The cost position is no longer a moat
For two decades, regional manufacturers competed primarily on labour cost and proximity to European markets. Both advantages remain relevant, but neither is defensible on its own: cost gaps narrow, and proximity is only valuable when delivery is predictable.
Differentiation is an operating decision
Differentiation in industry is rarely a marketing exercise. It is built through engineering capability, quality systems, traceability, responsiveness and the ability to co-develop with customers. Each of these is an investment with a measurable payback.
Three moves that change the position
First, move up the value chain within existing customers rather than chasing new ones. Second, invest in measurement — firms cannot improve quality or productivity they do not track. Third, treat digital capability as industrial infrastructure, not an IT project.
What this means for policy
Industrial policy should reward capability, not only capacity. Instruments that support certification, engineering talent, testing infrastructure and supplier development have a longer half-life than generic investment incentives.