Where Manufacturing Thrives

Integrated circuits and clean rooms are replacing the smoke-stacks of steel plants and other heavy manufacturing in Pennsylvania's Lehigh Valley, where more than 40 companies are now making computer chips or related products. Meanwhile, across the Atlantic Ocean, Portugal is building highways, planning high-speed train lines, constructing mass transit systems, and modernizing airports to be better able to move products and people. At Port Said East, where the Mediterranean Sea meets the Suez Canal, a US$1 billion trade port and industrial city is being built to facilitate the movement of goods between Europe and Asia and to boost Egypt's manufacturing and exporting capabilities. Macau, the Portuguese colony that reverted to China in December 1999, is strengthening its economic ties with the Pearl River Delta region, a robust manufacturing, financial, and shipping center that includes the cities of Hong Kong, Guangzhou, and Shenzhen. The names may not be as familiar as Silicon Valley, Stuttgart, Rotterdam, or Shanghai, but no company can afford to ignore them. They, too, are places where the dynamics of world-class manufacturing are being played out in the opening years of the 21st century. It's been said before, but it bears repeating: A new economy is emerging. In the U.S., for example, "it is a knowledge- and idea-based economy [in which] the keys to wealth and job creation are the extent to which ideas, innovation, and technology are imbedded into all sectors of the economy," observes the Progressive Policy Institute, Washington. Significantly, however, the information-driven new economy is taking shape both within and beyond U.S. borders. Indeed, there's a palpable excitement in manufacturing communities around the globe as the still-strong U.S. economy rewrites modern economic history, as the economies of Asia and Latin America recover from their recent downturns, and as Europe again prospers. Consider the macroeconomic context. The current U.S. expansion is now 109 months old. The only relevant question is how fast an inflation-wary Federal Reserve will let the economy grow this year. (Bet on 3.5%.) Meanwhile, Japan is expected to post 1.8% real growth in 2000, compared with only 0.8% in 1999, figures Merrill Lynch & Co., New York. For the other Asia/Pacific economies, Merrill Lynch forecasts a heady collective growth of 6.3%, even better than their not-exactly-shabby 5.7% performance in 1999. From 0.1% growth in 1999 Latin American economies are expected to post a healthy 3.6% real growth rate this year. And the 15 nations of the European Union are projected to pick up the pace of economic recovery this year, with growth reaching 3.2%, compared with 2.2% in 1999. As manufacturers develop, produce, market, ship, and manage a staggering array of goods and services for an increasingly interconnected world, they are tearing down functional barriers of all kinds and taking to the 'Net in an effort to bring themselves closer to customers and to increase speed, productivity, and profits. Significantly, "the astonishing swiftness with which the Internet has grown suggests that the business cycle is moving much more rapidly than in the past, and localities need to update economic development strategies with this accelerated business cycle in mind," states New York-based Kerstin Nemec, national partner-in-charge of KPMG LLP's business incentives group. Nevertheless, only a few manufacturing communities around the globe can lay claim to true world-class status. It's tough to meet the qualifying criteria; being a center of production, though essential, is not enough. World-class manufacturing communities also are marketing centers (such as Seoul), logistics centers (Singapore and Shanghai), development centers (San Jose and Singapore), and headquarters sites (Houston and Stuttgart). Meanwhile, many other communities continue to work at attaining world-class status, seeking to create competitive advantages for the companies that have their R&D, production, marketing, logistics, and headquarters activities within their metropolitan boundaries. It is this dynamism of communities defining competitive advantages and improving upon them that is at the heart of 21st-century manufacturing and of IndustryWeek's exclusive worldwide perspective on the places where manufacturing makes a difference.