The new measure of competitiveness

For decades, industrial strategy largely revolved around one guiding principle: efficiency.

Companies optimized supply chains, reduced inventory, concentrated production in specialized locations and built global networks designed to deliver products faster and at lower cost. The system worked remarkably well for many years. Efficiency became synonymous with competitiveness. But recent events have exposed the limitations of that model. From pandemic-related disruptions to geopolitical tensions and, more recently, the instability that affected parts of our region, businesses and governments alike have been reminded of a fundamental truth: systems designed solely for efficiency can become vulnerable when conditions change. What matters in times of disruption is not only how efficiently a system operates, but how successfully it adapts.

This is particularly true in the energy sector, where reliability is not merely a commercial consideration. It is a national imperative.

The recent regional crisis provided an important reminder of this reality. Understandably, much of the attention focused on energy markets, shipping routes and security concerns. Yet another lesson quietly emerged. The ability to sustain critical operations depends not only on physical infrastructure, but also on the availability of spare parts, local expertise, trusted logistics networks and resilient supply chains that can continue functioning when external conditions become uncertain.

In other words, resilience is no longer a defensive concept. It is becoming a competitive advantage.

Perhaps the most significant shift taking place today is that countries and industries are increasingly seeking balance between efficiency and resilience. This does not mean abandoning globalization or attempting to manufacture everything domestically. Quite the opposite. Modern economies will remain deeply interconnected. However, nations are becoming more deliberate about identifying strategic capabilities that must be accessible when they are needed most.

Saudi Arabia’s industrial transformation reflects this thinking.

The Kingdom’s investments in industrial cities, logistics infrastructure, advanced manufacturing, local supplier development and workforce capabilities were never solely about economic diversification. Through Vision 2030, Saudi Arabia has been building the foundations of a more resilient economy, one capable of adapting to changing global conditions while remaining integrated with international markets. The National Industrial Strategy similarly seeks to strengthen industrial resilience, expand local manufacturing capabilities and position Saudi Arabia as an integrated regional manufacturing hub.

What is increasingly apparent is that resilience cannot be created in response to a crisis. It must be built long before disruption occurs.

Some of the most successful examples across the region share this common characteristic. Investments in ports, logistics corridors, industrial zones and manufacturing capabilities were made years before recent disruptions tested them. Those investments created options. They provided flexibility. Most importantly, they allowed organizations to respond more effectively when conditions became less predictable. This is an important lesson for all of us. Resilience is not an emergency measure. It is a long-term investment.

Equally important is understanding that resilience extends beyond products and facilities. It also encompasses relationships and trust.

When a utility operator, infrastructure developer or industrial customer receives a commitment that critical equipment will be delivered on a certain date, entire investment decisions, project schedules and growth plans are often built around that commitment. When disruptions occur, the consequences go far beyond delays or rising costs. Confidence begins to erode.

The true cost of supply chain disruption is therefore not measured solely in financial terms. It is also measured in lost trust.

Trust remains one of the most underappreciated assets in industrial development. It enables investment, encourages long-term partnerships and allows projects of strategic importance to move forward with confidence. In an increasingly uncertain world, resilient supply chains play a critical role in preserving that trust.

This is one reason why localization itself is evolving. Historically, localization was often viewed through the lens of percentages, measuring how much content was produced domestically or how many jobs were created locally. These remain important indicators, but they no longer tell the whole story.

Today, successful localization is becoming less about individual factories and more about entire ecosystems.

A manufacturing facility alone does not create industrial resilience. Around it must exist suppliers, service providers, logistics capabilities, technical expertise, training institutions and long-term partnerships. When these elements work together, they create something far more valuable than local production. They create capability.

Across Saudi Arabia, there are encouraging examples of this approach taking shape. Industrial facilities are increasingly combining manufacturing, service capability, technical training and supplier development within broader industrial ecosystems. At the Siemens Energy Dammam Hub, for example, manufacturing activities have evolved alongside efforts to develop local suppliers, strengthen technical capabilities and expand training opportunities, reflecting a broader industry trend toward deeper and more integrated localization. The facility itself is positioned not simply as a production site, but as a manufacturing, service and training hub that contributes to industrial skills development and local capability building.

What makes these efforts especially significant is that they are designed not only for domestic demand, but increasingly for regional needs as well.

This points to another important lesson from recent years. Industrial competitiveness is becoming increasingly regional in nature.

No country can build resilience alone. Supply chains, logistics networks and industrial capabilities will continue to operate across borders. The most successful industrial hubs of the future will not be those that isolate themselves from the world. They will be those that serve as trusted nodes within broader regional ecosystems, combining global connectivity with local capability.

Saudi Arabia is particularly well positioned to play such a role. Its strategic location, expanding logistics infrastructure, growing industrial base and ambitious economic reforms provide a strong foundation for becoming a center not only of consumption, but of manufacturing, services and industrial expertise. Vision 2030 has accelerated this transformation, creating opportunities to develop industries that are globally connected while remaining locally rooted.

Ultimately, the recent Gulf crisis reinforced an important lesson. Resilience cannot be purchased when it is needed. It must be cultivated through years of investment, partnership and capability development.

As the global economy continues to evolve, the countries that thrive will not necessarily be those with the lowest costs or the shortest supply chains. They will be those capable of maintaining trust, adapting to disruption and delivering when reliability matters most.

In that sense, resilience is no longer simply an industrial objective. It is becoming the foundation of competitiveness itself.