Innovation focus needed to boost Australian manufacturing
21 April 2016: The development of advanced manufacturing technologies, including smart, connected products and factories, predictive analytics, and advanced materials, are core to Australian manufacturing’s future competitiveness in the global market, according to the 2016 Global Manufacturing Competitiveness Index report from Deloitte Global and the US Council on Competitiveness.
Whilst Australia’s manufacturing competitiveness ranking has slipped from 16th to 21st since 2013, Deloitte Australia Tax Partner and Manufacturing Group leader, Damon Cantwell, believes the country deserves to be ranked higher.
“We are simply not getting the message out – Australia is competitive in the majority of the global drivers of competitiveness such as talent, the supplier network and our innovation infrastructure, but this is not reflected in our ranking,” he said. “In fact, seven of the top 10 manufacturing nations, including the US, Japan, Germany and the UK, are all relatively high wage nations. Indications are a higher cost environment is becoming less important in regard to an economy’s manufacturing competitiveness.
“It is timely the Federal Government’s Innovation Agenda has been an area of focus over recent months in Australia, with global CEOs keeping a close eye on these settings in their investment decisions. The key for Australian policymakers is how these policies rank against international competitors. We are in our own competitive market with other countries that are more advanced when it comes to innovation and research and development support, and the integration between the manufacturing and research sectors,” Cantwell said.
According to the Index, the United States is expected to become the most competitive manufacturing nation over the next five years, with current leader, China, slipping into second position. The prediction is 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.
In the Index’s country rankings, regional clusters of strength emerge, with North American and Asia-Pacific nations dominating the competitive landscape. This includes the rise of Malaysia, India, Thailand, Indonesia, and Vietnam (MITI V, or the ‘Mighty 5’), all of which are expected to be among the top 15 nations by 2020 and could represent a ‘new China’ in terms of low-cost labour, agile manufacturing capabilities, favourable demographic profiles, in addition to market and economic growth.
“The role of larger, geographic manufacturing clusters is becoming increasingly important, with participating countries delivering different capabilities and skill sets in areas such as assembly, design, product development and testing. With Asia-Pacific identified as one of these regions, the challenge for Australia’s manufacturing industry is to determine which of these areas will be its main focus,” Cantwell concluded.
About the 2016 Global Manufacturing Competitiveness Index
The 2016 Global Manufacturing Competitiveness Index (GMCI) report is the third study prepared by the Deloitte Touche Tohmatsu Limited (Deloitte Global) Global Consumer & Industrial Products Industry group and the US Council on Competitiveness, with prior studies published in 2010 and 2013. This multi-year research platform is designed to help global industry executives and policy makers evaluate drivers that are key to company and country level competitiveness as well as identify which nations are expected to offer the most competitive manufacturing environments through the end of this decade. The 2016 study includes more than 500 survey responses from senior manufacturing executives around the world.
To view the 2016 Global Manufacturing Competitiveness Index rankings by country and for more information concerning the specifics of this study and its participants, please visit www.deloitte.com/globalcompetitiveness
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