The Manufacturing Industry – Coping with Challenges

The perception of many people who live in the developed economies of Europe and America are often heard saying that the days of manufacturing are numbered in these countries and that China is the new “factory of the world”. This paper demonstrates how far from reality such a broad sweeping statement is. Manufacturing in developed economies is still flourishing and there is still scope to maintain and sometimes to bring back manufacturing to these parts of the world. Indeed, the landscape has changed; the types of industries, technologies, capabilities and manufacturing methodologies have been totally transformed over the years and now display high levels of sophistication. What has not changed is that the majority of companies around the world are still Small & Medium (SME) sized firms. The need for co-operation and collaboration has never been more needed than it is now as at individual firm level most SMEs do not possess all the resources and capabilities necessary to compete internationally. New challenges have also emerged. Indeed, the newly developing nations such as China, India and Korea have demonstrated a fast catch up capability. Competition is now global, greatly assisted by the revolutions undertaken in the communications and transportation sectors. Companies have also gone global through distributed organizations. The paper reviews current literature regarding trends and challenges in manufacturing and will illustrate how competition has shifted towards intangible assets, the capability to outsource, to innovate and to invest in advanced technologies not only to bring costs down but to enhance quality, cope with mass customization and develop the capability to produce high value added sophisticated products. Supply chains also form a new frontier to achieve competitive advantage and an area where competencies are being built. Malta is no exception. Being part of the European Union, and facing ever rising costs and global competition, manufacturing has shifted from low level labour intensive industries to more sophisticated, high technology companies within the pharmaceutical, electronics and medical products sectors among others. The total number of people employed in manufacturing has indeed reduced due to increased productivity of the manufacturing processes being deployed. The challenges to develop manufacturing capabilities and competencies remain as they have always been; central to competitive advantage. The change that has taken place is that many new manufacturing competencies had not traditionally been viewed as part of the manufacturing paradigm. The scope of the competency base has grown. Manufacturing companies have taken advantage of the globalization of industries by sourcing and producing where the highest competitive advantages can be reaped.