North American Manufacturers Are Bullish on NAFTA as Contributing to Competitiveness; Production Remains Achilles' Heel as Companies Compete Globally WASHINGTON, June 18
WASHINGTON, June 18 /PRNewswire/ -- Despite intense global competition,
manufacturers consider North America the most desirable region for expansion
over the next three years, according to a new survey released today by
Deloitte.
The survey, Made in North America, targeted top-tier executives of
manufacturing companies with North American operations. Results showed that
these companies have expansion plans for a variety of operations, including
sales, service, research and development, and sourcing. While expansion plans
are global, North America -- especially the United States -- was cited as the
No. 1 likely location in the short term. Most surprisingly, these
manufacturers seem to have a renewed emphasis on North America as the home for
actual production facilities, hoping to turn around an area that has been
lagging.
In terms of the executives' agendas for expansion, the survey found that
sales and services topped the list with 76 percent planning to expand sales in
the United States, 58 percent in Canada and 67 percent in Mexico. Sourcing of
raw materials and parts (50 percent in China, 49 percent in the United States,
and 43 percent in Mexico) and production (44 percent in the United States, 37
percent in Mexico and 37 percent in China) rounded out the top three
priorities.
Overall, the vast majority of respondents said North America will not lose
competitive ground in those areas over the next five years. And a significant
number said they believe North America will become even more competitive by
2012 in sales and marketing (45 percent), information technology (41 percent),
customer service (37 percent), R&D/engineering (36 percent) and
finance/accounting (34 percent). A small percentage predicted that North
America will be less competitive globally in these areas by 2012, with the
balance being neutral.
"While globalization will continue and some manufacturing jobs will
follow, North America is showing significant resiliency, based on the plans of
these executives," said Craig Giffi, a Deloitte LLP vice chairman and the U.S.
Consumer & Industrial Products industry leader.
The survey also shed new light on how North American manufacturers view
free-trade agreements. Overall, manufacturers paint a positive picture of
their experiences with the North American Free Trade Agreement (NAFTA) after
almost 15 years, according to survey respondents.
In fact, North American manufacturers said they are confident about their
competitive position in the global marketplace, and expect that to remain true
for the next several years. The only dark spot is production capability.
Despite plans to expand in North America in the short term, survey respondents
painted a gloomy picture of this region's ability to compete over the long run
with lower-cost locations for production, especially Asia.
More than half of survey respondents (61 percent) said they expect North
America to become even less competitive globally as a site for production by
2012. The key barriers to making production competitive globally were seen as
labor cost (cited by 71 percent), tax policy (66 percent), work rules (66
percent), lack of availability of skilled labor (51 percent) and costs of raw
materials and energy (56 percent). Not surprisingly, these were the issues
most frequently cited by executives surveyed as areas that governments should
address as matters of public policy.
By contrast, China and India were seen by executives surveyed as becoming
increasingly competitive as locations for production facilities. For example,
37 percent of respondents said they plan to expand in China in the next three
years, and 24 percent in India.
As production shifts, manufacturers indicated they will move other
operations as well. For example, more than 48 percent of respondents said they
plan to expand sales operations in China over the next three years, and 34
percent said they plan to do the same in India. Additionally, 27 percent plan
service operations expansion in China and 23 percent plan to do so in India.
"While the focus on expanding both production capacity and sales and
service in North America, China and India may seem like a contradiction," says
Giffi, "it is evidence of the fact that to compete in the future,
manufacturers need to be able to grow in all major markets around the world."
Giffi added, "The simplistic way to view manufacturing is to look only
where production is located. It's clear that a more accurate way to measure
the economic impact of these companies is to look at where all operations are
located, including sourcing, research and development, distribution, finance,
marketing, and all of the other functions necessary for a company to thrive.
In most cases, executives are telling us that North America provides a
competitive business environment for most of these activities."
About the Survey
Deloitte, Deloitte Canada and Deloitte Mexico, with the cooperation of the
National Association of Manufacturers (NAM), The Manufacturing Institute, and
Canadian Manufacturers & Exporters (CME), surveyed 321 executives of leading
North American manufacturing enterprises across product sectors to obtain
their perspectives on their current and expected future competitiveness. The
majority of companies represented in the survey (45 percent) are based in the
United States. The survey responses have been summarized and represent the
opinions of the executive management of these firms. No supplementary research
has been added.
For more information and to download the complete survey results please go
to http://www.deloitte.com/us/NAFTA.
About Deloitte
As used in this document, "Deloitte" means Deloitte LLP. Please see
http://www.deloitte.com/us/about for a detailed description of the legal
structure of Deloitte LLP and its subsidiaries.
Contact:Allyson McKenney Liz Torrez
Public Relations Hill & Knowlton
Deloitte +1 312 255 3036
+1 203 708 4406liz.torrez@hillandknowlton.com
amckenney@deloitte.com
SOURCE Deloitte
