Manufacturing is one of the most telling ways to judge a countries global standing and it will remain the strongest differential for many years to come as countries are rated on their competitiveness.
With this in mind, it is interesting to look at a new study on future global competitiveness, by Deloitte Global and the U.S. Council on Competitiveness, that has predicted that the U.S. is shaping up to replace China as the most competitive manufacturing nation in the world by 2020.
According to Craig Giffi, a leader in the Deloitte US consumer & Industrial products group, and a co-author of the report- “Manufacturing competitiveness, increasingly propelled by advanced technologies, is converging the digital and physical worlds, within and beyond the factory to both customers and suppliers, creating a highly responsive, innovative, and competitive global manufacturing landscape”
Though emerging markets continue to pile pressure on the leaders, the findings reflect the strength of the manufacturing powerhouses of the 20thcentury, with the United States, Germany, and Japan holding three of the top four positions currently.
Giffi remarks on this by remarking, “If you add in Singapore and Canada, which are also part of the top ten most competitive manufacturing nations, it really emphasises the ‘back to the future’ theme of these research findings. It also suggests that the BRIC countries (Brazil, Russia, India, and China) – with the exception of China – seem to have lost their allure as highly competitive manufacturing locations today, based on the views of executives responding to this study. India, however, is projected to move back up to the top five in the world, demonstrating executive optimism for the country in the future.”
As well a ranking the countries, there were also findings in the report that highlighted the principal drivers of manufacturing competitiveness. Talent was the leading driver, with access to skilled workers widely regarded by executives as the most important factor.This was followed closely by the cost of wages and materials. The third most important driver was Productivity of the workforce, with the availability of a quality local supplier base coming in at fourth.
Talent coming out as the most important aspect of global manufacturing competitiveness is nothing new. Craig Giffi’s partner at Deloitte and co-author of the report, Tim Hanley, has stated that the findings on talent are “consistent with the sentiments of senior executives that we have surveyed worldwide over the years. It underscores the changing nature of skills needed as manufacturers increasingly adopt advanced technologies to innovate their future products, services, and business models.”
The 2016 Global Manufacturing Competitiveness Index forecasts that the top eleven countries will remain relatively consistent between now and 2020, but there will be some exchange of rankings.
Mexico is renowned for its electronic manufacturing and Guadalajara’s capital city, Jalisco, is regarded as the hub of this industrial sector. Over $14 billion has been invested over the last 15 years in attempts to strengthen Mexico’s manufacturing sector and it looks as if efforts will continue to be made to ensure efficiency and growth.
South Korea is perhaps most known in manufacturing for its biopharmaceutical industry. 2010 saw the South Korea government provide both capital and regulatory support in attempts to boost the industry. They have also set an ambitious yet at this rate achievable target for Korean pharmaceuticals to capture 22% of the global biosimilars market share by 2020.
Samsung is one of the prominent players in the sector, and it announced earlier this month that is plans to open its third biologics manufacturing plant in the country.
Companies should no longer only consider India as a supplier of software and call centre services. India is the third-largest economy in purchasing power parity after the U.S. and China and additionally it has a large population of engineers and factory workers. Its intellectual property is also widely respected, and it is easy to find plenty of English-speaking managers there.
One example of a large multinational finding India attractive is Abbott Nutrition, who recently built a manufacturing facility in Jhagadia, Gujarat, in order to compete in India’s large growing nutrition market.
19% of Japan’s GDP comes straight from manufacturing. Recently all three subsectors of the manufacturing industry—consumer goods, intermediate goods, and investment goods—saw substantial growth.
The country also has high hopes for its aviation industry, with growth expected. One recent milestone in the sector saw Mitsubishi Aircraft Corp’s new jet embark on its maiden flight, fifty years after the country last introduced a new passenger plane.
Germany is looking to guide its leadership in industrial production research and development toward “smart production” and it plans to do so with such concepts as ‘INDUSTRIE 4.0’, which is aiming to establish Germany as a lead market and provider of advanced manufacturing solutions.
The country plans to build on its strong manufacturing, in particular automation and software-based embedded systems to reach become an even stronger global powerhouse by 2020.
Shenzen, a large manufacturing centre near Hong Kong, is a prime example of China’s continued growth in the manufacturing sector. Building on the success of its nearby plants, it is ranked fourth in China for its industrial output. Machinery and transportation equipment are seen as the core products of Chinese exports, as proven by China’s leading export sector for successive 11 years from 1996 to 2006. Unfortunately, with a recent cut in interest rates though, it is very possible that China will struggle to hold on to its place as the world’s leading manufacturing sector in 2020. Cue, the proposed number 1…
By 2020 the U.S will overtake China to earn the top spot for the most competitive nation in the world.
The reason for this ranking, according to Deloitte and the U.S. Council on Competitiveness, is due the country’s investment in research, technology, and innovation.
“Manufacturing competitiveness, increasingly propelled by advanced technologies, is converging the digital and physical worlds, within and beyond the factory to both customers and suppliers, creating a highly responsive, innovative, and competitive global manufacturing landscape,” says Craig Giffi.