A new era for manufacturing?

'The New Industrial Revolution' will appeal to expert and layman alike, says Matthew Partridge.


By Peter Marsh

Published by Yale University Press

Manufacturing has gone through four major epochs. The use of steam engines in the 19th century gave us mass production. The railways ushered in the transport revolution, enabling easier national and international trade. Cheap electricity in the first half of the 20th century increased our access to raw materials. In the post-war era, mass computerisation slashed communication costs and drove automation forward. And today, says Peter Marsh, we are already nearly a decade into a new era.

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In his new book, Marsh outlines the eight key trends in the sector that he thinks are driving this "fifth industrial revolution". These include cheaper energy, the rise of China, and innovation in the production process. What it adds up to is an era in which firms combine the low costs of mass production with the skill and quality of craft production.

This isn't just theory Marsh has used his role as manufacturing editor at the Financial Times to interview many of the key people at top industrial firms. Case studies range from low-tech emerging-market stories, such as Indian makers of micro-irrigation systems, to research-intensive sectors, such as high-end medical instrument design in American universities. This gives his views plenty of credibility.

There are still a few problems. While the second chapter talks a great deal about developments in gas turbine technology, there is not a single mention of shale gas. That's a glaring omission, given that many believe that cheap gas will help America regain the cost advantage lost to low-wage nations.

More importantly, he only briefly mentions at the very end that the importance of manufacturing, both in terms of employment and GDP, has been falling in most countries since the 1970s. This is partly due to increased efficiency, but it's also because as consumers get wealthier, they want relatively more services than goods. This plateauing demand suggests it will be tough for manufacturing ever to regain the economic and cultural position it once enjoyed.

That said, this is an accessible, informative book that will appeal to expert and layman alike. As The Manufacturer's Will Sterling puts it: "Marsh exhibits an intense passion for manufacturing." The underlying message about the importance of making things, rather than just selling or trading them, is something that both politicians and investors need to appreciate, if they are to take advantage of the opportunities offered by this new era.

The New Industrial Revolution: Consumers, Globalization and the End of Mass Production, by Peter Marsh. Published by Yale University Press, £25.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri