Weekly Program
The following information is taken from manufacturing highlights and data analysis by Deloitte in the 2013 GMCI survey:
CHINA is the largest exporter and the second largest importer in the world. China overtook the U.S. in 2010 as the largest manufacturing country in the world. As a result, China's middle class is rapidly growing, and is expected to double in size in the next decade. The influence of this large consumer segment will only increase with its growing disposable income levels, creating a strong domestic demand for products. The tax burden, however, is more than all other countries with the exception of France among major industrial countries. China ranks behind other Asian economies such as Japan, South Korea and India, but ahead of Thailand, Vietnam and Indonesia in intellectual property protection. They do have intellectual property protection laws, yet enforcement of the laws remains a concern.
GERMANY has taken a different path than China in improving manufacturing competitiveness. They have focused efforts on the development of new technologies and innovative capabilities, which requires a highly skilled workforce that commands high labor rates. Diversity within the manufacturing sector is also helping elevate Germany's GMCI ranking. Building on their historical strength in automotive manufacturing and "made in Germany" premium brand, the country continues to grow and dominate the field of "mechatronics" - a multidisciplinary field of science and engineering that merges mechanics, electronics, control theory, and computer science to improve and optimize product design and manufacturing. However, experts predict that Germany will drop from the world's second most competitive nation in 2013 to fourth by 2018 due to significant disadvantages such as labor and material costs, and energy costs and policies. There were also concerns about venture capital for start-ups and ongoing instability across the Eurozone. Yet, today, German is the world's second-largest manufacturing exporter behind China. Exports grew nearly three times between 2000 and 2011. Also, this country ranked highest in talent-driven innovation.
The 2013 GMCI survey ranked the UNITED STATES third in current manufacturing competitiveness. However the survey also expect the U.S. to fall behind due the rise of India and Brazil to perhaps the fifth most competitive manufacturing nation in five years. This is due to policy and regulatory disadvantages, as well as high labor, corporate tax, and unemployment rates along with sluggish GDP growth. The highest corporate tax rate based on figures from 2012 was 39.1% compared to a peer average of 26.2%.
INDIA dropped two spots in current 2013 GMCI rankings, falling from second to fourth since 2010. However, the decline may be short-lived as executives responding to the survey felt the country would regain its former position and once again become the world's second most competitive manufacturing nation in the next five years, behind China. The country's strong talent pool in the areas of science, technology and research, in conjunction with some of the lowest labor rates in the world, were cited as significant competitive advantages. India recently announced a US $1 trillion investment in infrastructure over the next five years, which will result in increased efficiency and low operating costs for manufacturers operating in the country. The highest corporate tax rate (2012) in China was 32.4% as compared to the peer average of 26.2%. India's largest manufacturing exports are textile goods, engineering goods and chemicals.
BRAZIL's rank dropped since 2010, falling from fifth to eighth in current manufacturing competitiveness. However, executives surveyed expect a quick improvement leading to perhaps the world's third most competitive nation over the next five years. Key to Brazil's manufacturing advantages are ongoing investments and favorable policy actions that seek to spur long-term competitiveness. Specifically, the country's recently announced Brasil Major (Bigger Brazil) Industrial Plan is expected to create favorable tax advantages as well as reduce lending and energy costs. Preparations for the World Cup 2014 and Olympics 2016, not to mention the Rotary International Convention 2015 (yeah!) (editor's addition here) are expected to drive a number of improvements. Brazil is one of the few countries with a sufficiently large natural resource base coupled with a relatively advanced research infrastructure. The highest corporate tax rate in Brazil is listed as 34.0% as compared to the peer average of 26.2%.
We hope that this information has been interesting to our Active Rotarians and guests. In that Rotary is international, we strive for programs to help us understand our world and our place in it. Perhaps this information will be useful in either attracting or sending Vocational Training Teams between countries. These are Rotary sponsored training teams designed to enhance vocational training.