South Africa and most of its fellow Brics members – and the African continent as a whole – need to take a long, hard look at investing in cutting edge technology to catch up in the global manufacturing stakes, a new study shows.
According to the three-year Deloitte 2016 Global Manufacturing Competitiveness Index (GMCI), South Africa is losing momentum compared to global leaders, although it remains the most competitive manufacturing country in Africa.
The GMCI helps global industry executives and policy makers evaluate the key drivers to company and country level competitiveness. It also identifies those nations expected to offer the most competitive manufacturing environments until 2020.
Of the Brics countries – Brazil, Russia, India, China and South Africa – South Africa occupied 27th position, a drop of three places since 2013. Brazil, Russia, and India all experienced a significant decline in their ranking over the last few years.
At No 29, Brazil experienced the steepest fall from eighth position in 2013, while Russia slipped from 28th to 32nd position. India is however expected to improve its rank from No 11 this year to the number five spot by 2020.
China came out on top and was ranked the most competitive country, with the United States, Germany, Japan, and South Korea rounding off the top five.
“Globally, we are seeing manufacturing-related activities evolving very quickly to match the advances in technology. This is seeing countries increase their focus on developing advanced manufacturing capabilities by investing in high-tech infrastructure and education,” said Mike Vincent, Africa industrial products & services sector leader.
The study found that advanced technologies are becoming an essential driver to remain competitive, with technology-intensive sectors dominating the global manufacturing landscape in most advanced economies. These sectors also offer a strong path to achieve or sustain manufacturing competitiveness.
Technological prowess is key
Advanced technologies – such as predictive analytics, the Internet of Things, and smart products and factories – will be instrumental in unlocking future manufacturing competitiveness. Even so, talent is still considered the top driver for manufacturing competitiveness.
However, manufacturers also consider cost, productivity and a good supplier network as vital components to remain competitive.
“In an era of sluggish economic growth, containing costs and increasing productivity to boost profits remains critical, alongside building a strong network and ecosystem of suppliers.” This, explained Vincent, means adopting more innovative strategies and developing and taking advantage of integrated manufacturing and technology clusters.
Governments are also becoming aware of the significant benefits a manufacturing industry provides to national economic prosperity. Similarly, manufacturers understand the role government policy can play in their success.
“We are seeing many countries with unfavourable or overly bureaucratic manufacturing policies working to improve and reform these. They are also investing in greater economic development and strengthening the overall manufacturing infrastructure,” said Vincent.
In Africa, Kenya has been aggressive in industrialising its economy and reducing the bureaucratic burden on industry – resulting in a significantly more competitive environment.
Executives throughout the United States, Europe and China have indicated policies that favour key elements which encourage manufacturing competitiveness, with policies specifically focused around technology transfer and science and innovation encouraging manufacturers to use advanced technologies.
Vincent pointed out that countries are increasing their focus on developing advanced manufacturing capabilities by investing in high-tech infrastructure and education.
Africa left out in the cold
The drive to progress to these advanced technologies is seeing a push at both a country as well as an organisational level. Unfortunately for Africa, a look at the top 15 countries in the index shows the continent left out in the formation of three distinct regional clusters of manufacturing strength.
In North America, the United States provides an anchor for both Canada and Mexico. It is a similar story in Europe where Germany plays the anchor role, and the Asia Pacific cluster where China, Japan, and South Korea are leading a group of emerging Southeast Asian nations.
“Executives surveyed clearly expect the most competitive nations in the future to embrace a higher-value manufacturing paradigm characterised by the adoption of advanced technologies. In the wake of this transformation, the days when a country could establish a position of manufacturing dominance on the back of a single point of strength are decidedly gone.
“In fact, leading countries are taking a much more balanced approach to talent, cost competitiveness, and innovation to set themselves apart from the global crowd,” said Vincent.
Several of the top ranked countries are developing policies that encourage investment in highly integrated manufacturing technology and innovation ecosystems. These involve national labs, supplier networks, universities and private equity investors.
All of this makes it vital for South Africa to engage on how to steer manufacturing forward in the light of the country’s ailing industry environment and its great potential, said Vincent.
Source: News24Wire.