One transition common to most world cities, especially in the developed world, is the shift from industrialisation to post-industralisation. As service economies became more profitable, “making stuff” became less fashionable. In 1960, manufacturing accounted for 30 per cent of London’s wealth; by 1990 it was less than 11 per cent. Shad Thames, an area once known for its warehouses and docks, now plays host to Italian chain restaurants and “I ♥ London” memorabilia shops.
Of course, London’s move away from manufacturing has a lot to do with space and money: in a city where you’re short on both, it makes sense to move your loud, large equipment elsewhere and seek a location where overheads, including wages, are cheaper.
But new technologies might be changing things yet again. Last year, The Economist ran a special report on what they called the “third industrial revolution”1. It argued that, in an age of complete mechanisation and technologies like 3D printing, labour costs were dropping and the factories of the future will be small, “squeaky clean”, and “almost deserted”.
As a result, “maker spaces” (sometimes called “hacker spaces” or “labs”) offering space and tools for production are opening up in cities around the world. This month, the South London Maker Space opened up; in Paris, there’s Fabelier, ArtLab and La Pailasse. Groups that might once have been seen as crafters or hobbyists are now, thanks to new technology, producing small-run, marketable products.
- 1. Like all revolutions, this one will be disruptive. Digital technology has already rocked the media and retailing industries, just as cotton mills crushed hand looms and the Model T put farriers out of work. Many people will look at the factories of the future and shudder. They will not be full of grimy machines manned by men in oily overalls. Many will be squeaky clean—and almost deserted. Some carmakers already produce twice as many vehicles per employee as they did only a decade or so ago. Most jobs will not be on the factory floor but in the offices nearby, which will be full of designers, engineers, IT specialists, logistics experts, marketing staff and other professionals. The manufacturing jobs of the future will require more skills. Many dull, repetitive tasks will become obsolete: you no longer need riveters when a product has no rivets.
The revolution will affect not only how things are made, but where. Factories used to move to low-wage countries to curb labour costs. But labour costs are growing less and less important: a $499 first-generation iPad included only about $33 of manufacturing labour, of which the final assembly in China accounted for just $8. Offshore production is increasingly moving back to rich countries not because Chinese wages are rising, but because companies now want to be closer to their customers so that they can respond more quickly to changes in demand. And some products are so sophisticated that it helps to have the people who design them and the people who make them in the same place. The Boston Consulting Group reckons that in areas such as transport, computers, fabricated metals and machinery, 10-30% of the goods that America now imports from China could be made at home by 2020, boosting American output by $20 billion-55 billion a year.