Labor productivity is the biggest factor for global competitiveness in manufacturing: survey

A new global survey commissioned by U.S.-based workforce management firm Kronos Inc. revealed that labor productivity ranked the highest among all 11 countries surveyed as the most important factor for achieving manufacturing success.

Factors such as modern infrastructure, government support, and foreign direct investment ranked in varying degrees after labor productivity in the study conducted between March and April 2012 by IDC Manufacturing Insights.

Manufacturing managers, directors, and executives from sectors including automotive, food and beverage, machinery and equipment, and textiles across Australia, Brazil, Canada, China, France, Germany, India, Mexico, Spain, the U.K., and U.S. were surveyed for current trends in global manufacturing. Respondents from developed economies fared similar to emerging nations when rating manufacturing’s importance, with 70 per cent of all respondents citing manufacturing as the single most important industry for their country’s economic health; some 74.7 per cent of all respondents agreed that a high level of labor productivity is very or extremely important for achieving manufacturing success.

“Manufacturers today are judged on a world stage and their treatment of labor is under the scrutiny of governments, downstream supply chain partners, and end consumers,” said Gregg Gordon, a senior director with Chelmsford, Mass.-based Kronos. “With developed countries facing high levels of un-employment and falling wages, emerging nations can no longer rely on low cost labor as a growth strategy. They will need to develop a skilled, productive workforce to compete globally. Also, as manufacturers seek growth internationally, they are required to invest in economic development by foreign governments; specifically good paying, local jobs. With increased global scrutiny, competition, and supply chain complexities, the workforce is becoming a competitive differentiator for manufacturers everywhere.”

Brazil, Mexico, and Spain scored the highest regarding labor productivity, with 82 per cent in all three countries noting it to be very or extremely important. China (66 per cent), France (66 per cent), India (68 per cent), and Germany (68 per cent) scored relatively low.

Brazil respondents ranked the need for modern infrastructure the highest, with 88 per cent rating it as very or extremely important, while only 66 per cent in the U.S. agreed on modern infrastructure’s importance.

Respondents in Mexico rated access to foreign investment the highest, with 70 per cent citing it as very or extremely important. Brazil, India, and Spain also ranked it highly.

Only 12 per cent of respondents in Canada thought that access to foreign direct investment was key to manufacturing competitiveness. Germany had 16 per cent and the U.S. posted 18 per cent, respectively.

China ranked government support for the manufacturing industry the highest, with 82 per cent rating it as very or extremely important, and 48 per cent of U.S. respondents agreed to the same.

Some 68.2 per cent of all respondents said training and continuous improvement of the existing workforce was the best way to improve workforce productivity.

Investment in technology followed with 63.3 per cent.

Both developed and emerging economies are impacted by a shortage of skilled production employees, with 68 per cent in Brazil, 36 per cent in China, 22 per cent in Germany, 44 per cent

in Mexico, and 26 per cent in the U.S. agreeing to they experienced a shortage.