Deloitte survey compiles opinions of senior executives and global CEO’s
By Tom Hoffman, CEO/President
In a very recent report, research powerhouse Deloitte says the U.S. will regain the manufacturing crown by 2020, becoming (once again) the world’s most competitive nation in manufacturing.
As recently as 2010, the U.S. was ranked 4th in the world of manufacturing. So, growth is rapid today (in spite of posturing to the contrary during the current election season). By 2020, the U.S. position will best China by more than 6 index points. Right now, the two nations are separated by a mere half point in the Council on Competitiveness index.
At this point in 2016, the crown sits somewhat loosely on China’s head. However, as reshoring continues, China is facing an aging population and fast-growing labor costs as the vast population adopts and demands middle-class values. China’s industrial growth has slowed to sluggishness. Industry Week’s coverage also cited a report from DBS Group Research, indicating that overcapacity is a growing supply-side problem for the Asian giant, so much so that it’s expected to take years to solve due to political barriers (local protectionism). Inefficient capital allocation and poor dividends were also mentioned.
Long ranked second or worse in manufacturing (due to robust offshoring that became exponential in the 1980’s), the United States appears “poised to capitalize on the transformation of its manufacturing sector…characterized by advanced technology and growth through innovation,” said The Standard, an Asian business publication. To these, Industry Week ranks talent as the “most critical driver of competiveness.” Enter STEM education, which continues to receive Federal and corporate boosts, with continuing gains likely as education executives rediscover the benefits.
Industry Week noted that investment by U.S. manufacturers is another important key. Growing sums are being spent on the Internet of Things (IoT), smart factories, predictive analytics and advanced materials and processes, all of which improve competitiveness via efficiency. Industry Week also noted that other manufacturing leaders – Japan, Germany and the U.K. – are making comparable investments. Overall, the traditional manufacturing leaders are poised to maintain or grow in rank at China’s expense.
Industry Week also noted that U.S. manufacturing executives in the survey were more favorable about national manufacturing policies compared with the same survey performed three years ago. Notably, new Federal policies on “sustainability, technology transfer, monetary control, science and innovation, foreign direct investment, intellectual property protection, and safety and health regulation” were cited. However, the respondents also noted that policies on corporate tax rates, healthcare and labor worked against U.S. manufacturers.
There’s more, including the status of BRIC nations like Russia and Brazil and several fast-growing southeast Asian nations known as MITI-V or the Mighty Five. The article includes a very informative infographic. You should read IW’s full story here.