2013 Global Manufacturing Competitiveness Index: CEOs See Emerging
Nations Surge as U.S., Germany and Japan Face Changing Game
WASHINGTON, Nov. 16, 2012 /PRNewswire/ -- Over the next
five years, 20th-century manufacturing stalwarts like
the United States, Germany and Japan will be challenged to maintain their
competitive edge against emerging nations such as China, India
and Brazil, according to the "2013
Global Manufacturing Competitiveness Index" (Index) from Deloitte
Touche Tohmatsu Limited's Global Manufacturing Industry group and
the U.S. Council on Competitiveness.
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The Index confirms that the landscape for competitive
manufacturing is in the midst of a "massive power shift" – based on
an in-depth analysis of survey responses from more than 550 chief
executive officers (CEOs) and senior leaders at manufacturing
companies around the world.
The Index lists the United
States as the world's third most currently competitive
manufacturing nation, but ranks it fifth just five years from now,
only slightly ahead of the Republic of Korea. The three other
developed nations currently in the top 10 also fall in five years:
Germany drops from second to
fourth place, Canada slides from
seventh to eighth place and Japan
drops out of the top 10 entirely, falling to 12th
place.
Further, it finds that Germany's slide in competitiveness holds true
for several other European nations, including the United Kingdom, France, Italy, Belgium, the
Netherlands, Portugal,
Poland and the Czech Republic, which are all expected to
experience a dramatic decrease in their ability to compete.
Poland, for example, drops from
14th to 18th place on the Index, while the
United Kingdom drops from
15th to 19th place.
"America and Europe have
continued to watch emerging markets mature and become formidable
competitors over the past decade," said Craig Giffi, vice chairman, Deloitte LLP and
consumer and industrial products industry leader, who co-authored
the report and lead the research team.
Giffi points out that in five years key emerging nations are
expected to "vault forward" in the Index: Brazil jumps from its current eighth place
slot to third place and India
jumps from fourth to second place. China remains firmly in first place.
2013 Global Manufacturing Competitiveness Index
Current
competitiveness
|
Competitiveness in five years
|
Rank
|
Country
name
|
Index
score
10=High
1=Low
|
Rank
|
Country
name
|
Index
score
10=High
1=Low
|
1
|
China
|
10
|
1
|
China
|
10
|
2
|
Germany
|
7.98
|
2
|
India
|
8.49
|
3
|
United
States of America
|
7.84
|
3
|
Brazil
|
7.89
|
4
|
India
|
7.65
|
4
|
Germany
|
7.82
|
5
|
Republic
of Korea
|
7.59
|
5
|
United
States of America
|
7.69
|
6
|
Taiwan
|
7.57
|
6
|
Republic
of Korea
|
7.63
|
7
|
Canada
|
7.24
|
7
|
Taiwan
|
7.18
|
8
|
Brazil
|
7.13
|
8
|
Canada
|
6.99
|
9
|
Singapore
|
6.64
|
9
|
Singapore
|
6.64
|
10
|
Japan
|
6.60
|
10
|
Vietnam
|
6.50
|
11
|
Thailand
|
6.21
|
11
|
Indonesia
|
6.49
|
12
|
Mexico
|
6.17
|
12
|
Japan
|
6.46
|
13
|
Malaysia
|
5.94
|
13
|
Mexico
|
6.38
|
14
|
Poland
|
5.87
|
14
|
Malaysia
|
6.31
|
15
|
United
Kingdom
|
5.81
|
15
|
Thailand
|
6.24
|
16
|
Australia
|
5.75
|
16
|
Turkey
|
5.99
|
17
|
Indonesia
|
5.75
|
17
|
Australia
|
5.73
|
18
|
Vietnam
|
5.73
|
18
|
Poland
|
5.69
|
19
|
Czech
Republic
|
5.71
|
19
|
United
Kingdom
|
5.59
|
20
|
Turkey
|
5.61
|
20
|
Switzerland
|
5.42
|
21
|
Sweden
|
5.50
|
21
|
Sweden
|
5.39
|
22
|
Switzerland
|
5.28
|
22
|
Czech
Republic
|
5.23
|
23
|
Netherlands
|
5.27
|
23
|
Russia
|
5.04
|
24
|
South
Africa
|
4.92
|
24
|
Netherlands
|
4.83
|
25
|
France
|
4.64
|
25
|
South
Africa
|
4.77
|
26
|
Argentina
|
4.52
|
26
|
Argentina
|
4.58
|
27
|
Belgium
|
4.50
|
27
|
France
|
4.02
|
28
|
Russia
|
4.35
|
28
|
Colombia
|
4.01
|
29
|
Romania
|
4.09
|
29
|
Romania
|
3.98
|
30
|
United
Arab Emirates
|
3.93
|
30
|
Belgium
|
3.63
|
31
|
Colombia
|
3.85
|
31
|
Spain
|
3.63
|
32
|
Italy
|
3.75
|
32
|
United
Arab Emirates
|
3.58
|
33
|
Spain
|
3.66
|
33
|
Saudi
Arabia
|
3.46
|
34
|
Saudi
Arabia
|
3.57
|
34
|
Italy
|
3.45
|
35
|
Portugal
|
3.39
|
35
|
Egypt
|
3.45
|
36
|
Egypt
|
3.24
|
36
|
Ireland
|
3.03
|
37
|
Ireland
|
3.23
|
37
|
Portugal
|
2.87
|
38
|
Greece
|
1.00
|
38
|
Greece
|
1.00
|
Source: Deloitte and U.S. Council on Competitiveness -
2013 Global Manufacturing Competitiveness Index
"While several nations in the Americas will continue to show
significant manufacturing potency – with the United States, Brazil, Canada and Mexico all in the top 15 most competitive
nations five years from now – many advantages are tilting toward
Asia, which are expected to have
10 of the top 15 most competitive nations within the decade," said
Giffi.
Deborah L. Wince-Smith, president
and CEO of the U.S. Council on Competitiveness, views the perceived
decline of America and other developed nations as an alarming trend
requiring immediate action.
"We need to better understand the highly complex forces driving
the future of manufacturing and many of the structural changes
reshaping the global economy. Emerging nations are growing fast and
strong. Wise policies and practices could unleash American
strengths, turbo-charge our manufacturing engines, and raise
technology commercialization to new heights – driving U.S. economic
growth and job creation," she said.
"For any nation, manufacturing matters because it creates a
platform on which research and development can deliver new ideas,
products, and further advances in technology," said Joe Echevarria, CEO, Deloitte LLP. "As a country's manufacturing
capabilities become more advanced and the workforce becomes more
skilled, all stakeholders – the nation, its businesses and its
citizens – enjoy the economic benefits that result."
U.S. Still Boasts Technology Prowess
According to Wince-Smith, even though the United States is expected to slide in the
Index in five years, it is still a powerful competitor – one that
is poised to lead the technological transformation in
manufacturing.
"The image of manufacturing as dumb, dirty, dangerous and
disappearing is far from accurate," she said. "Today, U.S.
manufacturing remains at the technological forefront; it has become
smart, safe and sustainable – and this powerful brand of domestic
manufacturing is surging nationwide."
Wince-Smith points out that two years ago, Deloitte Touche
Tohmatsu Limited and the U.S. Council on Competitiveness developed
a similar index to their new edition, which ranked the United States in fourth place – less
competitive than this year's third place ranking. Similarly,
Germany improved from eighth place
to fourth place between the 2010 Index and the 2013 Index.
The net gain in both countries shows that
20th-century powerhouses can still stake out winning
ground and can more than hold their own in areas like advanced
manufacturing.
Talent Leads the Way
The Index found that access to talented workers is the top
indicator of a country's competitiveness – followed by a country's
trade, financial and tax system, and then the cost of labor and
materials.
"Nothing was more important to CEOs than the quality,
availability and productivity of a nation's workforce to help them
drive their innovation agendas," said Giffi. "Enhancing and growing
an effective talent base remains the clear core of competitiveness
among the traditional manufacturing leaders – and increasingly
among emerging market challengers as well."
Drivers of global manufacturing competitiveness
Rank
|
Drivers
|
1
|
Talent
driven innovation
|
2
|
Economic,
trade, financial and tax system
|
3
|
Cost and
availability of labor and materials
|
4
|
Supplier
network
|
5
|
Legal and
regulatory system
|
6
|
Physical
infrastructure
|
7
|
Energy
cost and policies
|
8
|
Local
market attractiveness
|
9
|
Healthcare
system
|
10
|
Government
investments in manufacturing
|
Source: Deloitte and U.S. Council on Competitiveness -
2013 Global Manufacturing Competitiveness Index
The Index reveals several schisms in competitiveness between
established manufacturing players and their emerging counterparts,
most notably:
- Traditional manufacturing stalwarts are perceived to have an
advantage with respect to talent-driven innovation. More than
85 percent of global executives "strongly agree" or "agree" that
the availability of quality skilled talent in the United States, Germany and Japan makes those nations highly competitive –
while just 58 percent say the same about China and 40 percent say it about India.
- Established manufacturing nations scored far better than
emerging manufacturing nations when it came to local economic,
trade, financial and tax systems. More than seven in 10 global
business leaders "strongly agree" or "agree" that Germany and the
United States have an extreme competitiveness advantage
based on this criterion, but only 43 percent say the same about
India.
- Superior healthcare systems are viewed as giving established
manufacturing nations a distinct advantage over emerging players
thanks to their access to quality care and regulatory policies for
public health. More than seven in 10 business leaders believe
that the healthcare systems in the United
States, Germany and
Japan make them extremely
competitive, but no more than three in 10 say that about
China, India and Brazil.
- When looking at labor costs and availability, stalwart
manufacturing nations find themselves squarely on the
defensive. Almost nine in 10 global executive believe
China and India are extremely competitive with respect
to the local cost and availability of labor, but fewer than four in
10 believe the same about the United
States, Germany and
Japan.
- The newest of the emerging superpowers have a long way to go
when it comes to supplier networks. Five in 10 executives or
fewer "strongly agree" or "agree" that India and Brazil are extremely competitive relative to
their supply networks, compared to the eight in 10 or more who say
the same thing about the United
States, Germany and
Japan.
- Emerging manufacturing nations continue to struggle in
regard to the perceived competitiveness of their legal systems.
Fewer than four in 10 global business leaders "strongly agree" or
"agree" that China, India and Brazil are extremely competitive relative to
their legal systems, compared to the more than eight in 10 who feel
that way about the United States,
Germany and Japan.
- Newer manufacturing players face an uphill battle when it
comes to physical infrastructure competitiveness. Fewer than a
quarter of business executives "strongly agree" or "agree" that
India's infrastructure makes it
extremely competitive, but almost nine in 10 say the United States, Germany and Japan have a strong infrastructure
advantage.
"The emerging superpowers in manufacturing will focus on
building the advanced manufacturing capabilities and economic and
political infrastructures that drive rapid growth and high value
jobs for their citizens, forcing 20th-century
manufacturing powerhouses to fend off the growing strength of more
focused global competitors," Giffi said.
Still, Giffi makes it clear that "manufacturing still matters a
great deal for the economic prosperity of 20th-century powerhouses
– and these nations continue to have enough going for them to stay
in the game and even thrive."
"In America, manufacturing is the cornerstone of our
independence, economic prosperity and national security. Our
economy requires a healthy and growing manufacturing sector to
tackle the many problems we face such as job creation, debt
reduction and infrastructure investments," Wince-Smith said.
To download the "2013 Global Manufacturing Competitiveness
Index," please visit www.deloitte.com/globalcompetitiveness.
About the Study
The "2013 Global Manufacturing Competitiveness Index" is an
initiative led by The U.S. Council on Competitiveness and Deloitte
Touche Tohmatsu Limited designed to determine how CEOs view the
competitiveness of the manufacturing industry in different
countries around the world. A global CEO survey, which generated
responses from 552 CEOs and senior executives, offers perspectives
on the most important factors that drive manufacturing industry
competitiveness. The global survey results also helped to create a
unique "Global Manufacturing Competitiveness Index" ranking the
relative manufacturing industry competiveness of countries and
reflect how executives perceive this may change over the next five
years. The in-depth study seeks to define excellence in
manufacturing and draw out the implications for manufacturers in
terms of the competencies required to develop and sustain an edge
in a new competitive landscape. Participants were also asked to
provide their views of the global economic conditions and
government actions that can bolster competitiveness in the
manufacturing industry. To learn more, visit
www.deloitte.com/globalcompetitiveness.
About the U.S. Council on Competitiveness
The Council on Competitiveness is a leadership organization
comprised of CEOs, university presidents and labor leaders
committed to ensuring that the United
States remains the world leader. The Council has one goal:
to strengthen America's competitive advantage by acting as a
catalyst for innovative public policy solutions. For more
information, please visit www.compete.org.
As used in this document, "Deloitte" means Deloitte LLP and its
subsidiaries. Please see www.deloitte.com/us/about for a detailed
description of the legal structure of Deloitte LLP and its
subsidiaries. Certain services may not be available to attest
clients under the rules and regulations of public accounting.
SOURCE Deloitte