Cambridge professor warns research will suffer without local factories

Cambridge University innovation professor Tim Minshall says countries that give up manufacturing risk weakening their research and development capabilities. ERR reports that he rejects the idea that moving factories to countries with cheaper labour is a natural sign of economic progress.

Minshall said the view that economies develop in a simple progression from agriculture to industry and then services was too simplistic. A country may shift its focus over time, but it should maintain a balance in its long-term interests, even when that conflicts with companies’ focus on short-term profits.

He pointed to the “smile curve” model devised by Acer founder Stan Shih. It divides a product’s value chain into design, manufacturing, and sales and customer support. The model places research and sales at the high-value ends of the curve, while manufacturing sits at the bottom, where profit opportunities are narrower.

Although Shih acknowledged that the model was an oversimplification, politicians and economists adopted the idea that companies should focus on design and move factory work abroad. Minshall said this overlooks how physical engineering supports development.

When production is moved away, the connection between development, design and making a product can break down, Minshall said. If a factory is thousands of kilometres from its designers, the feedback needed to refine a product may be lost, despite modern communications.

Minshall also warned that losing local manufacturing means losing expertise. Without workers able to make products and capable suppliers, he said, the sector can gradually decline.