IronMagazine №3 (17) 2017 12 money makes money What is driving the interest in digital financial instruments? goes online 20 tHe tecHnoloGy drivinG cHanGe www.metalloinvest.com How innovation impacts the demand for traditional industry materials 26 Giants in metal armour Can skyscraper construction survive without metal? THE DIGITAL IM SPEAKS AND MOVES ON 2 You can comment on Great Iron Magazine articles online at re-miGration How diGital innovation and tHe efforts of developed Governments are HelpinG tHe process of ‘resHorinG’ WWW.metalloinvest.COM IRON MAGAZINE №3 (17) 2017 1 №3 (17) 2017 Founder: Management Company METALLOINVEST LLC Cover story vIew Into the Future Editorial office: 02 | Great re-migration 20 | The technology driving change 28, Rublevskoye Shosse, Moscow, 121609, Russia How digital innovation and the efforts of How innovation impacts the demand for Tel.: + 7 (495) 981-5555, ext. 7574 developed governments are helping the traditional industry materials Fax: + 7 (495) 981-9992 process of ‘reshoring’ [email protected] Industry InternatIonal experIenCe 26 | Giants in metal armour Project Manager 10 | Eternal values Can skyscraper construction survive without Dmitry Kravchenko The complete history of protectionism from metal? [email protected] English Kings Editor-in-Chief ManageMent Anton Troshin BusIness plan 30 | Risky business [email protected] 12 | Money makes money What drives innovation – technology or What is driving the interest in digital humans? The issue was approved for printing financial instruments? on December 20, 2017 eMployees Circulation: 999 copies FoCus group 32 | Success: the right place, the Printed by Union Print LLC, 2, ul. Okskiy Syezd, 16 | To find and neutralise right time Nizhny Novgorod, 603022 Iron Magazine asks the experts – how What skills will you need in the digital future? The content of the issue may strictly must cryptocurrencies be not be used without the consent regulated? suMMary of the Editorial office. 34 | Theatre. Version 20.17 Audience: 16+ Directors are increasingly using technology in their productions. Does the audience really benefit? 36 | The new old Publisher: LyudiPeople, Group of Companies Why people in the 19th century were scared of Office 18, Stroenie 1, 21, Zvyozdny Bulvar, ‘steam’ innovations, and what came out of it Moscow, 129085 Tel.: +7 (495) 988-18-06 photo gallery vashagazeta.com 38 | Above the clouds E-mail: [email protected] The world’s best skyscrapers, all in IM’s gallery Director General: Vladimir Zmeyushchenko Chief Editor: Evgeniy Peresipkin Executive Editor: Vilorika Ivanova Designer: Natalia Tikhonkova Photo Editor: Evgeniy Krasnov avaIlaBle Colour Corrector: Aleksandr Kiselev Production Director: Oleg Merochkin on the Photo: AFP, AKG, East news, Getty, app store Shutterstock, ТАSS, Russia today 2 COVER STORY IRON MAGAZINE №3 (17) 2017 3 Great re-migration ot so long ago, the main trend in The new term ‘reshoring’ has become one of the most common buzzwords in recent the manufacturing years. It refers to Western corporations with offshore production facilities – mainly industries of Julia in Asia – relocating back home. Among the main reasons for this re-migration are developed countries Gromadskaya changes to production costs abroad and the protectionist domestic policies. New was offshoring, opportunities brought about by the development of digital technology also have their or outsourcing, role to play in this process. Nproduction. While the brains of the companies remained in their homeland, business owners sourced labouring hands in more affordable countries. As is well known, Asia, and China in particular, benefited from this trend. Since the 1960s, in places like the USA and Western Europe the percentage of GDP accounted for by manufacturing has declined significantly – in some cases, it halved or more. However, after the 2008 crash, which only highlighted the imbalance of power in the leading world economies, Western governments began to look for new recipes for their economic wellbeing. Time To move Nobody believed that the process of reindustrialisation would be easy, but it already seems to be on a steady course. “Interest is fuelled by the complex growing role of global value chains, and higher competition amongst developing countries in those industries and subsectors of the global market, which, until recently, were dominated by developed countries,” writes Vladimir Kondratiev, Head of the Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO) in his article for World Economy and International Relations. In these conditions, governments play a key role in relation to domestic business with production facilities abroad. The administration of the current US President, Donald Trump, who rose to power with the simple slogan ‘Make America Great Again’, is often used as an example. However, his predecessor, Barack Obama, also commented that it was necessary “to stop encouraging entrepreneurs who move jobs abroad.” During the Obama 4 COVER STORY IRON MAGAZINE №3 (17) 2017 5 according to the government, relates American Free Trade Agreement intertwined. What is protectionism? to the product itself, rather than the (NAFTA) negotiations, the US Protectionist trade policies are a set place in which it is finally assembled. administration called for a change in of governmental actions that protect In 2009, Congress enacted the the terms, demanding that American domestic producers from international American Recovery and Reinvestment products should be used more widely competition. In the narrow sense, it Act (known as the Recovery Act), in vehicle manufacturing in the is an issue related to customs policy, allocating substantial funds as a United States of America, Canada and and in a broader sense, it is a set of stimulus package (about $787 billion) Mexico. This included various types of measures protecting the interests of and outlining specific requirements metal (like steel). The US Secretary of domestic companies to encourage for localisation. Its provision imposed Commerce, Wilbur Ross, defended the and stimulate production in a specific a general requirement that any public demands by stating that the measure country. building or public works project would promote production of vehicles Protectionism is not a new idea. funded by the new stimulus package using parts produced by NAFTA Leading European states have relied must use only iron, steel and other members, rather than in Asia. on it since the 18th century, while manufactured goods ‘made in the As this case suggests imposing America has used protectionist USA’; and that the funds will always be defined barriers, this approach looks policies since the end of the Civil sufficient, if construction projects are almost like protectionism. Along War (i.e. the second half of the 19th in compliance with these criteria. with reshoring, this is one of the century). In modern history, the US Walmart has promised to purchase American products for an additional $250 billion These kinds of initiatives are main issues currently being tackled Smoot-Hawley Tariff Act of 1930, commonplace today. Recently, media by the most prominent economists, increasing tariffs on over 20,000 reported that during the North especially since the issues are so imported goods, marked a turning administration, tax rebates were has also made some noise. This policies’ do not always mean returning introduced for businesses investing was a major development, because home. Quite often it is a matter of in domestic industry. Trump is previously Silicon Valley giants lived by moving production closer to the end continuing this theme, but he also the formula of ‘Designed in California. customer. This is especially true introduced a tax on companies that Assembled in Asia’. for companies producing everyday keep their manufacturing abroad, but In Europe, reshoring is not goods, like the Spanish Inditex, a sell their products domestically. yet high on the agenda, since it is large fashion chain with stores like In 2013, Boston Consulting Group not necessary relevant for all EU Zara, Massimo Dutti, Pull and Bear, (BCG) found that the executives of every countries. But governments are known Oysho, Uterque, Stradivarius, and second American corporation with a to be looking into it. “In the United Bershka. Inditex first announced that turnover of $1 billion were planning to Kingdom, reshoring is considered its products would be produced in both relocate their production facilities from a tool for balancing the structure of Asia and Spain. Then it added Portugal China or were looking into doing so. the economy. In Germany, it is being and Morocco to the list. Now, the According to the Reshoring Initiative, factored into the future development range of locations of the company’s since 2010, America has brought more of the country’s manufacturing sector. production facilities has become even than 300,000 jobs ‘back home’; and In Italy, it is the main idea behind the wider, including Russia as well. already 940,000 new industrial jobs state certification programme ‘100% have been created. Made in Italy’, helping companies False Mirror To paraphrase a famous saying return production ‘back home’. In When it comes to the remigration of by Lenin, in the business of reshoring, addition, the Ministry of Industrial industrial facilities, localisation has the upper classes want, and the Renewal in France recently adopted a big part to play.