global manufacturing competitiveness index

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MITI-V could represent a “New China” of manufacturing 

2016 Global Manufacturing Competitiveness Index

SINGAPORE, 11 April 2016 – The rise of the MITI-V (“Mighty 5”) – consisting of the Asia Pacific nations Malaysia, India, Thailand, Indonesia, and Vietnam – will be a trend to watch, according to the 2016 Global Manufacturing Competitiveness Index (GMCI) report from Deloitte Touche Tohmatsu Limited’s (Deloitte Global) Global Consumer & Industrial Products Industry group and the US Council on Competitiveness (Council).

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Marie Li
Deloitte Singapore
Marketing & Communications
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meijli@deloitte.com
 

All of these countries are expected to be included in the top 15 nations by 2020 and could represent a “New China” in terms of low-cost labour, agile manufacturing capabilities, favorable demographic profiles, as well as market and economic growth.

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 throughout the world. As in the 2010 and 2013 reports, the executives ranked 40 countries in terms of their current and future manufacturing competitiveness and also rated the top drivers of global manufacturing competitiveness (listed below).

Although all but Vietnam showed a drop in overall competitiveness rank between 2013 and 2016, when viewed as a group the MITI-V nations can be seen as offering an attractive option for market and economic growth as well as growing customer base for manufacturers. “The Southeast Asian countries of Indonesia, Malaysia, Thailand, and Vietnam continue to garner the interest of global manufacturers looking for alternatives to China with the availability of skilled workforce and growing labour productivity, as well as the lower manufacturing labour cost in comparison to China,” said Ng Jiak See, Deloitte Southeast Asia’s Industrial Products & Services Leader.

“Other advantages that these countries offer to global manufacturers include numerous tax incentives in the form of tax holidays ranging from three to 10 years, tax exemptions or reduced import duties, and reduced duties on capital goods and raw materials used in export-oriented production,” added Ms Ng.

From a global perspective, the United States is expected to become the most competitive manufacturing nation over the next five years, with the current leader, China, slipping into second position. “Made in the USA is making a big comeback,” said Deborah L. Wince-Smith, president and CEO of the US Council on Competitiveness. “Contrary to the view that manufacturing is falling behind the times, the study points to a manufacturing future characterised by advanced technologies and growth through innovation. Manufacturing is sustainable, smart, safe, and surging – and America is expected to be among the leaders in this industry transformation.”

According to the report, CEOs say that advanced manufacturing technologies are a key to unlocking future competitiveness. Predictive analytics, the network connectivity of common objects known as the “Internet of Things” (IoT), smart products and smart factories that are helping to define “Industry 4.0”, and advanced materials are viewed by executives as crucial to global manufacturing competitiveness.

“The US is currently among the top nations unlocking advanced manufacturing technologies including smart, connected products and factories, predictive analytics, and advanced materials that are core to future competitiveness,” said Craig Giffi, vice chairman, Deloitte LLP in the US and Deloitte US Automotive Sector leader. “The US excels at creating connections and synergy between people, technology, capital, and organisations to form a cohesive ecosystem of innovation, generating tremendous value from investments in research and development.”

Indeed, where emerging economies have an advantage over advanced economies on issues of labour and material costs, advanced economies lead their developing counterparts on labour productivity. “Singapore, while considered a relatively high cost manufacturing location in Southeast Asia, is still likely to remain amongst the most competitive in the region in the future,” remarked Ms Ng. “With its highly-educated workforce, an investment-friendly business climate, generous R&D incentives, high quality infrastructure and good governance, the trajectory of Singapore’s manufacturing sector will be one that is propelled by investments in talent and innovation,” added Ms Ng.

Global Manufacturing Competitiveness Index 2016
2016 Global Manufacturing Competitiveness Index rankings by country1
Current competitiveness Projected competitiveness in five years
Rank Country
2013 rank Rank Country
1 China
1 1 United States
2 United States 3
2
China
3 Germany 2 3
Germany
4 Japan 10 4
Japan
5 South Korea
5 5 India
6 United Kingdom 15 6 South Korea
7 Taiwan 6 7 Mexico
8 Mexico 12 8 United Kingdom
9 Canada 7 9 Taiwan
10 Singapore 9 10 Canada
11 India 4 11 Singapore
12 Switzerland 22 12 Vietnam
13 Sweden 21 13 Malaysia
14 Thailand 11 14 Thailand
15 Poland 14 15 Indonesia
16 Turkey 20 16 Poland
17 Malaysia 13 17 Turkey
18 Vietnam 18 18 Sweden
19 Indonesia 17 19 Switzerland
20 Netherlands 23 20 Czech Republic
21 Australia 16 21 Netherlands
22 France 25 22 Australia
23 Czech Republic 19 23 Brazil
24 Finland - 24 Finland
25 Spain 33 25 South Africa
26 Belgium 27 26 France
27 South Africa 24 27 Spain
28 Italy 32 28 Romania
29 Brazil 8 29 Belgium
30 United Arab Emirates 30 30 Italy
31 Ireland 37 31 Ireland
32 Russia 28 32 Russia
33 Romania 29 33 United Arab Emirates
34 Saudi Arabia 34 34 Colombia
35 Portugal 35 35 Portugal
36 Colombia 31 36 Saudi Arabia
37 Egypt 36 37 Egypt
38 Nigeria - 38 Nigeria
39 Argentina 26 39 Argentina
40 Greece 38 40 Greece

 

1 Source: Deloitte Touche Tohmatsu Limited and US Council on Competitiveness, 2016 Global Manufacturing Competitiveness Index

Drivers of global manufacturing competitiveness
Drivers 2016 Rank
Talent 1
Cost competitiveness 2
Workforce productivity
3
Supplier network 4
Legal and regulatory system 5
Education infrastructure 6
Physical infrastructure 7
Economic, trade, financial, and tax system 8
Innovation policy and infrastructure 9
Energy policy 10
Local market attractiveness 11
Healthcare system 12

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. For more information concerning the specifics of this study and its participants, please visit www.deloitte.com/globalcompetitiveness.

About the US Council on Competitiveness
Founded in 1986, the US Council on Competitiveness is a non-partisan leadership organisation in the United States of corporate CEOs, university presidents, labour leaders and national laboratory directors committed to advancing US competitiveness in the global economy and a rising standard of living for all Americans. Dedicated to building US prosperity, the Council plays a powerful role in shaping America's future by setting an action agenda to assess US competitiveness, identify emerging forces transforming the economy, catalyze thought leaders who drive change and galvanize stakeholders to act.

Deloitte Global Consumer & Industrial Products Industry group
The Deloitte Global Consumer & Industrial Products Industry group (Global C&IP) comprises more than 22,000 member firm partners and industry professionals in over 45 countries. Deloitte member firms provide professional services to 84 percent of the C&IP industry companies on the Fortune Global 500®, making an impact that matters in business sectors representing the entire value chain from raw materials to the end consumer. The group brings deep industry knowledge, service line experience, and thought leadership to help solve complex business issues in every corner of the globe. Deloitte member firms attract, develop, and retain the very best professionals, and instill a set of shared values centered on integrity, commitment, and serving clients with distinction. Sectors served include automotive; chemicals and specialty materials, including metals, forest, paper and packaging; consumer products; industrial products and services, including aerospace and defense; retail, wholesale and distribution; as well as travel, hospitality and business services. For more information about the Global C&IP Industry group, please visit www.deloitte.com/manufacturing and www.deloitte.com/consumerbusiness.

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