Prediction is based on in-depth analysis of survey responses from more than 500 CEOs and senior leaders around the world
April 7, 2016: The United States is expected to become the most competitive manufacturing nation over the next five years, with the current leader, China, slipping into second position, according to the 2016 Global Manufacturing Competitiveness Index (GMCI) report from Deloitte Touche Tohmatsu Limited’s (Deloitte Global) Global Consumer & Industrial Products Industry group and the US Council on Competitiveness (Council).
The prediction is based on an in-depth analysis of survey responses from more than 500 chief executive officers and senior leaders at manufacturing companies throughout the world. As in the 2010 and 2013 reports, the executives ranked 40 countries in terms of their current and future manufacturing competitiveness and also rated the top drivers of global manufacturing competitiveness.
The US is expected to take the top position from China as the most competitive manufacturing country, according to the report. It is likely that Made in USA will make a big comeback. Contrary to the view that manufacturing is falling behind the times, the study points to a manufacturing future characterised by advanced technologies and growth through innovation. Manufacturing is sustainable, smart, safe, and surging – and America is expected to be among the leaders in this industry transformation.
CEOs say that advanced manufacturing technologies are a key to unlocking future competitiveness. Predictive analytics, the network connectivity of common objects known as the ‘Internet of Things’ (IoT), smart products and smart factories that are helping to define ‘Industry 4.0’, and advanced materials are viewed by executives as crucial to global manufacturing competitiveness.
In the 2016 Global Manufacturing Competitiveness Index country rankings, regional clusters of strength emerge with North America and Asia dominating the competitive landscape. Three North American countries – US, Mexico and Canada – rank in the top 10 and are expected to remain there in the next five years. In the Asia Pacific region, five nations are expected to be in the top 10 by 2020 – China, Japan, India, Korea, and Taiwan – which only leaves two spots open for Germany and the United Kingdom to represent Europe in the top 10 by 2020.
Of the BRIC countries (Brazil, Russia, India, and China), only China is viewed by the respondents as a top 10 manufacturing country in 2016. Brazil fell from 8th in 2013 to 29th in 2016 while Russia fell from 28th in 2013 to 32nd in 2016. But India, although currently ranked 11th, is expected to jump to the number five spot by 2020.
Another theme highlighted in the report is the rise of the Asia Pacific nations Malaysia, India, Thailand, Indonesia and Vietnam (known by the acronym MITI V, or the Mighty 5). All of them are expected to be included in the top 15 nations by 2020 and could represent a ‘New China’ in terms of low-cost labor, agile manufacturing capabilities, favorable demographic profiles, as well as market and economic growth.
In addition to the country ranking, CEOs identified the top drivers of manufacturing competitiveness.
Talent was the leading driver with focus on the quality and availability of highly skilled workers that facilitate a shift towards innovation and advanced manufacturing strategies. 73 percent of executives believe that Germany is ‘extremely competitive’ on talent, followed by Japan at 67 percent, and the United States at 66 percent; these countries represent the top three most competitive nations on talent.
Executives ranked cost competitiveness as the second most influential driver of overall competitiveness, followed by productivity, supplier networks, and legal and regulatory systems to round out the top five factors.