Tag: competitiveness

OM in the News: The Top 10 Manufacturing Countries in 2020

chinaA new study on future global competitiveness, reported by Industry Week (Dec.9, 2015), predicts that the U.S. will dislodge China as the most competitive manufacturing nation in the world in 2020. “Manufacturing competitiveness, increasingly propelled by advanced technologies, is converging the digital and physical worlds, within and beyond the factory to both customers and suppliers, creating a highly responsive, innovative, and competitive global manufacturing landscape,” says the report. While emerging markets continue to push the leaders, the manufacturing powerhouses of the 20th century (the U.S., Germany, and Japan),  hold 3 of the top 4 positions currently and in the future. The study also suggests that Brazil and Russia seem to have lost their allure as highly competitive manufacturing locations today. Here are the rankings:

# 1 The U.S.: By 2020, the U.S will overtake China to earn the top spot for the most competitive nation in the world, due the country’s investment in research, technology, and innovation.

#2 China: Shenzen is a large manufacturing center that has sprung up quickly (see photo).

#3 Germany: Germany is pushing its leadership in industrial production research and development toward “smart production.”

#4 Japan: The manufacturing sector accounts for 19% of Japan’s GDP.

#5 India: It has a large population of engineers and factory workers, its intellectual property is widely respected, and it is easy to find English-speaking managers there.

#6 Korea: The biopharmaceutical industry is an important manufacturing sector to South Korea.

#7 Mexico: Electronics manufacturing activity in Mexico is widespread. In the last 15 years, $14 billion in investments have been made to make production stronger and more efficient.

#8 Taiwan: Five of the world’s largest producers of TFT-flat screens are Taiwan-based.

#9 Canada: Montreal’s aerospace sector is comprised of more than 210 companies which employ 43,500.

#10 Singapore: More than 30 biomedical sciences companies have established regional headquarters in the country.

Classroom discussion questions:
1. Why not Brazil and Russia?

2. What makes U.S. manufacturing more competitive than 30 years ago?

 

OM in the News: R&D Shifts Towards Asia

If yesterday’s blog about increased productivity in US factories provided some good news during these difficult economic times, today’s may take the wind out of our sails. It is based on with two separate articles in the Wall Street Journal (Jan.18,2012) about why we are losing critical (and high-paying) R&D jobs.

In the first, we find we are rapidly losing our research labs to China and Asia. Firms like GE and Caterpillar are spending billions to expand R&D overseas to: “tap a broader pool, of scientific talent, tailor products to overseas markets, and curry favor with foreign governments”. Here is what 3M’s CEO George Buckley has to say: 3M is expanding overseas labs “in preparation for a world where the West is no longer the dominant manufacturing power. Given the moribund interest in science in the US, this is strategically very important”. 

To a large extent, companies are setting up labs near factories (where ideas can be tested) and where engineering and scientific talent is becoming concentrated. Since 56% of the world’s engineering degrees are awarded in Asia–compared to 4% in the US — Caterpillar is hiring 500 engineers at its China R&D center while GE is setting up six product development centers there.

In the second Journal article, Harvard’s  Michael Porter answers that what is making us less competitive is “political gridlock, faltering schools, and a convoluted tax code”. Nearly 1/3 of the 9,750 execs he surveyed said “other countries offered better access to high-skilled workers and labor productivity”. More disquieting, of 607 site decisions resolved the prior year by respondents, work was moved out of the US in 511 (or 84%) of the cases–and many of these “involved R&D and engineering activities, belying the common perception that only low-skill jobs are at risk”.

Discussion questions:

1. What are the chief obstacles to retaining high-paying R&D jobs in the US?

2.  Why are the major manufacturers moving labs overseas?

OM in the News: US Productivity and Some Misconceptions

President Obama recently stated that the US can out-compete any other nation on Earth if only we “unlock the productivity of American workers”. Indeed, getting more or better value for each hour worked may be the key to competitiveness, according to two McKinsey execs in today’s Wall Street Journal (Feb.16,2011). Here are 4 of their main points in addressing  common misconceptions about the importance of productivity growth:

1.The US now relies more than ever on productivity gains to drive GDP growth. Productivity generated 80% of GDP growth in recent years compared to 35% in the 1970’s. “If productivity increases at an average of 1.7% annual rate posted since 1960, annual GDP growth will fall to 2.2%, from its historic average of 3.3%. Americans on average would experience slower gains in living standards than did their parents and grandparents”, the authors write.

2. Productivity does not destroy jobs in a dynamic economy. “More than 2/3 of the years since 1929 have seen gains in both”.

3. Productivity is not just for laggard sectors and companies. “Even the best-performing companies can boost productivity by emulating the best practices of others and developing new innovations of their own”. Hospitals have just started to embrace efficient practices and lean techniques in supply chains. And boosting public-sector productivity is critical in reducing the budget deficit without slashing services.

4. Our productivity engine is not running out of steam. “By applying best practices across the economy and tapping into the next wave of innovation”, we can match historic growth rates, they conclude.

This is an important topic covered in Ch.1, but it is timely enough to discuss throughout the semester.

Discussion questions:

1. Why do some argue that productivity is a “job-killer”?

2. How did retail contribute to productivity gains in the 1990’s?

3. What happens when productivity gains fall?