The 25 factors that underpin manufacturing competitiveness (US, Canada, Mexico, South America, Europe, Asia)
Posted by Bert Maes on June 25, 2010
According to a new report access to talent that supports innovation is the key factor driving global manufacturing competitiveness, well ahead of traditional factors such as cost of labor and materials and energy policies.
In the 2010 Global Manufacturing Competitiveness Index, a joint report from Deloitte’s Global Manufacturing Industry group and the United States Council on Competitiveness, manufacturing executives identify talent-driven innovation as the most important competitive driver.
The quality and availability of skilled production workers, scientists, researchers, engineers, and teachers, who collectively have the capacity to continuously innovate and improve production efficiency, is the most significant driver of manufacturing competitiveness, the report says.
Talented people are giving companies the greatest potential for making a company innovative and for improving the overall competitiveness of the country. The capacity of a country thus largely depends on the quality of its education and training.
The quality of talented people is driving manufacturing innovation. Coupled with the costs of labor and materials and the costs of energy, these three are the “foundations” of manufacturing competitiveness.
After the key factors of production – labor, materials and energy – government forces have the most significant impact on manufacturing. These include environmental, institutional and infrastructural elements.
It is interesting to see the differences across continents:
- Talent-driven innovation is the top driver of manufacturing competitiveness across global regions. The exception is Mexico and South America, where executives rate the quality of the physical infrastructure (roads, ports, electricity grids, telecom) as the most important.
- European executives view energy costs and policies as the second most important driver. The European Union faces serious challenges concerning security of supply as the dependence of several member states on one single gas suppliers (Russia) makes the continent very vulnerable for shortfalls in supply and energy crises. So clearly manufacturers in Europe see the availability of cost-effective alternative energy as key to competitiveness and the springboard to leapfrog competing regions of the world. However a common energy policy in Europe is very controversial as many nations see access and sources of energy supply as too critical to national security and should remain under the control of member nations.
- In the US between 50 and 60% of the respondents considered major current policy trends as very disadvantageous: (1) the bail outs that hinders competition and does not benefit business over the long term, (2) the corporate taxes making US manufacturers pay 18% more on taxes, natural gas, employee benefits and pollution abatement than a foreign competitor making a similar product, and (3) the increasing costs of healthcare that will stifle manufacturers’ ability to grow and create jobs.
- In China on the other hand the lack of access to healthcare and insurance is seen as very disadvantageous, as that is a major contributor to poverty in China. Low levels of insurance coverage have resulted in high savings rates and reduced consumption – key determinants of economic growth. China’s leaders recognize that they need to improve the equity and efficiency of the healthcare system, which plays a critical role in the economy.
Overall the study concludes that difficulties in accessing an empowered talent base are likely to contribute to the United States and Europe becoming less globally competitive in the next five years.
…Time to act towards attractive, inspiring and advanced manufacturing education…