June 29, 2010
by PLANT STAFF
TORONTO: Canada’s manufacturing sector continues to face serious competitive challenges from emerging economies and a Deloitte report points to the need for stepped up investments in talent-driven innovation and a more competitive policy infrastructure.
Deloitte says access to talented workers capable of supporting innovation is the key factor driving global competitiveness in manufacturing, well ahead of labour, materials and energy.
The 2010 Global Manufacturing Competitiveness Index report, based responses from more than 400 CEOs and senior executives worldwide, says the once dominant western manufacturing powers will continue to be outpaced by a new group of leaders such as China, India, the Republic of Korea and Brazil.
North American and Western European nations are expected to be less competitive in the next five years. Canada is currently ranked in the middle of the pack and will be in the same spot in five years.
“The Canadian economy as a whole is in a strong position compared to other developed countries, but our average competitiveness will mean that further restructuring of Canadian companies will be needed,” said Luc Martin, Deloitte Canada’s national manufacturing leader in a release. “Investments in a skilled workforce and in innovation will be key to improving performance and keeping a vibrant manufacturing industry in Canada.”
The report found that the countries with a competitive edge in manufacturing have a steady supply of highly skilled workers, scientists, researchers, engineers, and teachers who collectively have the capacity to continuously innovate and, simultaneously, improve production efficiency.
In addition, the most competitive nations demonstrate strength in research and development, as well as engineering, software and technology integration abilities. For example, although China, India and Korea relied on lower-cost labour early on, the current edge shown by their manufacturing sectors is attributable to their ability to supply high-end and highly technical products.
Other key drivers of competitiveness, many of which are policy related, include cost of labour and materials; economic, trade, financial, and tax systems; energy cost and policies; legal and regulatory systems; quality of physical infrastructure.
Compared to Europe and North America, China is seen as making competitiveness easier through government policies including support of science, technology, and innovation. European governments provide an edge to their manufacturing industry with the support of infrastructure development, while North America is perceived as having the most advantageous intellectual property protection policies.
North America was ranked third in financial and tax systems. The report noted inappropriate measures in this area could stifle the manufacturing sector and be a drag on a country’s competitiveness.
“Given that manufacturing will continue to be an essential path for attracting investments, spurring innovation, and creating high-value jobs, governments in Canada will need to ensure we have the right foundation in place for financial and tax systems, as well as quality infrastructure,” said Martin.
Click here for a copy of the report from Deloitte’s Global Manufacturing Industry group and the US Council on Competitiveness.