April 19, 2013

The future of manufacturing and its impact on your business park

In November 2012, McKinsey and Co. published a report about the future of manufacturing. If you have not read it yet, do it as soon as possible!

McKinsey has 3 key findings about the future of manufacturing, and we try to add some conclusions and tips about its impact to commercial real estate sector:

1. Manufacturing’s role is changing: 
'The way it contributes to the economy shifts as nations mature: in today’s advanced economies, manufacturing promotes innovation, productivity, and trade more than growth and employment. In these countries, manufacturing also has begun to consume more services and to rely more heavily on them to operate.'
Tip #1: Offer a complex, innovative and service-rich business enviroment
If there are academic/private research centers or global business service providers/BPO companies nearby your business park, than look at them as the part of your sales offer. Even more: try to attract such service providers and research facilities into your business park - and not just an office tenant, but as a sales promoter of your industrial real estates. Attract them with preferential facility pricing and the promise of new business for them!

2. Manufacturing is not monolithic:
'It is a diverse sector with five distinct groups of industries, each with specific drivers of success'
Segments of manufacturing. Source: mckinsey.com

Tip #2: Start to think about target industries
Are you sure your location's labour market, education, transportation infrastructure, supplier's background industries etc can serve all the possible industries from automotive to food processing, from nuclear energy to textile? How to select a target industry? Well, as a start, industries which have successful past and presence in your location, probably have a promising future, so do not invent warm water (excluding when you focuses on beverage industry).

3. Manufacturing is entering a dynamic new phase: 
'As a new global consuming class emerges in developing nations, and innovations spark additional demand, global manufacturers will have substantial new opportunities—but in a much more uncertain environment'
Tip #3: In market communication, focus on magic world like 'nearshoring' and 'advanced business environment'
Unfortunatelly you cannot relocate your facilities to Shanghai. And you cannot prevent the increasing consumption of emerging countries and the increasing manufacturing investments there. However, you can talk about the advantages of closeness of matured markets, the stabile legal environment, the high transparency and open society. These factors can be relevant for many industries and companies.

What do you think about these impacts? Share your opinion!

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