The world’s manufacturers are facing a protectionist, anti-globalisation backlash but also see the renewed political focus as a chance to promote their sector as a jobs-creating engine of economic growth, especially in the developing world.
For the region, the rapid digital-driven change in manufacturing means opportunity but also a need for a tougher approach, said Suhail Al Mazrouei, the Minister of Energy, speaking in Abu Dhabi on the opening day of the inaugural Global Manufacturing and Industrialisation Summit (GMIS).
The prolonged oil price slump is increasingly forcing them to stand on their own, he said.
"We cannot assume that manufacturing only works if it is provided with a subsidy; I don't think that is healthy, I do not think that is sustainable," the minister said. "In the future we will compete on the basis of certain areas [where] we have a competitive advantage."
The governments of the region have for years pursued policies to foster industry but have more recently, with Saudi Arabia’s Vision 2030 programme and its “in kingdom total value added” mandates for local content and exports, and the UAE’s small and medium-sized business policies, focused efforts on the private sector and organic growth.
“I definitely feel more of a sense of urgency and a willingness from the Governement of the UAE to try more things, to develop this ecosystem approach of bringing in a number of partners and putting themselves in the middle,” said Beth Comstock, the vice chairwoman of GE, which this week launched its first “microfactory” – a manufacturing ideas incubator – outside the US, with the backing of the Abu Dhabi and Dubai Governments in the form of partnerships with Mubadala and the Dubai Future Foundation. The initiative is one of a number GE has taken in the region, where it has annual sales of about US$16 billion, often with the direct involvement of governments.
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But the atmosphere has become more difficult for global companies, which have come under pressure from both the left and right, but particularly from populist leaders such as the US president Donald Trump, who wants to see American firms focus on creating American jobs.
The protectionist backlash misses the point that globalisation generally creates net gains, according to Ildefonso Guajardo Villarreal, the economy minister of Mexico. “If you analyse the last 20 years since Mexico signed the [North American] free trade agreement with Canada and the United States, you can see that, first, the trade between the countries is growing eightfold in those 20 years, and second, cross-border investment has increased fourfold between the countries,” Mr Villarreal said. “The free trade agreement was very good for all the countries that are members of this agreement.” The other complexity that is missed in the protectionist argument is that manufacturing has caught up with the digital revolution and is undergoing rapid change, whether politicians like it or not. “You have to go through change,” said Ms Comstock. “Jobs that people are used to doing are going to go away and they’re going to be replaced by new jobs.”
She cited Mohammad Ehteshami, who has converted from being a traditional engineer building jet engines to become GE’s chief proseltyser of 3D technology.
Also at GMIS, Strata, the aircraft parts unit of Mubadala Development, the Abu Dhabi company, showcased its first entirely 3D-manufactured interior aircraft part.
“Manufacturing is cool again, it’s having a moment right now,” said Ms Comstock. She said the digital revolution means there will be more “distributed manufacturing”, meaning there is much more flexibility about where to locate and how quickly manufacturing can change.
“All that is good for the region as it allows you to leapfrog manufacturing set up in other places,” she said.
But does it leave a company like GE vulnerable to the populist zeitgeist? “We’re a global company navigating all kinds of trends and dimensions and that’s part of the agility you need to make sure you survive,” she said. “The race is on in every country to get the best jobs, the best intellect, invest in the right people.”
Li Yong, the director general of the United Nations Industrialisation Development Organisation, which is co-host of GMIS with the Ministry of Economy, said governments should adapt to the new reality.
“Government decision-makers come here to see for themselves that this is the future of manufacturing and they need to send that feedback to get the right policies,” he said.
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