Transcript Test

WHAT GLOBALISATION MEANS
FOR MANUFACTURING
The changing shape of UK manufacturing
conference
22 October 2014
Jennifer Ribarsky
National Accounts Division, OECD
Introduction
• Short general overview of the phenomenon
of globalisation
• Overview of global value/production chains
• What is manufacturing?
• Future work
2
Increasing globalisation apparel, cars,
toys, planes, electronics…
Wing box: Mitsubishi Heavy Industries (Japan)
Wing ice protection: GKN Aerospace (UK)
Centre fuselage: Alenia Aeronautica (Italy)
Escape slides: Air Cruisers (USA)
Rear fuselage:
Boeing South Carolina (USA)
Vertical Stabiliser: Boeing
Commercial Airplanes (USA)
Forward fuselage:
Kawasaki Heavy Industries (Japan)
Spirit Aerosystems (USA)
Lavatories:
Jamco (Japan)
Doors & windows:
Zodiac Aerospace (USA)
PPG Aerospace (USA)
Flight deck seats:
Ipeco (UK)
Raked wing tips: Korean Airlines
Aerospace division (Korea)
Horizontal Stabiliser:
Alenia Aeronautica (Italy)
Centre wing box:
Fuji Heavy Industries (Japan)
Aux. power unit: Hamilton
Sundstrand (USA)
Passenger doors:
Latécoère Aéroservices (France)
Cargo doors: Saab (Sweden)
Prepreg composites:
Toray (Japan)
Landing gear: Messier-Dowti (France)
Electric brakes: Messier-Bugatti (France)
Tires: Bridgestone Tires (Japan)
Engines: GE Engines (USA),
Rolls Royce (UK)
Engine nacelles: Goodrich (USA)
Tools/Software: Dassault Systemes (France)
Navigation: Honeywell (USA)
Pilot control system: Rockwell Colins (USA)
Wiring: Safran (France)
Final assembly: Boeing
Commercial Airplanes (USA)
3
Source: Rivoli (2005), WTO (1998), Feenstra (1998), www.newairplane.com, Linden et al. (2009)
Industry’s share of total value added
Source: OECD, Factbook, 2014
4
Global production arrangements
•
•
•
•
Global value chains
Fragmentation of production across borders
Initiated by lead entity, the principal
Principal exerts a certain amount of control over
the process
• Tasks may be performed by an enterprise’s own
affiliates or through independent contractors
5
Simple global value chain
Supply chain management activity
FIGURE 1 Illustration of a simple supply chain
Source: U.S. International Trade Commission compilation
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Global production (1)
Manufacturing services on physical
inputs owned by others
Material inputs
Principal
(domestic
economy)
turnover
Material outputs
production
cost
Processing fee
Processor
(abroad)
= information
= products
= money
Global production (2)
Manufacturing services on physical
inputs owned by others
Principal
(domestic
economy)
turnover
Material inputs
Processor
(abroad)
Processing fee
production
cost
= information
= products
= money
Material outputs
Global production (3)
= information
= products
= money
Principal
(domestic
economy)
turnover
production
cost
Blueprints of
production
Contract
producer
Material outputs
(abroad)
Material inputs
production
cost
Global production (3)
= information
= products
= money
Trader or
Manufacturer?
Principal
fee or purchase
of products?
(domestic
economy)
turnover
production
cost
Blueprints of
production
Contract
producer
Material outputs
(abroad)
Material inputs
economic
ownership of material
inputs?
production
cost
Industrial Classification
• Industrial classification not designed to capture the global
manufacturing model very well
• Industrial Classification (ISIC rev. 4 and NACE rev 2)
provides guidance on outsourcing
• Manufacturers can outsource part of or fully the
physical transformation process
• However, if they outsource fully the physical
transformation process they are classified to
manufacturing if and only if they own the raw material
inputs.
What’s included in Manufacturing
Sector?
• Traditional view…
• Units engaged in the mechanical, physical, or chemical
transformation of materials, substances, or components
into new products. Often described as plants, factories,
or mills…
View From 30,000 feet:
Factoryless goods producer
• When we eliminate ‘smokestacks’ and
‘production workers’ as classification
characteristics units appear to have similar
characteristics of Wholesale/Retail Trade.
• ISIC defines wholesalers and retailers as buying
and selling goods without transformation of the
goods
• But are FGPs really traders?
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iPhone Study
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Future work for classification
• UNECE Task Force on Global Production (TFGP)
recommends that…
– Factoryless Good Producers (FGPs) be classified as
manufacturers
– Reviewed by Advisory Expert Group on National
Accounts (agreed that FGPs should not be classified
as traders; should be identified as a separate subset
of manufacturers)
– However, not consistent with current ISIC guidelines
– Recommend at least Flagging FGPs within trade so
that we can better track these activities
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UK Jobs in “Manufacturing”?
(millions)
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A ‘vertical’ view of UK manufacturing?
17
Expert Group on Extended SU tables
•
•
To create an integrated economic accounting framework for globalisation
More detailed SU tables:
– Imports
•
•
With all products at fob and separate column for residents expenditure abroad
Broken down by firm characteristics – and used to inform import flow tables
– Industries
•
More heterogeneity: Foreign/Domestic, Export/non-export, S/M/L
– Exports
•
Broken down by firm characteristic
–
•
In the export column but also as an ‘of-which’ of output
With non-residents expenditure and re-exports separately identified
– With transparent adjustments for some non-observed items (e.g. own account agricultural
production)
– Jobs by industry row
– Emissions by industry row
– With new rows for property income flows: interest, distributed income of corporations,
reinvested earnings on FDI
– And, for BEPS: current taxes on income, wealth etc
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Use Table
Changes
Industry 2
Industry 1
of which nonof which
in
Domestic
Foreign
Domestic
Foreign
Vauables Exports
HHFC GGFC GFCF
residents
re-exports
Inventori
NonNonNonNonExporter
Exporter
Exporter
Exporter
expenditure
es
Exporter
Exporter
Exporter
Exporter
Exporter
Non-Exporter
Exporter
Domestic
Non-Exporter
Exporter
Foreign
Industry
Non-Exporter
2
Exporter
Domestic
Non-Exporter
Taxes on Products
Subididies on Products
Industry
1
Foreign
Total Domestic intermediate
Consumption
Total imports
Total intermediate
Consumption
Value-Added
With exports
broken down,
ideally, by
destination (main
partner
countries/regions)
of which
Mixed Income
Compensation of Employees
Gross Operating Surplus
Other Taxes on Production
Other Subsidies on Production
Total Output
of which
own-account production of software
own-account prodduction of R&D
other own-account production
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Import Use table
Industry 1
Industry 2
of which:
Changes in
Foreign
Domestic
Foreign
Domestic
Residents
HHFC
GGFC GFCF
Vauables Exports
expenditure
Inventories
NonNonNonNonExporter
Exporter
Exporter
Exporter
abroad
Exporter
Exporter
Exporter
Exporter
Industry 1
Industry 2
Total imports
Taxes/Subsidies on Imports
With separate tables made
available broken down by main
country or region of origin
‘groupings’
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Supply Table
Memorandum item
Industry 1
Industry 2
Total
Imports
Foreign
Domestic
Foreign
Domestic
Domestic
Total Supply
NonNonNonNon- Supply at Basic F.O.B
Exporter
Exporter
Exporter
Exporter
Exporter
Exporter
Exporter
Exporter
Prices
Taxes and
of which
Subsidies import taxes
on Products / subsidies
Exporter
Non-Exporter
Exporter
Domestic
Non-Exporter
Exporter
Foreign
Industry
Non-Exporter
2
Exporter
Domestic
Non-Exporter
Total
Industry
1
Foreign
of which
own-account production of software
own-account prodduction of R&D
other own-account production
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Extensions?
Industry 1
Industry 2
Foreign
Domestic
Foreign
Domestic
NonNonNonNonExporter
Exporter
Exporter
Exporter
Exporter
Exporter
Exporter
Exporter
Property income payments - to abraod
of which
Interest
Distributed Income of Corporations
Reinvested Earnings on FDI
Investment Income Disbursements
Property
income
receipts
– from
abroad
Property
Income
payments
- to abroad
of which
Interest
Distributed Income of Corporations
Reinvested Earnings on FDI
Investment Income Disbursements
Current taxes on income and wealth
Employment
Employees
Hours worked
Co2 emissions
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Thank you for your attention!
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Increasing globalisation
Significant value-added is generated by foreign affiliates, with a large
share of value-added repatriated to parents as property income:
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Increasing globalisation
Jobs in the business sector (ISIC Rev.3, 10 – 74) sustained by
foreign final demand
As a % of total business sector employment
Source: OECD, Science, Technology and Industry Scoreboard, 2013
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