Sherry M. Stephenson
Senior Fellow
International Centre for Trade and Sustainable Development
Services have enabled manufacturing in the U.S. to become more efficient and competitive
Services have enabled manufacturers to take advantage of cutting edge technologies and become more productive. Services have also enabled manufacturers to grow the value of their operations from the initial stage of designing their products to the final stage of getting their products to their customers. Manufacturing has become a complex mix of many types of services, automation, and computer-driven production, with a large and growing share of value derived from the services components.
Consumer and capital goods increasingly embody a greater percentage of services. Manufacturing companies have increased their reliance on services for their inputs, and services constitute a significant portion of their outputs and revenue. Rather than thinking of manufacturing and services as separate economic activities in today’s economy, it is much more realistic and essential to think of them as having become inextricably intertwined. Manufacturing companies are now great users, producers and traders of services. It is in fact efficient services that make U.S. manufacturing more productive and give it a competitive edge in global markets. A new term, “servicification,” has been coined to describe the increasing use of services by manufacturing firms in their purchases and production, as well as their exports, pointing to the integrated role that services play in every step of the process (Swedish National Board of Trade). This is part of an overall global trend as noted in a recent OECD study on services and manufacturing which found that in the digital age, “services are part of a ‘business ecosystem’ where collaboration with customers, partners and contractors is the key to innovation and productivity.” (OECD 2017 study)
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Source: PECC News feed
