Manufacturing Value Chains Driving Growth

Macroeconomic forces, including the spread of free trade, accessibility of digital manufacturing technology, and rise of the global middle class, have resulted in value chains being distributed around the globe. Research and development can take place in one location, engineering in another and manufacturing in yet another, while consumers are scattered across different regions. Today’s manufacturing value chains are complex, highly interconnected and rapidly changing, which leads to a series of challenges and questions for policy-makers and business leaders alike in navigating this environment. As policy-makers drive to create more jobs and improve the quality of life for people within a country, manufacturing leaders are increasingly responding to an attractive global pool of talent, resources, capabilities and consumers. An understanding of the global, macroeconomic perspective as well as the local perspective is critical to shaping richer, more thoughtful dialogue between business and policy-makers.

To better inform this dialogue, Section 3 of our primer includes a series of illustrations and analyses of the value and jobs created in three manufacturing sectors: aerospace, automotive and chemicals. These sectors were selected due to their size and impact on countries, and as representative of several broader themes: globalization, including shifting consumer and production markets; increasing use of technology, digitization and advanced processes; and growing requirements for a talented workforce. Concepts are used from value chain analysis frameworks and methods to showcase the widespread economic value that each of these sectors brings to a country and local economy. For each sector, the report highlights a series of perspectives which, taken together, can help drive a more nuanced understanding of today’s manufacturing ecosystem:

• Global industry view – demonstrates where output or revenues are generated today and where they are forecast to be over the next decade. As each sector has a unique story when it comes to global value creation, the report identifies the messages that demonstrate what has shaped the current global landscape and what matters with regard to employment, talent and wages at a macro-level.
• Global trade view – analyses the import and export trends over the past 10 years for each sector. The report looks at the top countries that dominate the global market from an export perspective and what the trajectory for those countries has been over the previous decade. The changing patterns of trade of manufactured products across borders help to demonstrate shifting conditions – from a resource, capabilities, political and societal perspective.
• Facility view – captures an illustrative snapshot of a production facility and the associated economic impact on a local community, including direct and indirect jobs, net economic impact and induced effects from the construction of a new plant. These analyses demonstrate why policy-makers clamour to attract manufacturing companies to establish operations in their city, state or region.
• Product view – conducts an examination of a single product value chain, showing where it influences multiple locations around the world from a consumer, jobs and supply base standpoint. These illustrations show manufacturing sector illustrations that are technologically advanced and environmentally conscious, and require a variety of qualified, skilled workers. 

The report also contains commentary from value chain analysis experts to explain why an understanding of these topics is critical to driving growth and prosperity for companies and countries. Also included are insights from industry experts discussing sector-level trends that define the future of the industry. In combination with the policy recommendations and public-private partnership organization best practices, these graphics, data sets and essays can inform the dialogue between business and policy-makers by providing a global and local perspective of the network of value and jobs created by manufacturing sectors.