You may not be able to hear it, feel it or smell it, but manufacturing has changed — the mood has swung. After a long bout of winter blues, the spring and summer of 2016 has acted as light therapy for an industry seen unfavorably as unattractive and likely shrinking. For four consecutive months, the manufacturing sector has expanded, according to the Institute for Supply Management. Some say the trend is merely the product of lessons learned during the recession.
But the 2016 Global Manufacturing Competitiveness Index, a joint study by the U.S. Council on Competitiveness and Deloitte, suggests there is much more at play here, predicting that the United States will unseat China as the most competitive manufacturing nation by 2020.
While China holds the top spot according to the index, the U.S. is feeling the early rumblings of a technological earthquake that’s changing the manufacturing landscape into a sector that is smart, safe and sustainable.
The index surveyed more than 500 senior manufacturing executives from around the world, and its findings were the subject of Capitol Hill hearings.
During testimony delivered to the Senate Energy and Natural Resources Committee, experts spoke eloquently about the ongoing transition to a world of advanced manufacturing and an emerging innovation ecosystem where industry, start-ups, national labs, and universities all sit at the same research bench and collaborate on research and development.
This new public-private partnership serves as an innovation incubator, and it’s worth supporting. In fact, new lightweight materials are being developed that save energy costs and help our nation’s manufacturing base compete in the global energy race.
During the Senate hearing, Minnesota Sen. Al Franken declared enthusiastically, “This makes me an optimist.”
In Minnesota — where manufacturing is the largest private sector industry — there’s every reason to be optimistic. New advances in energy, high-tech modeling, robotics, 3-D printing and simulations fueled our “Manufacturing Spring” of 2016.
So how can Minnesota continue to be competitive in manufacturing? The 2016 Global Manufacturing Competitiveness Index provides a road map that will help create jobs and a vibrant economy. Here’s a top-five list of manufacturing competitiveness drivers:
• Talent. Skilled workers remain No. 1. The global manufacturing executives surveyed continue to give high marks to nations with well-educated workers. We see this emphasis on attracting excellent talent not only in manufacturing companies, but also across a multitude of industries sparking a talent war where various industry sectors compete to attract the best talent. The manufacturing industry must focus on innovation and creativity to appeal to talent and position the sector as the winner.
• Cost competitiveness. In the current climate of sluggish economic growth, containing costs to boost profits remains a critical imperative for manufacturers. Our manufacturing executives surveyed ranked cost competitiveness as the second most influential driver of overall competitiveness.
• Embracing advanced technologies. Many manufacturers are at the forefront of technology-driven production. Robotics, lasers, sensors and other high-precision technologies are beginning to dominate the shop floor.
• Ecosystem partnerships. Companies that embrace advanced technologies will also need to leverage strengths of ecosystem partnerships beyond traditional boundaries. This means that competitiveness is directly correlated to the strength and robustness of an organization’s collaborative networks. Those networks include government labs opening their doors and working with companies to cultivate public-private partnerships.
• Education investments. A well-funded education infrastructure sets the stage for a talented, productive and skilled workforce. According to the Minnesota Department of Employment and Economic Development, the University of Minnesota ranks ninth in research expenditures among top American universities. The power of a strong academic system is vital to a strong manufacturing industry.
Standing on the cusp of a new industrial revolution, the stakes are very high. The competitiveness of U.S. manufacturing has never been more important.
If the U.S. can capitalize on its resources, it will realize our report’s prediction as the world’s most competitive manufacturing nation by 2020. States like Minnesota play a deciding role in how this plays out.
Despite lagging productivity, if we can spark creativity and innovation, we can unleash advanced manufacturing’s potential to restore America’s economic might.
A new age of unprecedented knowledge and innovation is unfolding. As Sen. Franken went on to say at the hearing, “Sometimes in this job we get a little pessimistic when we see things. We are talking about the future and the amazing things we’re doing in advanced manufacturing. This is unbelievable.”
We couldn’t agree more.
Barb Renner is vice chairman and the U.S. consumer products leader for Deloitte LLP. Deborah Wince-Smith is president and CEO of the Council on Competitiveness. Access the 2016 Global Manufacturing Competitiveness Index survey at tinyurl.com/zjuhdr7.