Picture a company that manufactures in a dozen countries across the world, manages innovation across a number of time zones and sells its products across many more.
Imagine how that company organises its logistics and supply chain and coordinates its research and development efforts.
This is not the manufacturing company of the future; rather, this is how many manufacturing companies in the UK and in other parts of the developed world are organising their business today in response to a global economic environment that has become ever more integrated and where the pace of change seems unlikely to slow.
The competitive landscape in which business operates is changing. Given the importance of trade to their companies, manufacturers are particularly affected by this. New technology is changing the way in which products are manufactured and improved transport links and communications are providing companies with greater options on where to locate their various activities. The eastward expansion of the European Union and the entry into the global marketplace of low-cost Asian economies means companies are facing new competitive pressures as well as opportunities to sell into fast-growing markets.
The changing shape of the world economy has implications for both companies and governments. This report demonstrates that manufacturers are rising to the challenge, developing strategies that combine an increased focus on innovation with measures to cut costs aggressively. As one of the most liberalised economies in the world, the UK is well placed to continue to embrace change, just as it has done successfully in the past. Yet our report also suggests that the government will have to work just as hard as companies to ensure that the business environment remains competitive, making the UK an attractive place for manufacturers.