Earlier this month, Deloitte Touche Tohmatsu Limited (Deloitte Global) and the Council on Competitiveness (Council) release the 2016 Global Manufacturing Competitiveness Index report. The most interesting highlight from the report is that by 2020, the U.S is expected to the most competitive manufacturing nation with China moving to the number two spot.
The study used an in-depth analysis of survey responses from over 500 chief executive officers and senior leaders at manufacturing companies around the world. Respondents were asked to rank nations in terms of current and future manufacturing competitiveness.
Other major highlights of the 2016 Global Manufacturing Competitiveness Index (GMCI) include:
- The U.S is highly competitive in terms of the share of high skill and technology contribution to exports and labor productivity as measured to gross domestic product (GDP) due to continued heavy investment in talent and technology.
- Among the BRIC nations, manufacturing executives expressed optimism for only China and India by 2020. The other three – Brazil, Russia and India – have seen continuous declines in the study’s rankings over the past six years, despite aspirations that they may emerge as manufacturing goliaths.
- Brazil’s political uncertainty, Russia’s geopolitical activities and impact from the slide in global crude oil prices, matched with India’s challenged economic and policy actions around infrastructure and investments, have likely triggered the decline from the BRIC’s manufacturing competitiveness peak.
- The U.S. stands out as the anchor for the North American region with the highest level of manufacturing investments, a strong energy profile, and high-quality talent, infrastructure and innovation. Canada’s low trade barriers, tariff-free zone and investments in sectors key to its growing high-tech manufacturing future, along with Mexico’s 40 free trade agreements, low labor costs and close proximity to the U.S. round out the region.
China moving to the number two spot for manufacturing isn’t surprising given the meteoric rise of worker wages which has increased at a 13.7 percent annual rate, or close to six times the overall inflation rate according to the U.S Department of Commerce:
While China’s rapid wage growth is not the norm in many other countries, manufacturing wage growth in a number of countries has easily outpaced wage growth in the United States—and may well surprise manufacturers who are not expecting such growth. Between 2000 and 2013, annualized manufacturing wage gains were, for example, 6.5 percent in Brazil, 5.4 percent in the Philippines, 6.7 percent in South Korea, and 7.9 percent in Poland
“Made in the USA is making a big comeback,” says Deborah L. Wince-Smith, president and CEO of the Council on Competitiveness. “Contrary to the view that manufacturing is dirty, dumb, dangerous and disappearing, our study points to a manufacturing future characterized by innovation-driven growth…The manufacturing rebound in America is all about advanced manufacturing, not bringing low-wage, low-level manufacturing back. That will make us competitive at the high-end of advanced manufacturing where jobs are fewer and require a high level of skill.”
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