US Most Competitive Nation in 2020

US Will Be the Most Competitive Nation in 2020

A shift is underway among the world’s traditional manufacturing powerhouses due to the Asia-Pacific region’s rising influence and declining strength in European and BRIC countries.

By 2020, the United States will become the most competitive manufacturing nation in the world by shifting China into second place, according to the 2016 Global Manufacturing Competitiveness Index report from Deloitte Touche Tohmatsu Ltd. and the Council on Competitiveness. The report also reveals a shift among the world’s traditional manufacturing powerhouses due to the Asia-Pacific region’s rising influence and declining strength in European and BRIC countries.

“The U.S. 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 and Deloitte U.S. Automotive Sector leader. “The U.S. excels at creating connections and synergy between people, technology, capital and organizations to form a cohesive ecosystem of innovation, generating tremendous value from investments in research and development.”

Here are some highlights from the report:

U.S. moves to top of list

  • The U.S. improved its ranking from 4th in 2010 to 2nd in this year’s study, and is expected to reach No.1 by 2020.
  • As the U.S. invests heavily in talent and technology, the nation ranks highest as an advanced manufacturing economy. The country is highly competitive in terms of the share of high skill and technology contribution to exports and labor productivity as measured to gross domestic product (GDP).
  • The U.S. continues to position itself among the global leaders in research and development (R&D) activities by investing in top universities, R&D talent and venture capital.

Mighty Five (MITI-V) start to show face as manufacturing power group

  • Made up of the five-Asia Pacific nations of Malaysia, India, Thailand, Indonesia and Vietnam, the MITI-V or “Mighty Five” could represent a “New China” and enter the top 15 rankings of global manufacturing competitiveness over the next five years.
  • Low cost labor, agile manufacturing capabilities, favorable demographic profiles, and market and economic growth are leading factors likely to position these countries to rise in rankings by 2020.

BRIC crumbles as member nations’ individual ratings shuffle

  • Among the BRIC countries, only China is viewed as a top manufacturing nation in 2016. The other three – Brazil, Russia and India – have seen continuous declines in the study’s rankings over the past six years, despite aspirations that they may emerge as manufacturing goliaths.
  • Brazil’s political uncertainty, Russia’s geopolitical activities and impact from the slide in global crude oil prices, matched with India’s challenged economic and policy actions around infrastructure and investments, have likely triggered the decline from the BRIC’s manufacturing competitiveness peak.
  • Among the BRIC nations, manufacturing executives expressed optimism for only China and India by 2020, with expectations that India will regain some of its ranking position lost over the past several years.

North America and Asia Pacific become regional clusters of strength

  • The two regions are expected to dominate the competitive landscape in the next four years: All three North American countries (U.S, Canada and Mexico) in today’s top 10 remain there in the 2020 outlook; five Asia Pacific nations (China, Japan, South Korea, Taiwan and India) factor into the study’s top 10 in 2020.
  • The U.S. stands out as the anchor for the North American region with the highest level of manufacturing investments, a strong energy profile, and high-quality talent, infrastructure and innovation. Canada’s low trade barriers, tariff-free zone and investments in sectors key to its growing high-tech manufacturing future, along with Mexico’s 40 free trade agreements, low labor costs and close proximity to the U.S. round out the region.
  • The dominant Asia Pacific countries of China, Japan and South Korea are driven by talent and innovation and along with emerging newer powerhouses, such as Singapore and Taiwan, strengthen the region with a focus on high-tech exports. This region also houses the “Mighty Five” and five of the top 10 countries in current or future GMCI rankings.

European countries feel pressured to remain competitive on global scale

  • European nations are lagging behind as they work through sluggish economic recovery efforts and look to their anchors, Germany and the United Kingdom, to pull them ahead.
  • Most European nations, aside from the two anchors, are expected to slip in overall global manufacturing competitiveness rankings in next five years.

 

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