry 4.0 this New Industrial Revolution, to achieve which he has identified a number of very specific steps and important investment, which he is already discussing as part of an initiative at European level.

 

If we look to the U.S., they seem to have understood the importance of this re-industrialization and are implementing policies in support of the same: there is an excellent BCG study on this topic, which I am inviting to read: Made in America, Again.

Paper Made in America, Again – Hal Sirkin – Senior Partner & Managing Director di BCG
The continuous increase in productivity in the United States, combined with the weakness of the dollar and rising Chinese wages, is reporting in America many of the previously outsourced production in China: this is the so-called re-shoring phenomenon. A massive rebalancing, which may turn into an opportunity for the United States to create five million jobs by 2020.

 

The new productivity challenge requires Governments, Institutions and individual businesses to make non-trivial choices of industrial policy.  Italy, which remains one of the leaders of the Industrial production in terms of quality, has to deal with these new rules of the global game with the aim to take advantage of them, and turn them into opportunities.

 

Personally, I do not believe that the productivity gap between the U.S. and the BRIC will be closed, even in the medium term, nor that it makes sense aiming at doing that.  We certainly could and should think about a production’s redistribution, by transferring some production activities back to the U.S., and especially by strengthening those supply chain components with greater added value (such as, for example, Design and After Sales).

 

Under these assumptions, could Italy still find its own way for a new Industrial competitiveness?

 

Continued ...

 

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