Deloitte launches global manufacturing competitiveness index
28 June 2010
Deloitte’s global manufacturing competitiveness index reveals that the UK, US, Japan and Western European countries are expected to become less competitive over the next five years, as China, India and Korea maintain their leading positions.
The report, compiled by Deloitte, the business advisory firm, and the US Council on Competitiveness, ranks the countries considered the most competitive now and predicts their relative competitiveness in five years. The report also lists the key drivers of competition in the global manufacturing industry, identifying talent led innovation as the highest ranking driver.
Asian giants China, India and the Republic of Korea lead the current competitiveness index and are expected to retain their top three rankings over the next five years. In contrast, the dominant manufacturing superpowers of the late 20th century are expected to become less competitive. Other Western European nations will be similarly challenged especially the Czech Republic, the Netherlands, Switzerland, Ireland, Italy and Belgium.
David Raistrick, UK manufacturing leader at Deloitte commented: “China and India have been emerging as global leaders in manufacturing for a number of years now, and this survey highlights the increasing dominance that these two major economies will continue to have over the remainder of this decade.
“It is disappointing to see that the UK is ranked outside the top 10, positioned at number 17 in an index of 26. Further, it is predicted that the UK will drop three places over the next five years. The fact that both the US and Germany are ranked in the top 10 shows that the drivers of competitiveness are not just cost-based. Both the US and Germany have high wage costs and rigorous safety and environmental standards in place, similar to the UK, yet for example, the US is given a competitiveness score of 5.84, more than double the UK’s of 2.82.
“It is vital that the new UK government works jointly with manufacturers to ensure they can improve their global competitiveness. The UK manufacturing sector is predominantly focused on emerging new technologies and high tech industry, we must continue to invest in and develop these areas. Given the significant proportion of UK GDP earned through our manufacturing base, and the number of people employed in this sector, any further slippage in our global competitiveness will have a real impact on the broader UK economy.”
European policy strengths and weaknesses
The report also asked senior manufacturing executives to identify national policies that they perceived as contributing to their country’s competitive business advantage or disadvantage. Europe was seen by local executives to benefit from policies that strongly support infrastructure development (46.1%) as well as science and technology and innovation (43.4%), and intellectual property protection (42.1%). On the downside, European executives felt disadvantaged by labour laws and regulations (42.1%), as well as environment policies (36.8%) and energy policies (31.6%).
Drivers of global manufacturing competitiveness
In order to rank the drivers of global competiveness, respondents were asked to assign a numbered score of importance between one and 10 to a list of factors affecting industry competitiveness. Access to talented workers capable of supporting innovation was the highest ranking driver globally, with a score of 9.2 rating well ahead of the traditional factors typically associated with competitive manufacturing, such as labour, materials and energy. (see chart)
David Raistrick concluded: “Within the UK, we have seen a shift over the past decade away from our more traditional manufacturing base into high tech and cutting edge technology sectors. Our manufacturing sector is differentiated by our innovation - we must ensure that the industry and our government invest in our ‘brain trust’.”
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To download the 2010 Global Manufacturing Competitiveness Index, please visit www.deloitte.co.uk/manufacturing
About the Study:
To learn how manufacturing chief executive officers and other senior leaders view their industry’s competitiveness around the world, Deloitte’s Global Manufacturing Industry group and The US Council on Competitiveness undertook a multi-year Global Competitiveness in Manufacturing initiative. The initiative was based, in part, on the responses of more than 400 senior manufacturing executives worldwide to a wide-ranging survey discussing the current business environment and global competitiveness in the manufacturing sector. The study also draws on select interviews with key manufacturing players as well as unique insights provided by the professionals at Deloitte, the US Council on Competitiveness, and Clemson University. For more information concerning the specifics of this study and its participants, please consult the study’s appendix by downloading the full report.
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTT and its member firms.
The information contained in this press release is correct at the time of going to press.