Skilled labor advantage for competitiveness

In the Global Manufacturing Competitiveness Index of 2016 produced by Deloitte and the US Council on Competitiveness, China retained the top ranking it has held since 2013; the United States moved up to number two, and Germany dropped to number three.

The report predicts the US will overtake China as the world's most competitive country in manufacturing by 2020. While China scored 100 in the current competitiveness index it is predicted to fall to 93.5 in 2020, while the US, which scored 99.5 in the current index, is forecast to score 100 by 2020. Thus the report expects the US to become much more competitive than China in manufacturing by the end of the decade.

The Manufacturing Competitiveness Index is prepared on the basis of responses collected from a diverse group of senior global executives belonging to different industries. The impression of these executives points to the US emerging as the most competitive manufacturing country in the world. This impression is being driven by the importance of advanced technology in determining manufacturing competitiveness.

Unlike low labor costs and small innovations, which have been the main determinants of manufacturing competitiveness for the last three or four decades, sophisticated technology is expected to become the main source of industrial competitiveness in the near future.

This is the result of the change in the organizational character of manufacturing. High value-added manufacturing industries, such as aeronautics, automobiles, chemicals, defense, electronics, machinery and pharmaceuticals are becoming more automated in process and function and are therefore employing less labor. Value additions in these industries now come from technological advances that improve efficiencies.

The vital role of advanced technology in promoting the competitiveness of future global manufacturing is well understood. But will that make the US the most competitive manufacturing country in the world within five years?