2016 Global Manufacturing Competitiveness Index · 2015-12-10 · 2016 2013 Rank Index score Rank...

2016 Global Manufacturing

Competitiveness Index

2 Deloitte and US Council on Competitiveness I 2016 Global Manufacturing Competitiveness Index Copyright © 2015 Deloitte Development LLC. All rights reserved.

Country 2016 2013

Rank Trend

Rank Index score

China 1 100.0 1

USA 2 99.5 3 ▲

Germany 3 93.9 2 ▼

Japan 4 80.4 10 ▲

South Korea 5 76.7 5

United Kingdom 6 75.8 15 ▲

Taiwan 7 72.9 6 ▼

Mexico 8 69.5 12 ▲

Canada 9 68.7 7 ▼

Singapore 10 68.4 9 ▼

India 11 67.2 4 ▼

Switzerland 12 63.6 22 ▲

Sweden 13 62.1 21 ▲

Thailand 14 60.4 11 ▼

Poland 15 59.1 14 ▼

Turkey 16 59.0 20 ▲

Malaysia 17 59.0 13 ▼

Vietnam 18 56.5 18

Indonesia 19 55.8 17 ▼

Netherlands 20 55.7 23 ▲

China hangs on – barely - to the most competitive manufacturing nation ranking for

2016, but the US is very close and expected to take over the top spot in five years

2016 Global Manufacturing Competitiveness Ranking

Country Rank Index score

USA 1 100.0

China 2 93.5

Germany 3 90.8

Japan 4 78.0

India 5 77.5

South Korea 6 77.0

Mexico 7 75.9

United Kingdom 8 73.8

Taiwan 9 72.1

Canada 10 68.1

Singapore 11 67.6

Vietnam 12 65.5

Malaysia 13 62.1

Thailand 14 62.0

Indonesia 15 61.9

Poland 16 61.9

Turkey 17 60.8

Sweden 18 59.7

Switzerland 19 59.1

Czech Republic 20 57.4

Current Competitiveness Index Competitiveness Index in Five Years


Brazil continues to struggle with little optimism for significant improvement over the

next five years…

2016 Global Manufacturing Competitiveness Ranking

Country 2016 2013

Rank Trend

Rank Index score

Australia 21 55.5 16 ▼

France 22 55.5 25 ▲

Czech Republic 23 55.3 19 ▼

Finland 24 52.5 - -

Spain 25 50.6 33 ▲

Belgium 26 48.3 27 ▲

South Africa 27 48.1 24 ▼

Italy 28 46.5 32 ▲

Brazil 29 46.2 8 ▼

UAE 30 45.4 30

Ireland 31 44.7 37 ▲

Russia 32 43.9 28 ▼

Romania 33 42.8 29 ▼

Saudi Arabia 34 39.2 34

Portugal 35 37.9 35

Colombia 36 35.7 31 ▼

Egypt 37 29.2 36 ▼

Nigeria 38 23.1 - -

Argentina 39 22.9 26 ▼

Greece 40 10.0 38 ▼

Country Rank Index score

Netherlands 21 56.5

Australia 22 53.4

Brazil 23 52.9

Finland 24 49.7

South Africa 25 49.3

France 26 49.1

Spain 27 48.4

Romania 28 45.9

Belgium 29 45.8

Italy 30 45.0

Ireland 31 43.7

Russia 32 43.6

United Arab Emirates 33 42.6

Colombia 34 40.9

Portugal 35 40.1

Saudi Arabia 36 36.1

Egypt 37 28.3

Nigeria 38 25.4

Argentina 39 24.6

Greece 40 10.0

Current Competitiveness Index Competitiveness Index in Five Years


Brazil’s Decline Adding To BRIC Breakdown… The long-awaited promise of the BRIC countries as emerging manufacturing

goliaths continues to unravel in the face of sharp declines in competitiveness

• Brazil joins Russia in a steep

decline in the global

competitiveness ranking as

economic and socio-political

instability takes its toll

• Brazil and India lag advanced

global economies on talent,

innovation policy & infrastructure,

legal/regulatory environment, and

physical infrastructure

• However, some hope remains for

India to rejoin China in the top five

manufacturing nations in the next

five years, salvaging half of the

original BRIC potential

2 4

11

5

8

29

20

28

32

2010 2013 2016

Co

un

try R

an

kin

gs

India

Brazil

Russia


…And Search Begins For A New Low-Cost Center As China begins to pivot toward a higher value manufacturing paradigm to align

with other innovation-oriented markets, where’s the “New China”?

• Rapidly rising wages in

China present

opportunities for other

emerging nations to be

competitive on cost of

labor and materials

• India, Malaysia, Vietnam,

and Indonesia are

emerging as alternate low-

cost destinations

• This presents significant

opportunities and

challenges for companies

currently operating in

China that depend on a

lower cost base

Country India Vietnam Malaysia Indonesia

Future Rank 5 12 13 15

Current Rank 11 18 17 19

2013 Rank 4 18 13 17


While Two Regional Pillars of Strength Emerge… North America and Asia-Pacific countries establishing dominant positions as

regional manufacturing centers…

• All three North American nations

are in the top ten current and future

rankings for manufacturing

competitiveness

• Six countries in the Asia-Pacific

region feature in the top ten for

current or future competitiveness

• Both China and India currently

provide a cost competitive

manufacturing advantage, but

are also leading in number of

STEM graduates going forward

• South Korea and Japan also

excel in developing critical talent

indicators such as concentration

of researchers and patents

China Japan

Singapore

South Korea

India Taiwan

Canada Mexico United States

North America

Asia-Pacific


Putting The Squeeze On European Countries Most European nations expected to slip in the overall competitiveness rankings in

the next five years

• Germany and the UK are the only

European nations forecast to

remain in the top ten global

manufacturing markets going

forward

• In fact, only two European

countries (Czech Republic and

Romania) are expected to show

any improvement in their relative

rank position over the next five

years, leaving most of the region

vulnerable to global competitive

pressures

European Country Current Rank Future Rank

Germany 3 3

United Kingdom 6 8

Switzerland 12 19

Sweden 13 18

Poland 15 16

Turkey 16 17

Netherlands 20 21

France 22 26

Czech Republic 23 20

Finland 24 24

Spain 25 27

Belgium 26 29

Italy 28 30

Ireland 31 31

Romania 33 28

Portugal 35 35

Greece 40 40


Meanwhile, It’s “Back To The Future” At The Top Traditional manufacturing powerhouses of the 1980’s are back atop the global

rankings by focusing on core competitiveness attributes, including talent

• Shift to higher value, advanced

manufacturing forms a new

battleground for global

competitiveness going forward

• US is leading the way having

surpassed Germany and closed the

gap to China over the last five years

• A resurgence from the UK results in a

top ten position going into the next five

years

• Executives ranked US, Germany, &

Japan highly competitive in Talent,

Innovation, Legal/Regulatory

Environment, and Physical

Infrastructure – key drivers of global

manufacturing competitiveness

2016 2013 2010 Future

#1

#4

#6

#8

#17

#1 #1

#2 #3

#10

#15

#3

#4

#6

#1

#2

#3

#4

#8

#2


For the 2016 Index, Global CEOs point to talent (again), cost competitiveness, and

workforce productivity as the top three drivers of manufacturing competitiveness

What Drives Manufacturing Competitiveness?

Global Manufacturing

Competitiveness

Talent 1

Cost

Competitiveness

2

Workforce

Productivity

3

Supplier

Network

4

Legal & Regulatory

System

5

Educational

Infrastructure

6

Physical

Infrastructure

7

Economic,

Trade, Financial

& Tax System

8

Innovation Policy &

Infrastructure

9

Energy Policy 10

Local Market

Attractiveness

11

Healthcare

System

12

Market

Forces

Government

Forces


Consistently identified as the top driver of manufacturing competitiveness, talent is

a significant pain point, specifically for advanced technology companies

Focus On Talent Is Critical Going Forward

• US retains a leadership position in

research, technology and innovation

having created a strong foundation over

the last century that includes an

educational system that fosters creative

thinking, superior talent, and world-class

universities

• …but, the R&D competitiveness gap is

narrowing rapidly as countries like China

have been aggressive in attracting and

nurturing STEM (Science, Technology,

Engineering, and Math) talent

• …resulting in a significant challenge in

the form of a talent shortage and

widening skills gap over the next decade

The aging of engineering and manufacturing workforces, without appropriate knowledge transfer, is exacerbating a skills shortage not only in the US but also in other developed and developing nations

- Executive Interviewee


A host of issues face US manufacturing companies looking to spur growth through

innovation going forward, the question is how to capitalize while avoiding pitfalls

Challenges, Sure … But, Also Opportunities

• Challenges faced by US

companies include:

• a significant talent shortage

and widening skills gap

• uneven and weak foreign

market conditions and

business environments

• coping with weak Intellectual

Property (IP) laws and

behavior globally

• the high cost and complexity

of compliance in an uncertain

US regulatory environment

• Long-term global trends that will help

provide opportunities for US companies to

spur growth and innovation, include:

• an expanding middle class and rapid

urbanization across Asia

• continued and plentiful low cost energy in

North America

• attractive demographics across North

America

• increased global demand for commercial

aircraft

• the rapid technological advances in the

auto industry (e.g., autonomous vehicles)

• increased output in the US chemicals

and industrial machinery sectors

Challenges Opportunities


In order to grow and succeed in the highly competitive global innovation space,

companies can follow some overarching themes for strategy development

Industry Innovation Playbook

1. Think like a venture capitalist and

take best practices from successful

start-ups

2. Take a portfolio approach to

innovation projects and investments

3. Adopt a risk-tolerant mentality to

allow some of the higher risk, higher

reward efforts to proceed

4. Operate outside of traditional

walls to take advantage of

collaboration opportunities

5. Understand there is no singular

solution or path to achieve

innovation success

6. Have a strategic focus regarding

resource allocation, alignment and

activities as well as incentives

7. Be explicit about innovation

ambitions and goals and

organize accordingly

8. Perseverance pays: Fear of

failure or failure to bounce back

when met with failure will relegate

an organization to a role as

followers

9. Look beyond product

innovation to transform other

elements of your business system.

10. Diagnose your capabilities and

be realistic about them; address

as required

About this presentation This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 225,000 professionals are committed to making an impact that matters. Deloitte serves 4 out of 5 Fortune Global 500® companies. About the U.S. Council on Competitiveness The Council on Competitiveness is the only group of corporate CEOs, university presidents, labor leaders and directors of national laboratories committed to the future prosperity of all Americans and enhanced U.S. competitiveness in the global economy through the creation of high-value economic activity in the United States. The Council is a non-partisan and non-governmental organization. Learn more about the Council here or view the full list of publications here. Check out the Council on Competiveness' Facebook page for further updates or follow @competenow on Twitter. © 2015. For information, contact Deloitte Touche Tohmatsu Limited.

2016 Global Manufacturing Competitiveness Index · 2015-12-10 · 2016 2013 Rank Index score Rank...

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