Posted by Michelle Drew Rodriguez
In the first blog post I recently wrote about the 2016 Global Manufacturing Competitiveness Index, which I coauthored with several colleagues at Deloitte (including Craig Giffi, Vice Chairman, US Automotive Leader and Tim Hanley, Global Manufacturing Leader) and in collaboration with the US Council on Competitiveness, I primarily discussed country rankings revealed in the Index. The study is modeled from earlier versions we released in 2010 and 2013, and the findings are based on an in-depth analysis of survey responses from more than 500 chief executive officers and senior leaders at manufacturing companies around the world. A number of interesting findings arose this year.
In this discussion, I wanted to take a deeper look at the drivers of competitiveness, which you can also drill down into by visiting the GMCI Interactive Website, as well as the impact of public policy on manufacturing competitiveness.
Talent remains the top driver of manufacturing competitiveness. Consistent with the 2010 and 2013 Global Manufacturing Competitiveness Index studies, manufacturers continue to rank talent as the most critical driver of global manufacturing competitiveness. Talent will be a key factor in the manufacturing competitiveness battlefield going forward, as companies and countries will compete for their fair share of the best and brightest talent. With aging populations, shortages of manufacturing talent, shortening product cycles and the growth of robotics technologies many companies are exploring different talent models to try to close the gap. The new open-talent economy looks to be a more collaborative, transparent, technology-driven, rapid-cycle way of doing business.
Cost competitiveness (number two), productivity (number three), and supplier network (number four) are also key. In an era of sluggish economic growth, containing costs and increasing productivity to boost profits remains critical for manufacturers, alongside building a strong network and ecosystem of suppliers. When coupling the top four drivers together, the implication shows executives placing greater emphasis on tapping into the broader ecosystem–rather than simply relying on innovation within their traditional walls. New models of collaboration and partnership are being explored–whether it be with the supply base, new start-ups, academic and/or research institutes, or other forms of private-public partnerships.
The impact of public policy is a key driver of competitiveness as well. A more favorable policy environment for manufacturing is key to attracting and retaining industry investments. Executives throughout the United States, Europe, and China indicated their respective nations have a number of more favorable policies around key elements of manufacturing competitiveness than even three years ago. Specifically around the areas of technology transfer, as well as science and innovation, executives indicated their nations have favorable policies to encourage manufacturers to increasingly use advanced technologies to improve their manufacturing competitiveness. Intellectual property protection also rose towards the top of competitive advantages in the United States and Europe, while it was absent from the list of advantages in China.
- US perspective: United States executives were more favorable toward policies in the United States than the last study three years ago. According to US executives, favorable US policies centered on sustainability, technology transfer, monetary control, science and innovation, foreign direct investment (FDI), intellectual property protection, and safety and health regulation help to create a competitive advantage for their businesses. On the other hand, US executives identified policies around corporate tax rates, healthcare policies, labor, and taxation of foreign earnings as disadvantages for manufacturers in the United States.
- Chinese perspective: In China, policies either encouraging or directly funding investments in science and technology, technology transfer, sustainability, and infrastructure development appear to be helping Chinese-based companies to create a competitive advantage. Chinese executives indicate that some policies are inhibiting their competitiveness, including corporate and individual tax rates, labor laws, and government intervention and/or ownership.
- European perspective: European business leaders see the continent’s antitrust and product liability laws along with policies around intellectual property protection, healthcare, technology transfer, sustainability, and science as competitive advantages for them. At the other end, only four policies were cited as contributing to a clear disadvantage, including labor policies, individual and corporate tax rates, and economic and fiscal policies.
In summary, our full study offers a critical and timely jumping-off point for companies and economies as they make strategic investments in advanced manufacturing technologies and enact public policies designed to spur post-industrial era manufacturing growth. We hope, both government heads and company CEOs adopt key takeaways from this study to reshape the future of manufacturing.
If you didn’t have an opportunity to view the first post in the three part series, please visit be sure to read about competitiveness rankings, and stay tuned for the upcoming post on how global manufacturers can succeed covering additional findings from the Global Manufacturing Competitiveness Index study.
Join the conversation on @DeloitteMFG #GMCI16