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Manufacturing Competitiveness – U.S. to Surpass China As No. 1 by 2020

Competitive success in Manufacturing has many components, for example, the cost of the manufacturing products (manufacturing competitiveness) and the cost of selling them (operational competitiveness).

This month we noticed two new reports highlighting trends in manufacturing competitiveness and in eCommerce. Enjoy!

1. Deloitte Global teamed up with the Council on Competitiveness to release its 2016 Global Manufacturing Competitiveness Index. It shows the United States is the second most competitive manufacturing economy after China. What’s more, global manufacturing executives predict that by 2020, the United States will be the most competitive manufacturing economy in the world!

The report highlights that China is the most competitive manufacturing nation… for now, but, is expected to slip to second position in the next five years (in the perspective of global executives). The United States is expected to take over the number one position from China by the end of the decade while Germany will hold firm at number three.

How come? The report explains in full but two key points are:

  • CEOs say advanced manufacturing technologies are key to unlocking future competitiveness
  • Shift to higher value, advanced manufacturing tilts the advantage to developed nations in the future: As the manufacturing industry increasingly applies more advanced and sophisticated product and process technologies and materials, traditional manufacturing powerhouses of the 20th century (i.e. the United States, Germany, Japan, and the United Kingdom) are back toward the very top of the 10 most competitive nations in 2016.

2. Operational competitiveness includes the cost of sales in the future. eCommerce may be significant in your strategy in that regard and here’s a new data point! We noticed this report on 2015 retail chain sales and highlight it here because what happens in B2C eCommerce often follows in B2B eCommerce!

2015 retail store sales were stagnant or falling for many of the biggest chains but eCommerce was a bright spot! According to Internetretailer.com 18 of the 39 largest publicly traded retail chains ranked in the Internet Retailer 2016 Top 500 Guide booked declines in 2015 store sales. However eCommerce sales for these 39 retail chains were up 10.4% while comparable-store sales growth was only 1.4%. Overall for the 156 public and privately owned chains, online sales grew by 11.6% last year. Our take is that industrial suppliers should expect eCommerce to gradually become a larger portion of total sales.

For example, Grainger was reportedly approaching 40% of sales via eCommerce a year ago. Their Q1 2016 results are reported here and although overall eCommerce sales aren’t reported, they do say, “strong performance for the Other Businesses was driven by 34 percent daily sales growth for the single channel online businesses.

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