Global Report: Government Policies Seen As Key To Manufacturing Competitiveness

       Global Report: Government Policies Seen As Key To Manufacturing

PR Newswire

NEW YORK, May 2, 2013

NEW YORK, May 2, 2013 /PRNewswire/ --Government policies can either make or
break a nation's manufacturing sector, according to more than 70 global
executives interviewed for a new report from the World Economic Forum (the
Forum) prepared by Deloitte Touche Tohmatsu Limited (DTTL).


The three-volume report, "Manufacturing for Growth," finds that executives
around the world crave government policies that simplify taxes and protect
free and fair trade – along with stronger energy and infrastructure policies
and more focused education and workforce frameworks. They also want science,
technology and innovation policies that promote advanced manufacturing.

"Our report reflects the broad support – from business and government – that
is necessary and exists today to create a progressive, innovative enabling
environment for manufacturing," said Andrew Liveris, chairman and chief
executive officer of The Dow Chemical Company and global chief executive
champion of the World Economic Forum's Manufacturing for Growth project.
"Manufacturing adds value – creating more jobs than any other sector; driving
innovation throughout every segment of our society; and delivering consumer
solutions – all of which are the keys to long-term, sustainable economic

"The manufacturing sector is an important part of balanced economic growth and
business leaders could not be more clear – effective government policies are
critical for a country's manufacturing competitiveness," said Joe Echevarria,
chief executive officer, Deloitte LLP. "Manufacturing companies are anchors
for national and global innovation, including leading research and

According to the report – which is based on extensive input from chief
executives and other senior executives as well as industry, academic and
policy leaders – the United States will succeed as a global manufacturer if it
can offer lower corporate tax rates, while also developing policies that
support domestic energy production and crafting education programs that lead
to an increase in the number of highly skilled workers.

In contrast, executives who participated in the report felt that perennial
manufacturing powerhouse Germany has maintained its path to prosperity through
innovation and new technologies, but faces challenges in the areas of energy,
as well as rising labor and material costs. To address these challenges, the
executives suggest that Germany should develop a realistic approach toward
energy transition. It should also focus on innovation within high technology
and address the rigidity of its labor laws.

Japan, for its part, has one of the largest economies in the world and is
recognized internationally for its best practices in manufacturing, but must
contend with a shrinking population, high taxes and limited access to natural
resources – according to executives. They say that to remain competitive,
Japan should develop monetary policies that help stabilize exchange rates and
address inflation. Japan should also lower tax burdens, develop employment
policies that recognize today's diverse labor market, and strengthen policies
supporting long-term investment in science and technology.

Executives also indicate that while historically strong manufacturing nations
must fight to maintain their competitive edge, emerging powerhouses will face
a very different policy challenge: balancing growth with other national needs.

China, executives say, has rapidly become the world's largest manufacturing
economy, but lags substantially when it comes to the environmental and energy
policies required for its national health and that of its citizens.

Similarly, India has indicated that by 2025 it plans to create 100 million new
jobs and increase its manufacturing sector's share of GDP to 25 percent. But
to reach such lofty growth, executives feel that the country will need to
implement less restrictive labor laws, invest in globally competitive
infrastructure and relax policies governing the levels of foreign direct

In another example, executives who participated in the report say that Brazil
will need to focus on talent development, innovation and education – with a
special emphasis on science and technology. Additionally, the country needs to
invest in infrastructure projects that improve logistics and transportation
and continue to invest in clean and sustainable energy projects. It must also
simplify its tax system and establish political, legal and regulatory

"Countries are now thinking more strategically about how to develop an
integrated portfolio of public policies that enhance the overall innovation
capability of the nation to design, develop and manufacture a wide variety of
sophisticated products. That is, how to foster an advanced manufacturing
ecosystem," said John Moavenzadeh, senior director and head of the World
Economic Forum's Mobility Industries Team.

Additional sections of the report offer value chain analyses for key industry
sectors, including aerospace, automotive and chemicals.

In one example, the report looks at the economic impact a new production
facility can have on a local community, including direct and indirect jobs as
well as net economic impact – determining that a single production facility
can have between $1 and $4 billion annual impact on a local economy and
attract significant additional private investment to the area.

"The research shows that today's manufacturing value chains are global, highly
interconnected and rapidly changing," said Craig Giffi, vice chairman at
Deloitte LLP and consumer and industrial products industry leader. "Countries
around the world are making the policy decisions and investments necessary to
develop a more skilled workforce, improve their infrastructures and drive
innovation – moves that grow advanced manufacturing, create high-value jobs
and seed overall economic prosperity."

The report also examines the importance of public-private partnerships in
amplifying the effectiveness of government policies. Almost universally, the
executives interviewed for the report emphasized the need for the public and
private sectors to collaborate with each other and with universities, national
laboratories and research centers and other non-profits.

The report points to several case examples of effective public-private
partnerships, stressing that they have enabled innovation and technology
advancement and promoted talent development. They include: the Brazilian
Agricultural Research Corporation, Germany's Fraunhofer-Gesellschaft, India's
National Skills Development Corporation, and SkillsUSA in the United States.

To download a copy of "Manufacturing for Growth," please see:

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