Emerging nations set to be manufacturing force

The Germans' manufacturing competitiveness is seen to be overtaken by the Indians in five years' time. Michael Dalder / Reuters

The manufacturing giants of the 20th century will be challenged by emerging nations over the next five years, according to Deloitte's 2013 Global Manufacturing Competitiveness Index.

China, Germany and the United States currently hold the top three ranks for competitiveness in manufacturing, according to the report, which is based on a survey of 550 chief executives around the world.

In five years, Deloitte believes Germany will have ceded the number two spot to India, taking the country's current number four position. The US will have slipped from third to fifth, with Brazil jumping six places to replace it.

"Nothing was more important to CEOs than the quality, availability and productivity of a nation's workforce to help them drive their innovation agendas," Craig Giffi, the Deloitte US vice chairman and the report's co-author, said. "Enhancing and growing an effective talent base remains core to competitiveness among the traditional manufacturing leaders - and increasingly among emerging market challengers as well."

In the Middle East, the UAE will slip from 30th to 32nd position. Saudi Arabia and Egypt will both advance one step, rising to 33rd and 35th places respectively.

The UAE and Saudi Arabia are striving to improve their manufacturing sectors. In Abu Dhabi, the recently opened Khalifa Port and the adjoining Kizad industrial zone are expected to attract a number of manufacturing companies. Saudi Arabia last week announced that two affiliates of Saudi Basic Industries Corporation have agreed to build an ultra-high molecular-weight polythene plant in Jubail, the nation's industrial hub.

Deloitte's report points out, however, that the emerging nations are perceived to be lagging in a number of areas central to manufacturing competitiveness. These include the availability of skilled talent; economic, trade, financial, tax and legal systems; supplier networks; and infrastructure.

The emerging nations rate better when measured on the cost and availability of labour. Almost nine in 10 chief executives said India and China were competitive in this regard; fewer than four in 10 believe the same about the US, Germay and Japan.