Thursday, 1 September 2016

How to boost employment, productivity and growth, and make globalization enter a new era...

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Summary of the TED talk by Olivier Scalabre:

Our global economy has stopped growing. This creates tensions (more people, less to go around).

Manufacturing revolutions (mid-19th century steam engine, beginning 20th century mass-production model, 1970s first automation wave) lead to big growth thanks to improved productivity (i.e. the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs).

Offshoring factories has not worked because cheap labor didn't stay cheap for long.

We've made our factories larger, making a lot of one product, stockpiling it to be sold on demand. This helped productivity for a while, but it introduced a lot of rigidities in our supply chain. 

Innovation in the tech sector hasn't done much for productivity either.

A fourth manufacturing revolution is underway: major technologies are entering the manufacturing space; it will boost industrial productivity by more than a third and create growth. It will change globalization.

By 2025, advanced manufacturing robots, programmed to perform complex, non-repetitive tasks, will result, compared to today, in an increase in productivity, output and growth of 20%.  Plastic and metal manufacturing (25% of global manufacturing production) is being improved by 3D printing (e.g. aerospace companies are now using 3D printing, resulting in 40% more productivity, output and growth).

Imagine a world where you can buy the exact products you want with the functionalities you need, with the design you want, with the same cost and lead time as a product that's been mass produced, like your car, or your clothes or your cell phone. The new manufacturing revolution makes it possible.

Not only will manufacturing become more productive, it will also become more flexible. Our factories will be smaller, operating on a multi-product, made-to-order basis. It will create a macroeconomic shift: our factories will be relocated into our home markets. In the world of scale customization, consumer proximity is the new norm.

Globalization will enter a new era. The East-to-West trade flows will be replaced by regional trade flows: East for East, West for West. The old model was insane: piling up stocks, making products travel the whole world to reach consumers.

The new model, producing just next to the consumer market, will be much better for our environment.

In mature economies, manufacturing will be back home, creating more employment, more productivity and more growth.

We'll have to massively re-train our workforce. We need to teach manufacturing again at university. Only the countries that will boldly transform will be able to seize this growth.

China and other emerging economies won't be the factory of the world anymore. It was not a sustainable model; it is already as expensive to produce in Brazil as to produce in France. By 2018, manufacturing costs in China will be on par with the US. The new manufacturing revolution will accelerate the transition of those emerging economies towards a model driven by domestic consumption, creating growth there.

The fourth manufacturing revolution means more wealth distributed to all of us and a better future for our children.

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