Magazine article Management Today

Thing-Making Has a Future Too

Magazine article Management Today

Thing-Making Has a Future Too

Article excerpt

New technology may be the way forward, but without the traditional processes of the manufacturing industry, it is going nowhere

Non-electronic manufacturers, long scorned as mere 'thing-makers', have been written off - and for apparent good reason. Their profits have been squeezed, their employment has slumped, and over-capacity is chronic. 'New technology' will supposedly dominate the future, as micro-electronics, the internet and associated marvels rule the 'knowledge society'.

Yet these vibrant sectors have no monopoly on new technology - or on profitable business. By far the greatest economic and technological activity lies in other areas, even in industries of such creaking antiquity as shipbuilding and steel.

Manufacturing far outsells information and communications technology. Only four of the IT specialists - Microsoft, EDS, Intel and Texas Instruments figure in the world's 500 largest revenue-earners. Their combined sales came to $62.2 billion in 1997, 25% below five low-tech beverage giants led by PepsiCo and Coca-Cola. Throw in all the computer and office equipment giants, headed by IBM and Hewlett-Packard, and you reach only $326.6 billion, under half the total sales of the broader-based electronics and electrical leviathans such as GE, Hitachi, Matsushita and Siemens.

Combined sales of the above high-tech sectors in Fortune's global 500 are easily matched by the $1,150.8 billion automotive sector. In his new book, In Praise of Hard Industries, Eamonn Fingleton makes the point that traditional manufactures, from steel and ships to foodstuffs and components, are in growing demand in the industrialised world. And gigantically populated markets await elsewhere.

In meeting that demand, manufacturing is making spectacular use of new technology in two ways. First, it has hugely increased output per worker, sharply reduced costs, vastly cut materials consumption, and steeply raised efficiency. Much of the output is humdrum compared to the wonders of, say, the computer makers and mobile phone firms. But these latter consume massive quantities of equipment arid materials from wiring to packaging. All this has to be made by someone, somewhere - and made efficiently.

Second, the IT wunderkinder depend heavily on the companies that make the machines that make the things that make the economic world go round. The technology here can be very high - and very expensive. Fingleton cites the cost of 'steppers', the lithographic machines that print circuit patterns on the silicon wafers used in computer chips. Prices soared from $1 million to $5 million between the early 1980s and 1998, with near-matching rises in performance. …

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