Strong Manufacturing = Healthier Financial Nation. A study from Belgium.
Posted by Bert Maes on September 8, 2010
Over the past 40 years Belgium lost 17% of its manufacturing activities, a prominent Belgian economist finds, in collaboration with several entrepreneurial organizations (the presentation of the study – in Dutch). Only the United Kingdom is doing worse. The future of both countries in terms of competitiveness doesn’t look bright.
Is deindustrialization/demanufacturing a normal natural process giving way to the services era? Not entirely, the study shows. Many countries still rely heavily on manufacturing. The simple logic is this: when a country loses its manufacturing base, the service sector gets fewer chances to grow.
The manufacturing sector has to be preserved, simply because the basic creative activities in the industry are a must to keep the rest of the economy going, according to the study. The financial crisis has revealed the weakness of our services economy. Loss of industry makes a country extra vulnerable. The country loses exports, loses income and has to rely on domestic demand that has to be stimulated by the government.
Maybe the most fascinating observation from the study is that the countries that enjoy a strong manufacturing base, have a healthier financial situation. There is not a chance that a country can get out of its recession and generate renewed wealth without substantial contribution from its manufacturing sector. Loss of manufacturing contributes to impoverishment.
The study states that Germany should be Belgium’s benchmark example with: lower labor costs, a more flexible labor market (less conflicts between employers and employees), less complex administration, a real export policy, attracting (foreign) top companies that have a urge to innovate and internationalize, focus on R&D support, more collaboration with the educational sector etcetera and the fact that the Germans unite behind the notion of manufacturing export. The government, business community and workers all see their future in global business and they work for a common purpose more often than not.