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Video: Paul Hodges discusses the impact on manufacturing of the New Normal
Four major transformations are taking place in consumer markets as we transition to the New Normal:
- Improving water availability
- Improving food production
- Increasing life expectancy
- Reducing carbon footprint
These are the great opportunities for future growth, if our economy can be adapted to serve their needs. At the moment, it is being driven in second gear as policymakers instead try to turn back the clock to the days of the economic ‘SuperCycle’ between 1982-2007.
The Western baby boomers (those born in 1946-1970) are the largest and richest generation that the world has ever seen. As they moved into their peak consumption period between the ages of 25 and 54 years, so the global economy boomed. The US suffered only 16 months of recession in the 25 years between 1982 and 2007. There was always ‘pent-up demand’, as more and more Boomers were entering the age group.
But since 2001,the oldest Boomers have been entering the New Old 55+ age group, when the kids have left home and people typically start to spend less. And the Boomers have to spend less, and save more, because they also have the longest life expectancy in history.
Today, we need to refocus on the megatrends that will drive future demand growth. In the fields of water and food, we should focus on reducing the amount of waste, and the output that is lost when product is moving to market. In developing new products and services for the over-55s,we should focus on core needs, such as food, water, health, shelter and mobility.
In turn, this will enable us to ‘do more with less’. We will reduce carbon footprint and ensure that our output can be afforded by the maximum number of people.
These changes in market drivers will have a profound impact on how, and where, products are manufactured.