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November 17, 2012

The Associated Press

America will drop from third to fifth place in the next five years, according to the 2013 Global Manufacturing Competitiveness Index. China will remain in the top spot.

Report: U.S. competitiveness in manufacturing on the wane

Bloomberg News

CHICAGO - The United States will slip to fifth place from third in manufacturing competitiveness in the next five years as India and Brazil race ahead, according to a report published Friday.

China will remain in the top spot while India rises to second from fourth and Brazil jumps from eighth to third, according to the 2013 Global Manufacturing Competitiveness Index compiled by Deloitte Touche Tohmatsu and the U.S. Council on Competitiveness. The index, which was first introduced in 2010, reflects perceptions of more than 550 senior corporate leaders surveyed about how 38 countries rank currently and will fare in five years.

Executives said access to talented workers is the top indicator of competitiveness, followed by a country's trade, financial and tax policies, the report said.

"From a U.S. perspective we didn't change that much, but it's just that others are moving rapidly," Samuel Allen, chairman and chief executive officer of Deere & Co. and chairman of the council, said in a telephone interview. "We can't tread water whether it be in education, tax reform or continued investment in infrastructure."

The current and future rankings reinforce the perception that the U.S. is "living off of investments we made a long time ago," Allen said. He said he worries about factors such as deteriorating U.S. infrastructure that may increase costs to move goods, and energy policies that could boost fuel prices.

While Deere, the world's largest maker of farm equipment, has factories around the world, it still has invested about 57 percent of its capital in the U.S. in the last five years, Allen said. The Moline, Ill.-based manufacturer generated 61 percent of its revenue in the U.S. and Canada last year, according to data compiled by Bloomberg.

"What you worry about is the continued deterioration of the critical success factors to manufacture here," Allen said.

The U.S. still can improve its competitiveness by reforming its tax structure and controlling its debt, Allen said.

According to the report, Germany will move from second to fourth in the competitiveness ranking, South Korea will fall from fifth to sixth, Taiwan will go from sixth to seventh, Canada will drop from seventh to eighth, and Japan falls out of the top 10 list altogether, tumbling from 10th to 12th. Vietnam, meanwhile, will jump from 18th to 10th and Singapore will maintain its No. 9 ranking.

In five years Germany will be the only European country in the top 15 spots, as Britain and Poland slide, Allen said.





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