The Dutch economy is doing well, even better than expected. In fact, we are at the top of the World Economic Forum's ranking of most competitive countries. This year, growth will exceed 3% - for the first time since 2007. The outlook for the near future is favourable. Growth is broad-based across all sectors and the pick-up in global trade is also ensuring that our exports continue to benefit. Business investment is also picking up. So far, not a cloud in the sky, or is there?
Dutch manufacturing is doing great
The NEVI PMI, a key economic index that measures the contract volume put away by Dutch industrial buyers in September, came in at 60. The second highest value ever!
Order intake from abroad (exports) came out at 60.3 and domestic demand at 59.3. Strong values indicating a full pipeline, at full occupied production capacity. The industry is currently short of people and materials. Resulting in further increasing delivery times and strong purchasing inflation (66.3). The latter is now being felt across the board. Few commodities fell in price in September. Oil, energy, plastics and food rose sharply in price, resulting in sharply higher selling prices. Shortages are even looming for Steel (6th consecutive month), Electronics and Chemicals (Isocyanates, Titanium Dioxide). These developments could start slowing down growth. But this is not yet the case. For now, demand for raw materials and for qualified personnel continues to rise. The latter is good for employment and public finances. But today's booming business requires smart solutions for the future.
With this historic growth, the risks to security of supply of raw materials and large price fluctuations are increasing again. Also, the tightness in the labour market is causing a shortage of well-qualified staff in the (short) term. We already see this in procurement, for instance, with the current strong demand for technical buyers. As a company, you can mitigate this in the short term by smart procurement and good contract management, limiting risks and extracting maximum value from your (suppliers). With good collaboration in the supply chain, this keeps you competitive.
'Smart Industry' acceleration needed
Global economic, technological and social developments demand acceleration towards Industry 4.0 just now. Standing still is not an option. Companies should invest in Smart Industry. Far-reaching digitalisation, the networking of products, services, machines and people and the deployment of new production technologies should be top priorities in every organisation. With 3D printing, for example, you can use raw materials smarter and robotisation increases labour productivity. With Internet of Things and big data, we can collaborate even better in the supply chain.
The Dutch government should also accelerate Smart Industry with concrete actions and structural funding. This renewal of industry is not only the main driver for the future earning power of the Netherlands but also an effective way to arrive at solutions for societal challenges in the fields of climate, energy, food, care and safety. A win-win-win for the whole of the Netherlands.
This blog was written by Erik van Assen. View his profile here.
(Courtesy of Professor Prof Dr Arjan van Weele).
