Over the next five years, 20th-century manufacturing stalwarts like the United States, Germany and Japan will be challenged to maintain their competitive edge to emerging nations such as China, India and Brazil, according to the 2013 Global Manufacturing Competitiveness Index report from Deloitte Touche Tohmatsu Limited's (DTTL) Global Manufacturing Industry group and the U.S. Council on Competitiveness.
The report confirms that the landscape for competitive manufacturing is in the midst of a massive power shift – based on an in-depth analysis of survey responses from more than 550 chief executive officers (CEOs) and senior leaders at manufacturing companies around the world.
The 2013 Global Manufacturing Competitiveness Index once again ranks China as the most competitive manufacturing nation in the world both today, and five years from now.
Germany and the United States round out the top three competitive manufacturing nations, but, according to the survey, both fall five years from now, with Germany ranking fourth and the United States ranking fifth, only slightly ahead of the Republic of Korea.
The two other developed nations currently in the top 10 are also expected to be less competitive in five years: Canada slides from seventh to eighth place and Japan drops out of the top 10 entirely, falling to 12th place.
"The Southeast Asia region appears to be very promising in terms of competitiveness. Five Southeast Asian nations – Singapore, Thailand, Malaysia, Indonesia and Vietnam – have emerged within the top 20 rankings of the index," comments Nuanjai Gittisriboongul, Manufacturing Industry Leader, Deloitte Southeast Asia.
The outlook for Southeast Asia is optimistic as most of the countries are expected to improve or maintain their index scores in the next five years. "In particular, frontier markets such as Vietnam and Indonesia are on the rise," says Gittisriboongul.
Further, the Index finds that Germany's slide in competitiveness holds true for several other European nations, including the United Kingdom, France, Italy, Belgium, the Netherlands, Portugal, Poland and the Czech Republic, which are all expected to experience a dramatic decrease in their ability to compete. Poland, for example, drops from 14th to 18th place on the Index, while the United Kingdom drops from 15th to 19th place.
"America and Europe have continued to watch emerging markets mature and become formidable competitors over the past decade," said Craig Giffi, vice chairman, Deloitte United States (Deloitte LLP) and consumer and industrial products industry leader, who co-authored the report and led the research team.
Giffi points out that in five years key emerging nations are expected to vault forward in the Index: Brazil jumps from its current eight place slot to third place and India jumps from fourth to second place. China remains firmly in first place.
"While the Americas region will continue to show significant manufacturing prowess – with the United States, Brazil, Canada and Mexico all in the top 15 most competitive nations five years from now – many advantages are tilting toward Asia, which will have 10 of the top 15 most competitive nations within the decade," Giffi said.
"The global CEO survey results echo the view that while China and India are still prominent in discussions, manufacturers are turning their focus to frontier markets for growth to capture both the growing local consumer demand and to serve as strategic manufacturing hubs in the global value chain,” comments Tim Hanley, DTTL Global Leader, Manufacturing.