The 2021 Global Manufacturing Risk Index from Cushman & Wakefield evaluates the most beneficial sites for global manufacturing in 47 nations throughout Europe, the Americas, and Asia Pacific.
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Table of Contents:
About the Global Manufacturing Risk Index and How It Is Calculated
As global health and security concerns continue to highlight the manufacturing sector's reliance on global production lines and supply networks, firms must make informed placement selections in order to protect output and preserve growth.
The Global Manufacturing Risk Index from Cushman & Wakefield helps businesses make the best placement decisions possible by providing analysis, recommendations and statistics from their logistics and industrial specialists providing local market experience all across the world.
Their integrated real estate and facilities services combine global reach, local execution coordination, and modern data analytics to give the best possible insight into the industry.
How It is Calculated
The Global Manufacturing Risk Index assesses the most advantageous locations for global manufacturing among 47 countries in Europe, the Americas and Asia Pacific. The evaluation of countries is based on four major criteria:
1. Bounce Back
As lockdowns are eased, work from home decreases and normal production resumes, what are projections for resumption of normal business services and manufacturing capacities
2. Conditions
The business environment, which includes talent/labor availability and market access.
3. Costs
Labor, power, and real estate are all part of the operating costs
4. Risks (Political, economic and environmental)
The Manufacturing Risk Index (MRI) is based on data from several trustworthy sources, including The World Economic Forum (WEF), a global gathering of economic powerhouses, Moody's Analytics which specializes in financial analysis and The World Bank, a multilateral financial institution.
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Key Findings of the Global Manufacturing Risk Index 2024
Impacting Trendseco
When it comes to deciding where to manufacture, the top criteria are supply chain interruptions, labor prices, and labor availability. However, production line problems caused by COVID-19 lockdowns and an imposed reduction in onsite labor wreaked havoc in plants all over the world, putting the industrial sector at a standstill.
India Moves to Second Place
Top three ranks of Global Manufacturing Risk Index
1st Rank: China
2nd Rank: India
3rd Rank: USA (United States of America)
According to the Global Manufacturing Risk Index 2021, China is the most sought-after manufacturing site in the world.
India just overtook the United States (US) to become the second-most sought-after manufacturing site globally, owing to cost competitiveness. The United States was placed second in the previous year's survey, while India was ranked third.
The rise in rank reflects businesses' rising interest in India as a favored manufacturing center over other nations, such as the United States and those in the Asia-Pacific region.
The United States came in third, ahead of Canada, the Czech Republic, Indonesia, Lithuania, Thailand, Malaysia, and Poland.
Factors That Contributed To India's Rise In The Rankings
India's operational circumstances and cost competitiveness are attracting more attention, especially with the country’s ability in meeting outsourcing requirements
India has a large population, which implies that the country's industrial industry would be fueled by a youthful workforce with inventive talents
Plant relocations from China to other regions of Asia, including India, may also be ascribed to the increase in ranking owing to an already established basis in the pharmaceutical, chemical, and engineering industries. US-China trade tensions are a factor in the factory relocations.
Land and labor legislation reforms together with government initiatives to make the country self-dependent eg. Skill India Mission, Make in India have been vital towards India's viability as a global manufacturing hub.
Bounceback
The capacity of a country to restart its industrial industry is measured by the Bounce Back rating. Those with the best economic circumstances and infrastructure are at the top of the rankings, while those with the most impediments to a complete recovery are at the bottom.
The top 5 rankers were China, Ireland, the Netherlands, Canada and Denmark. COVID-19 has had a considerable influence on global manufacturing, and the capacity to prevent the virus's spread in important production regions is critical to projecting the sector's recovery.
So two key factors were considered. IMF’s GDP growth forecast, which is a reliable indication of how quickly an economy is expected to recover; and Percent of the population vaccinated by country, which is a reliable indicator of where each country is relative to protecting its population from future waves and lockdowns.
Baseline
The Baseline scenario gives equal importance to a country’s operating conditions and cost competitiveness.
Despite concerns about the Biden administration's ongoing tough stance on trade, China continues to diversify its industrial base, shifting up the value chain to focus on telecommunications, high-tech (China produces 40% of the world's robots), and computers.
See our article on the top manufacturing cities in china
With fast technological adoption and The American Rescue Plan, the United States and its higher-cost workforce may be better positioned to compete with China for industrial production and jobs.
Cost
The Cost scenario places greater emphasis on cost reduction to give a higher score to countries where operating costs, including labor, are lower.
While China remains in first place, Vietnam and India have been overtaken by Indonesia, which has risen from fifth place to second, owing in part to a drop in Jakarta rentals during the last year. India and Vietnam have also shifted spots, now ranking third and fourth, respectively.
Thailand's cost profile, like Indonesia's, improved this year, propelling it from ninth to fifth position, ahead of Malaysia, which has witnessed continued salary rises.
For more details check out our article on what causes manufacturing price fluctuations?
Risk
Taking into account rising geo-political risk, Risk favors countries presenting lower levels of economic and political risk.
The United States and Canada have been relegated to second and third place, respectively, while China has risen to first place from fifth place last year.
China's manufacturing rebounded after Q1 2020 thanks to early and successful lockdowns to suppress the initial wave of the epidemic. Its manufacturing sector's strong performance during the remainder of 2020 contributed to its first-place placement.
Related Article: Is it Cheaper To Manufacture In China?
Conclusion
If you liked this article, check out our global hand tools market forecast and analysis for 2022 and beyond
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