industry

The Netherlands loses manufacturing industry

Over the years, the Netherlands has lost a lot of manufacturing industry to the Middle East and the Far East. Wage costs in particular played an important role in this. However, countries such as Germany and Switzerland continued to participate well internationally. Where did the Netherlands lose the game?

Employers have been worried about the disappearance of the last manufacturing industry for some time and have set up the Knowledge and Information platform together with the Government. The 2012 report shows that the Netherlands still has a long way to go, even if there is some improvement.

Competitiveness

The platform focuses mainly on education, research and innovative entrepreneurship. In addition, the platform compares with GCI [global Competitiveness Index] of the World Economic forum. This shows that in education, research and innovative entrepreneurship, the Netherlands is still quite behind. This list is topped by Switzerland, followed by Singapore, Sweden, Finland and the United States. The Netherlands was still in 3d in 2000 and back to 7 in 2011.

Global manufacturing Competiveness Indices [GMCI] such as from Deloitte, show that the spectrum of factors is much broader. This includes talent innovation, costs of material and labor, energy costs, network suppliers, local business, government financial and tax system, quality of infrastructure and digital structure, government investments, local regulations, quality of health care. In the GMCI, the Netherlands is not in the top 10. [13th place] It is striking how high Germany scores with 4th place behind China. The United States and Japan lead the list. The major difference between the two lists is the indicators that are followed. The GMCI is much wider than that of the World Economic Forum.

High Quality

Compared to countries such as Germany and Switzerland, it is striking that these two countries, from a middle industry, have a lot of sales outside Europe. In recent decades, their manufacturing industry has focused on high-quality products where innovation and the quality of personnel were central. Both countries have always invested in technical personnel at different levels. Especially when it comes to technical personnel at the executive level, the Netherlands has left the ball. There is a clear difference in government policy. Both Germany and Switzerland, the manufacturing industry has always been a priority at various administrative levels.

What the GCI apparently pays less attention to is the international Multi Tier Value Chain. It is precisely here that important changes have occurred in recent years. The number of Tiers has increased and further broken down. A Tier 3 to 4 is often a change from a hundred to a thousand suppliers. Controlling this value chain is the biggest challenge for large companies.

An aircraft like the latest Boeing is manufactured internationally on all continents, with 17 directly collaborating partners. The total number of suppliers is many times greater. The Dutch manufacturing industry is not present enough in this game. Only a few Dutch companies still play an important role here, such as Stork-Fokker.

Globalisation

The large internationally operating companies such as Boeing are themselves unable to control the entire value chain. They depend on partners who are the connecting link and ensure that quality and speed are maintained in the chain. This requires more than education, investments and innovative research. Dutch companies should profile themselves more as a sustainable partner capable of distinguishing themselves on factors such as process control, quality, innovation, culture connecting and value chain. The Netherlands, which has its tracks in Supply Chain Management, should be able to take major steps here.

Then the focus should shift from physical distribution to digitization. Not only locally but especially internationally. The Dutch Government can contribute by intensifying educational investments and broadening its focus from Europe to specific manufacturing countries such as in the Far East, whereby links are established between Dutch medium-sized industry and suppliers operating in the Far East. The better these connections are, the more chance and opportunities the Netherlands has to maintain and strengthen its manufacturing industry.