LACK OF PATIENT CAPITAL LEADS TO INADEQUATE EVALUATION OF POSSIBILITIES

Manufacturers face many problems related to the fact that the manufacturing industry may not have been successful enough, and the availability of new technologies creates a chance to achieve improved growth. It seems obvious in many parts of Western Europe that the financial returns from manufacturing are too small. It seems clear that this is also the case in the United States. Manufacturers have competition from the service sector, where returns often are more handsome, and from the financial services, where the returns of the last 2 or 3 years have been phenomenal, not only for shareholders but also for employees.

The manufacturing industry that enjoyed more positive attitudes after the bad years of the 1970s is again losing its glamour. The risk is that the industry is subjected to short-term evaluations of its possibilities. Training people to use the technology at their disposal requires time. Industry also needs patient capital. Even if product development cycles are shortened and even if products can be introduced into production faster today than they could 10 years ago, it is still a matter of 5- to 10-year perspectives. It may well be 10 years before a manufacturer is certain of a fair return on a new product development that has been introduced into production and then into the market. Serious investors understand that technology and product development takes time and requires research and development by competent people. Short-term speculations are detrimental to the manufacturing industry. I would predict that the capital market will understand this very soon.

The manufacturing industry is running out of patient capital, which is hardly available anymore. Not only does industry need to apply the new technological means at its disposal, it also needs support to get more glamour, to get more real development. At present the acquisition of industries is often more profitable than adding value through patient and good work.

NO SERVICE SECTOR WITHOUT A VIABLE MANUFACTURING INDUSTRY

It is often said that the service sector is growing faster than the industrial sector, and of course, that is true. But there is a link between services and industry. A great part of the new service- and knowledge-based industry is directly or indirectly a result of the manufacturing industry. For instance, manufacturing companies need more technical support and systems development. Many companies prefer to buy these services rather than build up their own in-house resources. If we take industry or industrial growth away, eventually part of the service sector will collapse. Although the manufacturing industry cannot solve the problems of unemployment and slow growth, even with the new technology now available, it is absolutely certain that those problems cannot be solved without a viable manufacturing industry.



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