FMosconi_Why Manufacturing Matters_2015

Why Manufacturing Matters:
(The Case of Emilia Romagna)
Franco Mosconi
(Università di Parma)
Lecture: “Economia Applicata” &
”Economia Industriale Internazionale”
Seminar 18 March 2015
Keynote speech held by Prof. YULEK
Agenda
1990s and first decade of 2000s:
Finance dominated the economic and
political agenda (“Washington
Consensus”)
TODAY:
The good news, today, is the
“revival” of manufacturing
Agenda/2
«Today, I'm calling for all of us to come
together- private sector industry,
universities, and the government- to spark
a renaissance in (…) manufacturing and
help our manufacturers develop the
cutting-edge tools they need to compete
with anyone in the world... With these key
investments, we can ensure that (…)
remains a nation that 'invents it here and
manufactures it here' and creates highquality, good paying jobs for (…)
workers.»
Agenda/3
Who said this?
Agenda/4
President Obama, speaking at
Carnegie-Mellon University on June
24, 2011
Agenda/5
Then, the Federal Government
launched “The Advanced
Manufacturing Partnership (AMP)”
(http://manufacturing.gov/advanced
_manufacturing.html)
The Change in Direction
This is (only) the beginning of a
change in direction –the tip of the
iceberg- after two decades that have
been dominated by finance.
Since 2010, quarterly journals,
magazines (think of “The
Economist”), think-tanks, and so on,
have all published articles on “Why
Manufacturing Matters”
The Change in Direction/2
So, why?
Where does the higher income come
from?
It has to come from productivity
growth, which is faster in
manufactuing (than in services).
The Change in Direction/3
From the big picture to our
city/region: how this narrative has
been internalized in Parma/EmiliaRomagna?
The Emilia Romagna (E-R) hasn’t lost
its industrial tradition/base during
the reign of the “Washington
Consensus”.
Emilia Romagna/1
As a matter of facts:
[i] in E-R one-third of value added comes
from INDUSTRY (MANUFACTURING +
CONSTRUCTION)
→ similar to the level of the German
Länder;
→ the breakdown by sector: Food Industry
(many high-quality products), and food
machinery
Emilia Romagna/2
[ii] E-R exports a huge amount of
goods and services (essentially,
goods):
€50 billion in 2014
this impressive amount, in turn,
contributes to Italy’s highest
commercial surplus on a regional
basis
Emilia Romagna/3
[iii] many “Industrial Districts” are
localized in E-R …
[iv] … as well as many “Medium-Sized
Enterprises (MSEs)” have in our
region their headquarter (570 out of
Italy’s 4.000); Mediobanca and
Unioncamere have built an index
(“MSEs Oriented Regions”) >>>
Emilia Romagna/4
>>> “MSEs Oriented Regions”:
• Max score = 100
• 1st Veneto = 92.9
• 2nd E-R = 90.6
• (Lombardia is 4th with a score of
84.7; Piemonte 8th with 64.0)
Emilia Romagna/5
We should continue to shed light on
other performances and on their
origins ...
All in all the performance has been
positive. But we should not sit on our
laurels. The «Emilian Model» has
gone through a «Metamorphosis».
Why?
Our research-project on ER
The «Metamorphosis»
The explanation is twofold:
• Exogenous reasons (the emergence
of the so-called BRICs, the
technological revolution, etc.), which
are the same in all the Western
Industrialized countries;
• Endogenous ones, which depend on
how firms are changing. What does
this mean?
The «Metamorphosis»/2
UPSTREAM
ACTIVITIES
(E.g., R&D,
design …)
PRODUCTION
PROCESS
(more robots and
computers in the
assembly line)
DOWNSTREAM
ACTIVITIES
(E.g., Brand
building,
customers
assistance ...)
The «Metamorphosis»/3
The competitive firms are shifting – in
relative terms - from production to
upstream and downstream activities.
This means that workers are shifting
from low-skilled jobs to high-skilled
ones; i.e., from “blue collars” to
“white collars”.
The «Metamorphosis»/4
A successful city/region must not lose
the headquarters of successful
companies where much R&D,
Innovation and Training is done.
This is what is happening in E-R –to a
certain degree.
Industrial Policy: “Knowledge
Investment” (R&D, human
capital, Ict)
Conclusion
We are speaking about high-skilled
workers, and jobs which require a
high level of education in the
workforce. So, there is - I think - a
“moral to the story” after the fall of
finance: in advanced manufacturing
there will be room for your
generation, here and in the U.S.
So....Keep on studying!
Conclusion/2
Let me finish with another quotation,
once again from the U.S.:
Professor Gary Pisano
(‘HBS Weekly Newsletter’, March 28,
2011)
Conclusion/3
«One of our key messages is to get
students to appreciate that
manufacturing involves a lot of
knowledge work. There has almost
been a whole generation of MBA
students and managers who have
been brought up on a false idea that
manufacturing is kind of the brawn
and not the brain, and that the
country should focus on the brain.»
Conclusion/4
The winds are changing: as this quote
from the Harvard Business School
shows.
Let's hope it lasts.
Looking back at ER, the main
difference is: we have always
thought that manufacturing involves
brain work too.
‘Food for Thought’
‘Food for Thought’-cont.
Book edited by professor Murat Yülek
(Springer, 2015)
http://www.springer.com/economics/develo
pment/book/978-3-319-06473-4
My own chapter:
The New Industrial Policy in Europe a
Decade After (2002-2012), pp. 207-38
Grazie!
E-mail
Franco.Mosconi@unipr.it
Homepage
www.cattedramonnetmosconi.it