US FOCUS


With plenty of change and a new style of government in the White House, Relocate looks at how business in the US is responding, and assesses the implications for the global mobility sector and domestic relocation. Major players at the heart of the sector share their views, and reveal how they are rising to the challenges.


T


he first months of Donald Trump’s presidency have seen the eyes of the world turned on the United States


to an even greater extent than usual as the winds of change blow through everything from the country’s immigration and foreign policies to its healthcare provision. What effects are transformations in the


world of work, from rapid technological change to innovations in manufacturing, having on the US and its people, and how are they affecting domestic relocation and global mobility? Relocate asked some of the mobility sector’s leading players for their perspective. Blueback Global, a specialist in the


technology and fintech sectors, provides a range of relocation management solutions and helps companies to set up operations in new dominions. Principal Arden Ng points out that the US has always been an attractive location for overseas investors. The reasons for this, he says, include its mature corporation-law framework and stable business environment, its well- educated, English-speaking workforce, its cutting-edge technological advancements, and its many entrepreneurial, innovation- supporting hotspots, from Silicon Valley to the Boston Tech corridor and New York. In the last two decades, however,


the country’s economy has changed fundamentally as heavy industries and labour-intensive manufacturing


have


declined and high-tech and internet-related industries have flourished. Says Mr Ng, “Technology giants,


including Apple, Google, Facebook, Microsoft and Amazon, now make up a good number of the top ten companies by market valuation. Compare this list with the top companies in the early nineties: General Electric, Walmart, General Motors and Exxon. “The trend is clear: the emergence and


importance of technology have changed America’s economic drivers. Traditional labour-intensive manufacturing industries are shifting towards the use of robotics, automation techniques and cutting-edge materials. Manufacturing in America is not dead; it just has to transform and adapt to changing times.” Service industries, adds Arden Ng, are seeing similar change – the self-service


checkouts introduced by so many retailers being one example. All these transformations, he says, are


possible because of existing infrastructure and know-how. Social media has disrupted the way in which consumers research and buy products and services. The sharing economy has disrupted the services industry. From hotels, taxis and food delivery to personal services, the key to success is building trust, speed and convenience.


A brave new world? However, as many commentators have observed, particularly in connection with the surprise result of last year’s presidential election and Mr Trump’s first few months in office, these transformations have come at the expense of the many ordinary Americans who feel left behind by globalisation and the digital economy. Highlighting a welcome fall in


unemployment and rise in wages, the authors of a new McKinsey Global Institute report point out that these indicators can distract from the bigger picture. Tens of millions of workers are struggling to make it in America, they say, and even a full- time job does not guarantee a “decent” standard of living. The report, Making it in America, considers


how the US can regain its competitive edge in manufacturing by exploiting changes in technology and value chains to compete for new market opportunities, at the same time as grappling with a two-tier labour market and finding ways of making economic growth more inclusive. Manufacturing, the


authors say, remains a pillar of the economy – the US is still the world’s second-largest manufacturing nation, after all – and it is the primary industry in some 500 US counties. The sector drives 30 per cent of the country’s productivity growth, 60 per cent of its exports, and 70 per cent of private-sector spending.


its R&D


Real value added is at 10- to 20-year lows for a range of US manufacturing industries1 Index: 100 = 1980


100 120 140 160


80


McKinsey Global Institute, Making it in American %


Compound annual growth rate


Vehicles and heavy machinery 156


Locally processed goods


Resource-intensive commodities


Basic consumer goods 78 –0.7 –1.0 –2.6 1980– 1990– 2000–


145 118


1.3 1.0 0.5 1.0 0.6 0.1 –0.3 –0.8 relocateglobal.com | 21 –0.9 GDP


However, the US has lost market share


not only to lower-cost economies but also, in knowledge-intensive industries, to other advanced economies. There are now 30 per cent fewer US manufacturing firms than there were in 1997, and around a third fewer manufacturing jobs. But it’s not all doom and gloom:


the report finds that the diversity of the US industrial base presents great opportunities for growth, and its authors are optimistic that demand, global value chains and technology are evolving in ways that play to US strengths.


Seizing opportunity Among the “promising factors” for US manufacturers seeking opportunities for global growth, say the McKinsey report’s authors, are:


• Rising consumption, and rising wages, in emerging markets


• Global value chains shifting as firms emphasise serviced-based business models and proximity to markets, suppliers and innovation partners


• The new world of digital manufacturing, which represents a shift towards high productivity and the agility needed to meet fragmenting demand. Technologies like the internet of things, analytics, advanced robotics, and 3-D printing are transforming factory floors into flexible, self-maintaining operations


Bill Graebel, CEO of Graebel Companies, believes that the “renaissance” in American manufacturing represents a “terrific opportunity” for the US economy. However, he says, some constraints need to be overcome if the sector is to reach its full potential in becoming a predominant global source of manufactured goods that


Revitalizing manufacturing in America


Manufacturing plays an outsized role in national competitiveness Manufacturing as % of US total, 2016 or latest Employment


Infographic: Manufacturing


Net capital stock


Patents Exports R&D spending


9


12 The future of production is digital


As global demand rises and fragments, manufacturers need agility—and technologies such as analytics, the Internet of Things, advanced robotics, and 3-D printing can provide it. Optimized, autonomous factories will connect with supplier networks in a fully digitized and tightly integrated value chain. Real-time data will run from product design through customer usage, enabling new services and business models.


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55


60


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