To Secure Future of Manufacturing, Act Now: Aarhus BSS Report

The future begins now, according to a report on the Danish manufacturing sector prepared by Aarhus BSS and consultancy McKinsey. If Danish manufacturers want to do well in ten years’ time, they must act now.

2016.02.11 | Peter Roy Harmsen

Philipp Schröder

The need to act now is one of the main conclusions of the report, titled “Danish Manufacturing – winning in the next decade”, which was presented to the public at an event at the home of the Confederation of Danish Industries in the centre of Copenhagen.

”There is an enormous potential in the manufacturing sector, and Denmark is very well positioned to be one of the leading nations in the field, also in ten years’ time,” said Philipp Schröder, a professor of economics at Aarhus BSS, Aarhus University, and co-author of the report.

”However, it requires an effort, both from the companies involved, and from the decision makers who determine the framework within which Danish enterprises operate,” said Schröder, who also heads the university’sTuborg Research Center for Globalisation and Firms.

The report is the result of one of the most comprehensive surveys every made of the Danish manufacturing sector, based on analyses of altogether 225 companies and input from 250 executives.

”We are able to document a big difference between the reforms carried out by the leaders in the manufacturing industry and those who lag a little bit behind and may be struggling a bit. However, with the right policies and the right initiatives from the companies, it will actually be possible to lift the entire sector,” said Schröder.

”If you adopt a ten-year perspective, as we do in our analysis, the implication is we have to act today if we want to be sure that we have a robust and stable manufacturing sector in Denmark one decade down the road.”

If the manufacturing sector is faring well, the entire economy is better off. The manufacturing industry is one of the primary value creators in terms of hours worked. This means that timely action in the field is a prerequisite for continued prosperity.

”Successful manufacturing companies are a precondition for future prosperity. The manufacturing industry is were the money for society as a whole is going to come from.  So it’s important that we have this debate now, and the report could help trigger this,” said Klemens Hjartar, a senior partner with McKinsey.

The 60-plus-page report contains a number of tangible proposals for what can be done to secure the future of a sector which links Denmark to the outside world. Basically, the authors have three main pieces of advice for the executives and the politicians.

”First, internationalisation. Our goods and services must reach even further abroad. Second, we must adopt a complex view of value chains and ensure that our value chains entail both goods and services. Third, digitalisation, or, put differently, industry 4.0. This is the key to success ten years from now,” said Schröder.

The Danish manufacturing sector currently employs more than 100,000 people, of whom over 90 percent live and work outside the Copenhagen region. The industry accounts for 16 percent of overall Danish exports.

”The report points towards the challenges facing Danish business,” said Troels Lund Poulsen, minister for business and growth, who attended the launch of the report.

”It’s a help for the politicians, as it provides concrete advice, in addition to proposals about where the focus of our efforts should be in order to secure a bigger piece of the global growth pie for Danish business, which is decisive for our ability to maintain the Danish welfare state.”

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