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Manufacturing Opportunity
Cag A. G
Craig Gi is a vice chairman and the leader or the U.S. Consumer &
Industrial Products Industry practice spanning the Aerospace & Deense,
Automotive, Process, Industrials, Consumer Business and Retail Industry prac-
tices or Deloitte LLP. Craig is also the chairman o the global manuactur-
ing industry practice o Deloitte ouche ohmatsu Limited (DL).
In addition to his U.S. Consumer & Industrial Products Industry practice respon-
sibilities, Craig has primary responsibility or Deloittes day-to-day activities as amember o the Council on Competitiveness working with industry CEOs, university
presidents and labor leaders to shape the debate on competitiveness. He is also a
rustee o Te Manuacturing Institute helping to drive thought leadership regarding
manuacturing talent, innovation and contributions to the American economy and
participates as a subject matter expert regarding manuacturing competitiveness with
the National Association o Manuacturers (NAM) on their eorts to shape the debate
on the issues impacting manuacturers in the United States and around the globe.
Currently, Craig is leading a multi-year Global Competitiveness in Manuacturing
initiative in partnership with the Council on Competitiveness with the objec-
tives o establishing a global competitiveness index dening both critical driverso competitiveness or nations and companies and the ranking o countries based
on manuacturing CEO input rom around the world. Tis research is help-
ing uncover the new models or success or the 21st century being adopted by the
most capable and competitive global manuacturers today. Craig is also leading
Deloittes manuacturing research eorts with the World Economic Forum; having
recently co-authored the report Te Future o Manuacturingor the Forum. Craig
assisted with the release o this report and helped acilitate CEO, government leader,
and academic leader discussion regarding the reports key ndings at the Forums
annual meeting in Davos, Switzerland in January 2012. Craig is currently leading
Deloittes collaboration with the World Economic Forum on their Manuacturing
or Growth project eort intended to be completed in time or Davos 2013.
Craig is the co-author o the bookCompeting in World Class Manuacturing
Americas wenty First Century Challenge and has been a guest lecturer at the GE
Whitney Symposium, the Council on Competitiveness, the Global Federation o
Councils on Competitiveness, at the World Economic Forums annual session in
Davos Switzerland and the Woodrow Wilson International Center or Scholars on
the topic o manuacturing competitiveness. More recently, Mr. Gi was asked to
testiy beore the U.S. Congress on Deloittes manuacturing competitiveness research.
About the author
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Contents
Eecutie summar | 2
Introduction | 5
A crisis o confdence | 6
The elements o competitieness | 10
Making America a more attractie place to conduct business:Action steps or policmakers | 14
Conclusion | 24
Appendi A:The World Economic Forum Future o Manuacturing project | 25
Appendi B:The U.S. Manuacturing Competitieness Initiatie | 26
Appendi C:Understanding American perceptions o manuacturing and tackling thegrowing skills gaps in the United States | 27
Endnotes | 28
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Manufacturing Opportunity
AmeriCAn manuacturing is a world oparadoxes. In the past decade, Americahas lost 6 million manuacturing jobs; yet
today, 600,000 jobs cant be lled in America
because manuacturers cant nd people with
the right skills.
When Americans are asked how they would
create a thousand new jobs in their communi-ties with a new business acility, manuacturing
is their rst choice. Yet 18 to 24yearolds
rank manuacturing dead lastamong indus-
tries in which they would actually choose to
start a career.1
Similarly, 79 percent o Americans believe
a strong manuacturing base should be a
national priority. However, when it comes to
the uture o manuacturing, Americans are
very pessimistic: Only 7 percent believe thatU.S. manuacturing competitiveness is likely
to get stronger, while 55 percent say it will
become weaker.
In short, manuacturing is experiencing
a crisis in condence in the United States.
Americans view the manuacturing sector
as ragile and unstable. Tey are concerned
about the long-term stability o manuacturing
employment. Tey also ear that manuactur-
ing jobs will inevitably be moved to workers
in other countries, and they appear to have
doubts about our leaders ability to prevent
this. Tese views have remained consistent
year aer year.
Te United States is at a crossroads. Low-cost basic manuacturing is unlikely to ever
recover its ormer importance in our economy.
However, this doesnt mean urther decline is
inevitable. New pathways to manuacturing
opportunity in America are both available and
achievable. And public policy has a major role
to play in supporting these directions.
Te rst pathway lies in advanced technolo-
gies and innovation. I America is to regain its
position as a global leader in manuacturingand revive economic prosperity, we must look
to increasingly complex and emerging tech-
nologies, and to Americas ability to lead the
development o such breakthroughs.
Across the spectrum o policy, rom the tax
code to the direct incubation o small busi-
nesses, government policy can either help
Eecutie summar
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spuror inhibitmore innovation. A healthy
manuacturing base drives emerging technol-
ogy development and will help propel the
United States into the uture. Strengthening
manuacturing today will play an integral part
in determining where America will be techno-
logically in 20 years. Government could help
establish consortiums between businesses,universities, and labor and political leaders to
develop long-term U.S. manuacturing goals
and orm a new innovation strategy.
Te second pathway is enhancing talent.
CEOs agree that talent trumps all other ac-
tors gauging manuacturing competiveness.
In act, 67 percent o manuacturers reported
that moderate to severe shortages o available,
qualied workers exist. And 56 percent antici-
pate that these shortages will only grow worsein the next three to ve years. Te workers
hardest to nd are machinists, operators, cra
workers, and technicians. Tere are numerous
ways to center policy on enhancing skills to
meet todays advanced manuacturing needs.
A ocus on perormance-based education and
building government-to-industry partnerships
among many other recommendations can help
prepare talent better. As a country, we need
to arm students with the right technical and
problem-solving skills through fexible educa-
tion pathways that lead to advanced degrees
or certications.
Te third pathway to greater competi-
tiveness is to reorm taxes and regulations.For example, 69 percent o Americans agree
that tax cuts or businesses and individu-
als create jobs, while 65 percent support tax
incentives or manuacturing. In 2011, the
United States had the highest corporate tax
rate among OECD nations. And the United
States is the only G8 member that does not
employ a territorial tax policy, which taxes
only income earned inside the nations borders.
Improvements in intellectual property reormare also needed. Tis reports recommenda-
tions, i implemented, would make it more
attractive or manuacturers to improve and
increase their activities in the United States.
Fourth, the need to invest in inrastruc-
ture development is paramount. Every dol-
lar o inrastructure spending generates an
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Manufacturing Opportunity
additional 60 cents in economic activity.
China, or example, recently devoted 9 percent
o its GDP to inrastructure development,
while the United States has let much o itsinrastructure deteriorate.
Lastly is the issue o Americas energy policy
and its impact on manuacturing. Competitive
energy policies could ensure reliable energy
supplies to literally uel manuacturing.
In short, while policymakers mention
manuacturing all the time, most Americans
dont believe enough is being done to support
it. Eighty percent o Americans think that the
United States should invest more into manu-
acturing. Why? Te linkage between manuac-
turing capabilities and economic prosperity is
a much stronger predictor o a vibrant, suc-
cessul, and growing economy than any other
measure typically used by economists. Simply
put: manuacturing matters.
Tis study looks at the manuacturing
sector and the challenges it aces. It pro-
poses a series o recommendations that, i
implemented, would help the United States
climb back into the drivers seat in global
manuacturing competitiveness.
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Introduction
In March 2011, a major economic milestoneattracted relatively little notice in the nationalpress. Economic consultants rom IHS Global
Insight reported that in 2010, China had sur-
passed the United States. to become the worlds
leading manuacturing nation, with a 19.8 per-
cent share o global output, compared to 19.4
percent or the United States. Chinas share o
world manuacturing output had tripledin just
10 years.2
Perhaps the most surprising thing about
this announcement was how unsurprising
it was.
Manuacturing competitiveness and the
relative importance o manuacturing to the
economy are issues that have been debated or
decades, and hundreds o premature obituar-
ies or U.S. manuacturing have been written.
Spurring these obituaries has been the undeni-
ably long and steady decline in the importance
o manuacturing within Americas overall eco-
nomic mix. In 1947, or instance, 26 percent o
nominal U.S. GDP came rom manuacturing.
By 2011, that gure had allen to less than
11 percent.3Tis decline has been accompanied by
sustained job losses. America has lost about 6
million manuacturing jobs since 2002, 2 mil-
lion since 2008 alone,4 including 28 percent o
its high-technology manuacturing jobs in the
last decade as reported by the National Science
Board.5 As a result, Americas middle class,
which pioneered innovations and technologi-
cal advancements, has also steadily erodedas
has its economic prosperity.
But U.S. policymakers are beginning to
recognize the vital importance o a strong
industrial base as emerging economies seize
upon the economic benets o manuacturing,
and key developed nations such as Germany
demonstrate the resiliency and strength manu-
acturing adds to the mix. In addition to reviv-
ing Americas once prosperous middle class,
a competitive manuacturing sector would be
a critical catalyst or innovation, providing
essential support or sectors including nancial
services, inrastructure development, cus-
tomer support, logistics, inormation systems,
healthcare, education, real estate and more.
Manuacturing typically generates 2.5 jobs in
related industries or each one created directly.6
Tis report relies on collaborative eorts
with a number o organizations working on
important issues aecting the manuacturing
industry, as well as surveys o American citi-
zens, business and labor leaders, and university
and national laboratory executives. It presentsa case or optimismand or hard work. It
examines some o the main challenges acing
any attempt to cultivate an American manu-
acturing renaissance, and highlights recom-
mendations that could help the United States
overcome these roadblocks.
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Manufacturing Opportunity
A crisis o confdence
MAnuACturinG has been a majorcontributor to the U.S. economy ormore than a century and a hal, and Americans
retain a consistently high regard or its impor-
tance both in terms o its economic contribu-
tions and our global standing.
For nearly ve years, Deloitte* has been
working with the Manuacturing Institute
to investigate the average Americans view
o manuacturing in the United States.
Unwavering Commitment: Te Publics View o
the Manuacturing Industry odayreports the
results o an annual research program gauging
the American publics perspectives on manu-
acturing. Findings o the latest annual survey,
released in September 2011, suggest that
despite requent swings o public opinion on a
wide range o topics, Americans have remained
steadast in their commitment to a strong and
globally competitive U.S. manuacturing sector.
Tey ully understand the importance o
manuacturing in job creation; 86 percent
agree that manuacturing is directly linked
to our standard o living (see gure 1), and
77 percent believe it is very important or
our national security. Americans support or
manuacturing carries over into the topic o
job creation as well. When asked how they
would preer to create 1,000 new jobs in their
communities with any new business acility,
* As used in this document, Deloitte means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about or adetailed description o the legal structure o Deloitte LLP and its subsidiaries.
Source: Unwavering Commitment: The Public's View of the Manufacturing Industry Today
77%National security
85%Standard of living
Economic prosperity
86%
THE MANUFACTURING INDUSTRY
IS VERY IMPORTANT TO:
THE U.S. NEEDS A MORE
STRATEGIC APPROACH TO
THE DEVELOPMENT OF ITS
MANUFACTURING BASE
THE U.S. SHOULD
FURTHER INVEST IN THE
MANUFACTURING INDUSTRY
DEVELOPING A STRONG
MANUFACTURING BASE
SHOULD BE A
NATIONAL PRIORITY
83%
80%
79%
Figure 1. Percentage of respondents who believe that...
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Americans indicated they wanted those jobs to
be in the manuacturing sectormore so than
any other industry choice.8
Despite their embrace o manuacturing,
Americans do not believe enough is beingdone to support it. About 83 percent believe
the United States needs a more strategic
approach to the development o its manuac-
turing base, 80 percent think the nation should
invest more in manuacturing; and 79 percent
believe a strong manuacturing base should
be a national priority. We also ound that the
manuacturing industry has several signicant
challenges in the area o public perception (see
gure 2).
While Americans generally hold strong
views on the importance o manuactur-
ing, they hold negative views about its
uture in the United States. Americans
want stronger policies to support manu-
acturing and better leadership to support
manuacturing competitiveness.
Recent economic data have yielded mod-
est reasons or optimism. In 2011, the number
o U.S. manuacturing jobs actually rose by
2.05 percent,9 the rst increase in more than a
decade. But nurturing this growth will require
bold and eective policy decisionsand those
decisions will be made more dicult by a pro-
ound loss o condence in our leaders ability
in this arena.
oday, Americans view the manuactur-
ing sector as ragile and unstable. Tey are
concerned about the long-term stability o
manuacturing employment, and are equally
worried that these jobs are less accessible thanthey should be. Tey also ear that manuactur-
ing jobs will inevitably be moved to workers
in other countries, and they appear to have
doubts about our leaders ability to prevent
this. Tese views have remained consistent
year aer year.
Many Americans, in act, believe that we
have already lost the manuacturing race.
Only 7 percent believe that U.S. manuactur-
ing competitiveness is likely to get stronger,while 55 percent say it is becoming weaker (see
gure 3).10 And unortunately, they are solidly
Source: Unwavering Commitment: The Public's View of the ManufacturingIndustry Today
MANUFACTURING JOBS ARE
AVAILABLE AND ACCESSIBLE
MANUFACTURING JOBS ARE
FIRST TO BE MOVED TOOTHER COUNTRIES
MANUFACTURING JOBS ARE
HIGHER PAYING THAN JOBS
IN OTHER INDUSTRIES
CAREERS/JOBS IN MANUFACTURING
ARE STABLE AND SECURE RELATIVE
TO JOBS IN OTHER INDUSTRIES
78%
Agree / Strongly Agree
44%
37%
26%
Figure 2. Percentage of respondents who agree or strongly
agree with each statement
Source: Unwavering Commitment: The Public's View of the ManufacturingIndustry Today
STAY THE SAME
WEAKEN
STRENGTHEN
DONT KNOW
Figure 3. Respondents views on the longer-term outlookfor the manufacturing sector
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Manufacturing Opportunity
pessimistic about the ability o government or
business leaders to reverse this trend.
Most Americans agree, or instance, that
the ederal government shouldplay an impor-
tant role in building and sustaining a healthyenvironment or manuacturing. But only 26
percent believe that it is doing so.
CEOs are only a little better. Less than
hal o Americans believe that current business
leaders are creating a competitive advantage
or the U.S.11
CEOs and the Americanpublic agree
Theseviews are shared by business leaders.A Deloitte global survey o manuactur-ing CEOs conducted in conjunction with the
U.S. Council on Competitiveness also ound
serious concerns about U.S. manuacturing
competitiveness. According to the Global
Manuacturing Competitiveness Index devel-
oped by Deloitte and the Council, the United
States is the ourth most-competitive manu-acturing nation and is expected slide to h
place within ve years (see gure 4).
In less than a decade, tectonic shis in
regional manuacturing competence have
created a new world order or manuactur-
ing competitiveness. Asia is the worlds most
competitive location or manuacturingand
will be or the oreseeable uture, barring
signicant macroeconomic shocks such as
war, economic collapse, natural catastrophe or
major government interventions.12
Regional implications will arise as North
America, South America, Europe, and Asia
challenge one another or dominance in
Fiure 4. Expeted ane in manuaturin ompetitiveness in fve ears
Sidin DOWN From To Movin UP From To
United States o America 4th 5t Brazil 5th 4t
Japan 6th 7t Meico 7th 6t
Singapore 9th 11t Poland 10th 9t
Czech Republic 11th 12t Thailand 12th 10t
Netherlands 16th 17t Spain 19th 16t
Switzerland 14th 18t Russia 20th 14t
United Kingdom 17th 20t South Arica 22nd 19t
Ireland 18th 21st Argentina 25th 24t
ital 21st 22nd Saudi Arabia 26th 25t
Belgium 24th 26t
Source: Deloitte and U.S. Council on Competitiveness, 2010 Global Manuacturing Competitieness Inde
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manuacturing. Many rising countries appear
destined to be important only within select
manuacturing sectors, while others pos-
sess the breadth and depth o resources and
capabilities to be dominant global players.
One thing is certain: government policies
within these regions will play an impor-
tant roleor good or badin each coun-
trys competitiveness.
Public polic and thecompetitie parado
T
he Competitiveness Index leads us to
another striking nding. Manuacturing
is declining in Western countries with more
enlightened social and environmental
policies and rising in emerging markets with
large governmental interventions or manu-
acturing. Within these developing countries,
some manuacturers are even government-
owned. Clearly, a new model is emerging.
Many governments, especially in emerging
regions, are aggressively competing or
manuacturing dominance.
Nations sliding down in competitive-
ness, moreover, are losing a core economic
strength, a key link in the innovation equa-
tion o: research, design, manuacture, aer
sales. Tese actors are synergistic, and with-
out the manuacturing step, much know-how
is lost. China, India and Korea are aware o
this and their public policies urther their
competitive advantage.
Regardless o a nations economic or politi-
cal system, however, manuacturing can play
a key role in its prosperity. Economies based
primarily on services could become second tier
in the absence o a vibrant manuacturing sec-
tor and the commercial ecosystem that grows
rom it.
But manuacturers cannot go it alone.
Governments must play their part by develop-
ing policy and national manuacturing strate-
gies that are collaborative, integrated, ocused,
and eective.
RESEARch METhODOlOgy AND BAckgROUND FOR ThIS REPORT
For seeral ears, Deloitte has had the priilege o working with a number o global and nationalorganizations to stud the comple linkages between manuacturing and economic prosperit and
to understand what nations can do to reap the benefts o globall competitie manuacturingcapabilities. Working in collaboration with the World Economic Forum (the Forum), the U.S.Council on Competitieness (the Council), and the Manuacturing Institute, Deloitte has collectedinput directl rom policmakers and business, labor, academic, and scientifc leaders romaround the world to identi was in which public-priate sector collaborations enable economicgrowth, create jobs, and drie innoation and talent deelopment within manuacturing.
The results o these eorts hae included a number o in-depth research reports that haebeen shared with business leaders and policmakers at important enues on the national andglobal stage, including the 2012 World Economic Forum Annual Meeting in Daos, Switzerlandand seeral sessions with policmakers representing Congress and the administration. Whilethe project identifed man common assessments and recommendations or improing
U.S. manuacturing competitieness, each report also deliered unique perspecties criticalto this important debate. The results o these initiaties orm the basis or the analsis andrecommendations in this stud. Summaries o each initiatie can be ound in the appendi.
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Manufacturing Opportunity
To explore how the global manuactur-ing ecosystem is evolving, the WorldEconomic Forum, along with manuactur-
ing specialists rom Deloitte, embarked on a
project called Te Future o Manuacturing
to identiy the actors most likely to shape theuture o competition or both countries and
companies. Te key ndings o this study were
released at the Forums 2012 annual meet-
ing in Davos, including a critical nding or
policymakers concerned with job creation and
economic growth.
Based on recent research at the Harvard
Kennedy School and the MI Media Lab, the
project concluded that manuacturing, or the
ability to make things, is an essential driver
o knowledge creation, innovation, capability
development, and economic prosperity. Te
more advanced the manuactured product,
the greater the prosperity o the nation. Te
linkage between manuacturing capabilities
and economic prosperity is a much stron-ger predictor o a vibrant, successul, and
growing economy than any other measure
typically used by economists. Simply put:
manuacturing matters.13
Deloittes research with the Forum and
the Council also concluded that the uture
o manuacturingseparating winners rom
loserswould be driven primarily by the ol-
lowing actors: talent, innovation, energy, and
government policy.
The elements o
competitieness
Te linkage between manuacturing capabilities and
economic prosperity is a much stronger predictor
o a vibrant, successul, and growing economy than
any other measure typically used by economists.
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Sources:
Uday Karmarkar, The Increase in U.S. Manufacturing Jobs Is Nothing to Cheer About, Harvard Business Review(January 20, 2011),http://blogs.hbr.org/cs/2011/01/why_the_increase_in_us_manufac.html.
http://www.themanufacturinginstitute.org/~/media/A07730B2A798437D98501E798C2E13AA.ashx
Deutsche Bank Group/DB Advisors, The Decline of U.S. Manufacturing: Fact or Fiction? (Frankfurt am Main, March 2011), p. 1,https://www.dbadvisors.com/content/_media/DAM466_CloserLook0311.pdf.
Economic Policy Institute, Updated Employment Multipliers for the U.S. Economy, by Josh Bivens (August 2003), http://www.epi.org/page/-/old/workingpapers/epi_wp_268.pdf.
U.S. Bureau of Labor and Statistics, Department of Labor, http://www.bls.gov/news.release/pdf/empsit.pdf.
CoolingAsian
Economy
StrongEconomic
Headwindsin Europe
RisingLabor &
Other Costsin Asia
World ClassUniversities
and NationalLaboratories
StrongIntellectualProperty
ProtectionPolicies
Strong R&DCapabilities
AdequateInfrastructure
High LaborProductivity
EstablishedSupplierNetwork
QualityHealthcare
LargeMiddle ClassConsumer
Base
DRIVERS THAT MAKE THE UNITED STATES ANATTRACTIVE MANUFACTURING DESTINATION
UNFILLEDMANUFACTURING
JOBS IN THE
UNITED STATESDUE TO SKILLS
SHORTAGE
POTENTIAL NEWJOBS FROM
MANUFACTURING
GROWTH
NEW JOBS CREATED INRELATED INDUSTRIES
POTENTIAL JOBSDRIVEN BY
MANUFACTURING
600,000 + 500,000 + 2,750,000 = 3,850,000
[ ]1 manufacturing jobgenerates 2.5 jobs
Decline inunemployment rate
1947
201126%
of GDP
11%of GDP
6,000,000MANUFACTURINGJOBSLOSTSINCE2002
Figure 5. Manufacturing opportunity in the United States
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Manufacturing Opportunity
Taent
alented human capital will be a critical di-
erentiator or the prosperity o countries and
companies. Millions o manuacturing jobs
around the world cant be lled today due to agrowing skills gap. In the United States, more
than 600,000 such jobs cant be lled due to
skills shortages.14 Despite high unemployment
rates in most developed economies, companies
are struggling to ll
manuacturing jobs
with the right talent.
And emerging nations
cant increase their
growth without moretalent. Access to tal-
ent will only become
more important and
more competitive.
Companies and coun-
tries that can attract,
develop and retain the
highest-skilled tal-
entrom scientists,
researchers, and engi-neers to technicians
and skilled production
workerswill be bet-
ter positioned to come
out on top.
Innovation
Te ability to inno-
vate quickly and eec-
tively will be anotherimportant actor in the
success o countries
and companies in the
uture, as measured by growth in GDP, mar-
ket share, and protability. Companies must
innovate to stay ahead o competition, and
they must be supported by inrastructure and
policies that support breakthroughs in science
and technology as well as dedicated investment
budgets that permit long-term pursuits. In the21st century manuacturing environment, the
ability to develop creative ideas that address
new and complex problems with innovative
products and services will be all-important.
Ener
Aordable clean energy strategies and
eective energy policies will be a top priority
or manuacturers and policymakers, and they
serve as another important dierentiator o
highly competitive countries and companies.
Te demand or and
the cost o energy will
only increase with
uture population
growth and industrial-
ization. Environmentaland sustainability
concerns will demand
that nations respond
eectively and respon-
sibly to the energy
challenge. All nations
will seek competi-
tive energy policies
that ensure aordable
and reliable energysupplies or manu-
acturing, and will be
orced to seeknew
ways o manuacturing
rom energy-ecient
product designs to
energy-ecient opera-
tions and logistics.
Collaboration between
company leaders andpolicymakers will be
an imperative in solv-
ing the energy puzzle.
government poi
Finally, the strategic use o public policy to
urther economic development will become
increasingly important, placing a premium on
collaboration between governments and busi-
ness leaders to create win-win outcomes. Withthe prosperity o nations hanging in the bal-
ance, policymakers must actively seek the right
With the prosperity
o nations hangingin the balance,
policymakers must
actively seek the
right combination
o trade, tax, labor,energy, education,
science, technology,
and industrial policy
levers to generate the
best possible uture
or their citizens.
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Fiure 6. Drivers o manuaturin ompetitiveness (oba vs. te United States and canada)
RANk goba United States and canada
1 Talent-drien innoation Talent-drien innoation
2 Cost o labor and materials Cost o labor and materials
3 Energ cost and policies Economic, trade, fnancial, and ta sstems
4 Economic, trade, fnancial, and ta sstems Energ cost and policies
5 Qualit o phsical inrastructure Legal and regulator sstem
6 Goernment inestments inmanuacturing and innoation Qualit o phsical inrastructure
7 Legal and regulator sstemGoernment inestments inmanuacturing and innoation
8 Supplier network Supplier network
9 Local business dnamics Local business dnamics
10 Qualit and aailabilit o healthcare Qualit and aailabilit o healthcare
Source: Deloitte and U.S. Council on Competitiveness, 2010 Global Manuacturing Competitieness Inde
combination o trade, tax, labor, energy, educa-
tion, science, technology, and industrial policy
levers to generate the best possible uture or
their citizens. In a complex and interdependent
global economy, governments must pull theright levers at the right time while remain-
ing mindul o unintended consequences.
Companies, in turn, must become more
sophisticated and engaged in their interactions
with policymakers to help strike the balanced
approach necessary to enable success or all.
Te Competitiveness Index developed
with the Council provides urther evidence
supporting these ndings. While manuactur-
ing competitiveness traditionally has been
judged by labor, materials, and energy costs,15
todays manuacturing executives note other
qualitative actors (see gure 6) that infuence
American competitiveness:
education and workorce preparation
innovation
economic, trade, nancial and tax issues
inrastructure and
energy policy
Each actor plays an important role in
determining manuacturing competitiveness.
Government is more central to some than oth-
ers; in matters o trade, regulation and taxa-
tion, obviously, it is central. But government
has a role to play in eacha role that will help
determine whether U.S. manuacturing can
remain competitive in the uture.
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Making America a
more attractie placeto conduct business:Action stepsor policmakers
To develop specic recommendationsregarding U.S. competitiveness, Deloitteand the U.S. Council on Competitiveness
sought the input o CEOs, university presi-dents, leaders o U.S. national laboratories,
and labor union leaders. Deloitte conducted
one-on-one interviews with dozens o rep-
resentatives rom these constituent groups
across America and then distilled the recom-
mendations. Tese interviews are documented
in the Councils Ignite series o reports, which
orm the basis or the recommendations
presented here.
An overarching concern consistently andalmost unanimously expressed by executives,
university presidents and national laboratory
leaders was policy, legislative and regulatory
uncertainty. Participants suggested that this
uncertainty directly aects both short- and
long-term decision making. Business leaders
emphasized that they routinely develop strate-
gic business plans and supporting investments
with 10 to 15year horizons, but they must
work under government policies that do not
provide similar long-term clarity or stability.
In particular, many suggested that this uncer-
tainty aects critical cost and competitiveness
variables. University presidents and national
laboratory leaders noted uncertainties tied tounding stability and the consistency o pro-
grams centered on education and R&D.
Participants cited issues such as the clarity
and permanency o R&D tax credits, com-
petitive tax rates, the ratication o ree trade
agreements, tort reorm, nancial reorm, and
policies aecting health care, labor, innova-
tion, energy, and carbon regulation, as well
as long-term unding or important research.
Clear and stable competitive policies in theseareas would generate tremendous opportuni-
ties or American manuacturers and make the
United States an attractive place to invest and
conduct business.
It is important to note that these recom-
mendations were not entirely consistent among
stakeholders. While many agreed on a number
o topics, there were some dierences among
the stakeholder groups; the ollowing recom-
mendations are culled rom those outlined in
one or more o the Ignite reports.
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Education and workorcepreparation
MAnuACturinG CEOs agreed thatworker talentspecically the talentthat drives innovationtrumps all other ac-tors in gauging competitiveness.16 Developing
this talent through education, then, is
the most important element in ensuring
manuacturing success.
Taent sortaes
Te existence o a substantial and growing
U.S. skills gap in science, technology, engi-
neering, and math (SEM) disciplines is well
documented, and the gap is having obvious
eects on competitiveness. In the 2011 survey
conducted by Deloitte and the Manuacturing
Institute, 67 percent o responding manuac-
turers reported moderate to severe shortages o
available, qualied workers; 56 percent antici-
pate that these shortages will grow worse in the
next three to ve years.
And the talent shortage inevitably aects
American innovation. As the Baby Boomer
generation wanes, losses o skilled workers,
scientists, researchers, engineers, and teach-
ers will have a lasting impact on manuactur-
ing competitiveness and thus the country as
a whole. Without radical action, most 21st
century workers are likely to be less skilled
than their Baby Boom counterparts.17
In an era o widespread unemployment,
manuacturers reported that 5 percent o
positions at their rms were unlled due to a
lack o qualied candidates. As noted above,that represents more than 600,000 jobs that
cant be lled today because employers cant
nd people with the right skills. Seventy-our
percent indicated that employee shortages or
inadequate talent in skilled production roles
were hurting their ability to expand operations
or improve productivity. Eleven percent o
respondents were considering relocating, and
among these, the most commonly cited reason
was greater access to qualied talent.
Survey respondents also indicated that the
workers hardest to nd today include machin-
ists, operators, cra workers, and technicians
and these are the positions they also expect to
be hit hardest by retirement over the next three
to ve years.18 As these experienced employees
retire, nding younger talent to replace themwill become an increasingly dicult challenge.
STEM teain defienies
One reason or the skills gap is a long-
term shi in educational ocus, both in the
classroom and in teacher training programs.
According to many o the university presidents
and national laboratory leaders participat-
ing in Ignite 2.0: Voices o Voices o American
University Presidents and National Lab
Directors on Manuacturing Competitiveness,
in recent decades, the emphasis in teacher
education has shied strongly away rom
subject-matter content and toward pedagogy,
the theory o teaching itsel.19 Tis has led to
critical deciencies in the teaching o SEM
subjects in particular.
Most o the business executives par-
ticipating in Ignite 1.0: Voices o CEOs on
Manuacturing Competitiveness said U.S.students are less interested and perorm more
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Manufacturing Opportunity
poorly in science and engineering disciplines
than oreign students.20 Put simply, many
American educational programs are not teach-
ing SEM topics well, and just as importantly,
they are ailing to make these disciplinesseem important, interesting or rewarding
to students.
Te global business community does report
concerns regarding engineering graduates
rom institutions in emerging markets, due to
ongoing questions about instructor qualica-
tions, soaring student-teacher ratios and the
variability o curricula. Despite these concerns,
however, the emergence o a large and skilled
technical workorce is one o the most impor-tant actors driving the competitiveness o
nations such as China and India.21
Perceptions o manuacturing careers
are also are hurting the United States abil-
ity to develop a highly talented workorce. In
another study conducted by Deloitte and the
Manuacturing Institute, 1824-year-olds rank
manuacturing dead lastamong industries in
which they would choose to start a career.22
Moreover, even students pursuing SEM
disciplines oen ail to translate their studies
into technical careers. According to a recent
study by Georgetown Universitys Center on
Education and the Workorce, more than 30
percent o engineering, computer science, andmathematics majors choose careers in business
or proessional services rather than in science
and engineering.23
America is still a vibrant and innovative
country, and its manuacturers still represent
an extremely valuable knowledge base. But
our ability to innovate and to address complex
scientic, technological, and social challenges
is in jeopardy. Most o the leaders participat-
ing in the various reports cited throughoutthis document agreed that U.S. manuactur-
ing competitiveness can be improved only
i Americans become more interested in
manuacturing through educational programs
that portray the industry as a valuable career
choice with good employment opportunities.
Furthermore, we need to arm students with
the right technical and problem-solving skills
through fexible education pathways that lead
to advanced degrees or certications.
Education leaders should be aligning educational
pathways in degree programs to portable,industry-recognized skills credentials, creating
more on and o ramps, says Emily Stover
DeRocco, ormer president o Te Manuacturing
Institute. Tis could help close the gap between
the skills manuacturers need and those held
by graduates entering the workorce.
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REcOMMENDATIONS: EDUCATED WORKFORCE
Participants in the Ignite series oered the ollowing recommendations to improe Americasabilit to deelop an educated and prepared workorce.24 While the recognized budgetchallenges and the imperatie o reducing the ederal defcit, participants consistentl eltthat unding in these areas were essential to U.S. manuacturing competitieness.
Maintain on-term,predictable edera and state support or universities,ommunit oees, and te nations resear and siene inrastruture.
c u.s. pbc ad g dca dvpg k cc, cg, gg, ad a.
The reial o Americas STEM talent pool must begin in the earliest gradeswith teachers who are ull prepared to teach and inspire the net generation
o proessionals. As part o this eort, the United States should:
At the state leel, adopt consistent standards and curricula or STEM disciplines.These standards should be tied to metrics ollowed in other leading manuacturing economies.
Proide guidelines and incenties to attract and retain primar and secondar STEM teachers whoare true subject-matter eperts that are able to prepare students or degrees or certifcations.Incenties such as continuing education opportunities could be oered to current STEMteachers. The nextgeneration o teachers could be cultiated with scholarship programsthat attract top high-school talent to pursue STEM education. K12 sstems could beoered discipline-linked salar tiers similar to those proided to college and uniersitproessors to reward teachers or deeloping and maintaining subject-matter epertise.
Dvp fxb g dca ack a stem ac gc cg, vcaa ad c, wk-ag pga, c.
spp a v aac g-cab d stempga ad ca b gada stem dcp.
Dvp av a p ad ak aacg a a va ad g-va dw wadg g- ca pp g c ad cg d.
This commitment should inole ocused, creatie, and measurable initiatiestargeted at todas and tomorrows studentsand parents.
Bd gv-d pap a pvd cv ppcv
wk p ca cc, gg, ad aacg.
Advac pac-bad ga ad cv c a AcaComPetes Ac, ea ad scda edca Ac, Ca D.Pk Ca ad tcca edca Ac, ivg ivad, ad rac tp ad tac icv d.
Bcak b pacc c a a ccdg aacg ad ag p stem a.
expad pga c a h hada ad pjc ab/cwkc ag a ad a acv a p, dadvaagd
, ad pd va cc ca kd ad.
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Manufacturing Opportunity
Innoation
ACross the spectrum o policy, rom thetax code to the direct incubation o smallbusinesses, government has an important role
to play in boosting innovation.
A healthy domestic manuacturing base
is important i the United States is to benet
rom emerging technologies in the uture. For
example, the shiing o television production
to Asia cost the United States its opportunity to
develop next-generation fat panel technology,
a competency that later proved instrumental in
the design and manuacture o solar panels.25
Te ompetitive andsape
Globalization and technological progress,
especially in advanced communications, have
put American workers into direct competi-
tion with rising, leading-edge talent pools
worldwide. And while many o the lead-
ers participating in the Ignite series agreed
that the U.S. should not engage in a race to
the bottom with other nations concerning
wages, nationwide discussion is increasing
on the topic o how to reestablish the United
States as an attractive and competitive loca-
tion or R&D and customer support unc-
tions. Bringing much o this capability back
is becoming a protable and ecient decision
or companies.26
Many elt manuacturing is in act a
misnomer, since it ails to address the many
sectors, including universities and colleges,
national laboratories and other private and
public bodies that support the manuactur-
ing ecosystem. And while many participating
in the Ignite series elt that the United States
is still capable o manuacturing high-qualitygoods at very competitive prices, they also
believe that competing on wages alone would
not be benecial to American manuacturing
and that the United States must ocus on and
support the R&D and innovation phases o
manuacturing i it is to retain any lasting edge
in competitiveness.
Fosterin a imate or
manuaturin innovationAccording to CEOs around the world, other
nations have done a much better job in creat-
ing, pursuing, and communicating national
innovation strategies (see gure 7). Germany,
or instance, has established a comprehensive
national strategy across all its ederal min-
istries with goals and timetables or critical
elds, and it greatly increased its research and
development unding.27 Germanys Fraunhoer
Institute, jointly unded by government andprivate contracts, is Europes largest applied
research organization, conducting both un-
damental and applied research and early-stage
commercialization development.28
Many CEOs participating in Ignite 1.0
said they would like to see the United States
oster similar instruments or manuactur-
ing innovation. Tey believe that government
Many elt manuacturing is, in act, a misnomer
since it ails to address many sectors, including
universities and colleges, national laboratories,
and other private and public bodies that
support the manuacturing ecosystem.
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Source: Deloitte and U.S. Council on Competitiveness, 2010 Global Manufacturing Competitiveness Index
GOVERNMENT INTERVENTION & OWNERSHIP IN COMPANIES
ENERGY POLICIES
ENVIRONMENTAL POLICIES
LABOR LAWS & REGULATIONS
ECONOMIC DEVELOPMENT
HEALTHCARE POLICIES
SCIENCE, TECHNOLOGY AND INNOVATION
IMMIGRATION POLICIES
INFRASTRUCTURE DEVELOPMENT
SUSTAINABILITY POLICIES
TRADE POLICIES
IMMIGRATION POLICIES
PRODUCT LIABILITY LAWS
HEALTHCARE POLICIES
CORPORATE TAX POLICIES
GOVERNMENT INTERVENTION & OWNERSHIP IN COMPANIES
TECHNOLOGY TRANSFER AND ADOPTION
INTELLECTUAL PROPERTY PROTECTION
INFRASTRUCTURE DEVELOPMENT
SCIENCE, TECHNOLOGY AND INNOVATION
INTELLECTUAL PROPERTY PROTECTION
FOREIGN DIRECT INVESTMENT POLICIES
69.3%
65.7%
62.0%
56.9%
56.2%
27.7%
32.1%
32.7%
42.9%
51.0%
53.1%
59.2%
61.2%
75.5%
46.1%
43.4%
42.1%
36.8%
31.6%
31.6%
36.8%
42.1%
China
Europe
United States
Competitive ADVANTAGESCompetitive DISADVANTAGES
Figure 7. Policy advantages and disadvantages (percent indicating advantage or d isadvantage)
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Manufacturing Opportunity
REcOMMENDATIONS: INNOvATIONParticipants in the Ignite series oered the ollowing recommendationsto improe Americas abilit to innoate.
Estabis a onsortium o business, universit, abor, and poitia eaders to deveopon-term U.S. manuaturin oas wit a 15 to 20ear deveopment orizon.
This consortium should work collaboratiel to crat inestment anddeelopment programs as well as the educational, technological, and intellectual
inrastructure needed to support progress toward those goals.
Dvp a u.s. va ag a ab pga pp bacad appd ac aacg va ad ccaza.
This strateg should aim at eliminating barriers to collaboration among uniersities,laboratories, and other priate and public entities. Its programs should be supportedwith long-term unding mechanisms that insulate them rom the uncertainties oelection ccles. A major goal should be the establishment o public and priatel undedpathwas to drie innoatie ideas and technologies through the alle o deathwhere man inentions and new technologies tend to dieto commercialization.
ica b pbc-pva d c a cvac , d, ad b a c advacg ac ad -cc ccaza.
ecag aa aba dvp -dv vacca aa w badg d aa cd cc dvp.
This would include leeraging the abilit o Americas national laboratoriesto drie applied research on the journe to commercialization, as well as theestablishment o succinct and concise goals in areas important to the United Statesor economic deelopment as well as national securit, deense, energ, etc.
This eort should also support the laboratories role in communit outreach
programs, such as educational outreach to local primar and secondarschools, nearb corporations, and the communit at large.
investments in the areas o science, technology,
and engineering can substantially improve
manuacturing competitiveness. Such invest-
ments could include the establishment o
support research institutions, technologicalsupports or manuacturers, and the encour-
agement o local manuacturing clusters.29
co-oatin R&D andmanuaturin
University leaders and national research
laboratory executives participating in Ignite 2.0
underscored a similar point. Many advocate
government support or sector-specifc indus-
trial clusters that place universities, national
laboratories, and companies in close proxim-
ity to optimize the commercialization o new
ideas, citing examples such as the biomedicalclusters in Ohio and Massachusetts.
Co-located research and manuacturing
connections encourage continuous product
and process improvement promoting the
maturation o basic research into applied
research, and the transition o pilot projects
into ull commercialization. Tey would
enhance the quality and return on investment
o breakthrough discoveries.30
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Economic, trade, fnancial,and ta issues
R
eGulAtory compliance costs, labor laws
and regulations, and intellectual property
protection and enorcement all have a strong
infuence on competitiveness and growth.
A 2008 study ound that U.S. manuacturers
on average spend nearly 18 percent more on
non-production expensesthe cost o energy,
taxes, employee benets, torts, and pollution
abatementthan do their counterparts in the
nations major trading partners.31
Tax poiAmericans show strong support or tax
policies that support competitiveness; 69
percent agree that tax cuts or businesses and
individuals create jobs, while 65 percent sup-
port tax incentives or manuacturing.32
High tax burdens. axes represent a
substantial burden or U.S. manuacturing.
In 2011, the United States had the highest
corporate tax rates among the OECD nations,
up rom second place in 2010.33
Critics o U.S.corporate tax policy note that the nations rates
have remained virtually unchanged or the
past two decades, even as competitor nations
have lowered theirs.34 High corporate tax rates
(as well as questions regarding permanency o
tax credits and policies) reduce manuactur-
ers ability to invest with condence over the
long term.
Repatriation could boost competitive-
ness. Business leaders interviewed or the
Ignite series oen cite the ability to repatriate
cash rom abroad as a means to boost com-
petitiveness. Te United States is the only G8
member that does not employ a territorial tax
rate policy, which taxes only income earned
inside the nations borders.35 Even a policy
allowing U.S. rms to repatriate cash at a
lower tax rate could help level the playing eld
between domestic and oreign manuactur-
ers and encourage U.S. companies to increase
domestic investments.R&D tax credit. Still another perti-
nent issue mentioned byIgnite participants
concerns the research and development tax
credit, which has existed in varying orms as
a temporary but perennially reauthorized
measure or nearly three decades, earning it
what theJournal o Accountancyhas calledwell-deserved reputation or complexity and
uncertainty.36
Inteetua propert protetion
Protecting American intellectual prop-
ertywhether by trademark or a new brand
or by patent or a new technological innova-
tionis essential to maintaining competitive-
ness. A 2005 National Bureau o Economic
Research study, or instance, concluded thatimprovements in intellectual property rights
result in increased technology transer by
multinational enterprises.37
Trade poi
International trade agreements, too, are an
obvious competitive actor in an era in which
95 percent o our manuacturers potential
customers live outside the United States.38
While the topic o trade policy was consistently
important to all stakeholders participating
in the Ignite series, there were clear simi-
larities and dierences between business and
labor leaders.
For example, both groups elt more needs
to be done to ensure the enorcement o U.S.
rights under existing trade agreements, and
to ensure compliance with WO including
legal action against countries that violate trade
policy and limit the United States ability to
compete airly in the global marketplace. Both
groups also elt the United States should estab-
lish air and equitable ree trade agreements
that address various aspects o the business
environment in competing countries, includ-
ing labor laws and regulations concerning
minimum wages, child labor, working condi-
tions, human rights, environmental protection,
and workplace saety.
Where the groups diered concerns thenotion oen described as air trade vs. ree
trade. While many executives interviewed
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Manufacturing Opportunity
REcOMMENDATIONS: ECONOMIC, TRADE, FINANCIAL, AND TAx SySTEMSParticipants in the Ignite series oered the ollowing recommendations toimproe Americas economic, trade, fnancial, and ta sstems.
i a cpv da cpa ax a pvdg- ca ad ab ad gba cpv a.
This should inole the reduction or elimination o taes on repatriated oreign earningsand permanent research and deelopment ta credits that aor U.S.-based innoation,continuing STEM education, and the acquisition o R&D equipment and inrastructure.
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This could help d iminish the cost and compleit o regulator compliance.The nations oerlapping ederal, state, and local regulations are challengingto naigate and can create barriers to innoation and growth.
Dvp a w ad p ad a-ack a qckab a ad qab ad ag.
One task should be the establishment o a set o principles to guide the ormulation o benefcialtrade agreements that address enironmental and worker protections and resole trade imbalances.
Aggv p c a cca agWto Da Agda w gba ad ba.
by Deloitte and the Council support recent
ree trade negotiations, such as those with
Korea (which promise to boost U.S. exports
by $10 to $11 billion), Colombia, and Panama,
many labor leaders interviewed or Ignite3.0 expressed rustration with these agree-
ments, calling them unair, one-sided, and
detrimental to national security, U.S. industry,
and American workers.39 Tey argued that
narrowly dened trade policies alone are not
sucient to position U.S. businesses airly
in the international marketplace and may be
detrimental to domestic production.40
Inrastructure
TrAnsPortAtion inrastructure isvitally important to U.S. manuacturingcompetitiveness in terms o attracting busi-
ness investment, improving the eectiveness o
logistics, the movement o raw materials, and
in producing nished products on time and at
minimum cost. Modern power grids and tele-
communications networks play similar roles in
moving energy and inormation.
In addition to improving Americas road-ways, airports, waterways, electric grid, and
broadband capabilities, inrastructure invest-
ments also can create long-term, high-paying
jobs in the United States, putting thousands
o people back to work while encouraging
private investment. Te Federal Aid Highway
Act o 1956, the largest public works project
in U.S. history, is oen cited as an example o
how large, nationally supported inrastruc-
ture projects can create long-term benets
and prosperity. Proponents o greater inra-
structure investment also point to recent
Congressional Budget Oce estimates which
suggest that every dollar o inrastructure
spending generates an additional 60 cents in
economic activity.41
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Americas competitors understand the
importance o modern inrastructure. In
2005, China devoted 7.3 percent o its GDP
to inrastructure development; by 2009, this
share had risen to about 9 percent. A largeshare o this spending went to the rail sector,
which saw a 70 percent increase in xed-
asset investments.43
Inrastructure improvement is perhaps the
clearest example o how government action
can improve manuacturing competitiveness
especially in areas that improve the eciency
o exports as well as job creation. And the
opportunity is not limited to the ederal gov-
ernment. States, or example, can help metro-
politan regions resolve issues with trac fow.
Ener
Clean, reliable energy is an all-important
element o manuacturing production. With
increasing demand or and limited supplies o
traditional energy sources, market orces will
play a crucial role in driving the development
and adoption o alternative orms o energy
and its ecient use. Alternative energy sources
also promise a competitive advantage or anynation that can develop them eectively.44
Alternative energy solutions could create
many more manuacturing jobs. U.S. labor
leaders, noting orecasted growth in this area
rom 9 million jobs in 2007 to as many as 37
million in 2030 (many o them not subject
to oshoring to overseas markets), strongly
support policies to promote the research,
development and production o alternative
energy (solar panels, wind turbines, advanced
batteries, etc.).45 Tey also avor an extension
o the Advanced Manuacturing ax Credit,
which provides incentives or investments in
the advanced energy products, and may prove
critical i America is to lead the next genera-
tion o manuacturing.46
REcOMMENDATIONS: INFRASTRUCTUREParticipants in the Ignite series oered the ollowing recommendations to improeAmericas inrastructure.
To ensure on-term undin, te United States soud reate a nationainrastruture bana overnment-owned et independent and proessionamanaed entit responsibe or manain investment in and te on-term fnanin o reiona and nationa inrastruture projets.
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A a ad ca gv w dg ac pjc b pvdg dagaa w bwg c ad z dp cpa bd ak.
To urther this eort, Congress should reinstate the Build America Bonds program, whichissued $181 million in taable municipal bonds beore epiring at the end o 2010.
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Manufacturing Opportunity
The stakeholders participating in the jointeorts between Deloitte, the Forum, theU.S. Council on Competitiveness, and the
Manuacturing Institute understand that U.S.
manuacturing is at a crossroads. Low-cost,
basic manuacturing is unlikely to ever recover
its ormer importance in our economy; our
long-term opportunities lie in increasingly
complex and emerging technologiesand in
Americas ability to lead in the development
o such breakthroughs. aking ull advantage
o these opportunities will require sustained
commitments to rebuilding our education
system and creating and cultivating an eec-
tive ecosystem o public-private research and
product development.
Most Americans understand that our
economic success is closely linked to our
ability to make useul and valuable products.
Government can advance eorts to retain that
ability by supporting the solutions summarized
in this report, which can help the United States
regain its global lead in manuacturing or
many years to come.
Conclusion
Low-cost, basic manuacturing is unlikely to ever
recover its ormer importance in our economy; our
long-term opportunities lie in increasingly complexand emerging technologiesand in Americas ability
to lead in the development o such breakthroughs.
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In January 2011, in response to a callto action rom manuacturing CEOs atDavos, Switzerland, the World Economic
Forum joined with manuacturing special-
ists rom Deloitte to establish the Future o
Manuacturingproject, with the objective o
exploring the evolution o the global manu-
acturing ecosystem and identiying pivotal
drivers o change and the actors most likely
to shape the uture o competition. A year
later, at the World Economic Forums 2012
Annual Meeting in Davos, manuacturing
leaders, including numerous CEOs and senior
executives, participated in public and private
sessions, unveiling a dra report titled he
Future o Manuacturing: Harnessing the Power
o Global Manuacturing or Economic Growth.
Te nal Future o Manuacturingreport was
released in a joint Forum-Deloitte media con-
erence in okyo in April 2012.
Based on strong support rom CEOs and
policymakers in Davos in January 2012,
Deloitte and the Forum are now collaborating
on a new initiative calledManuacturing or
Growth. Tis initiative will assess the value-
added economic benets, employment impact,
and growth potential o dierent types o
manuacturing and deliver recommendations
to stimulate high-multiplier manuacturing.
Appendi A:
The World Economic ForumFuture o Manuacturing project
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Manufacturing Opportunity
SinCe 2009, Deloitte has collaborated withthe U.S. Council on Competitivenesson the U.S. Manuacturing Competiveness
Initiative, a multi-year, multi-phase project
ocused on improving the U.S. manuacturing
sectors ability to compete and prosper glob-
ally. Te ndings o this initiative, including
overall recommendations or policymakers,
were documented in the CouncilsMAKE
report o December 2011, and were inormed
by research conducted by Deloitte on behal o
the Council that included a recurring survey o
more than 400 global manuacturing CEOs as
well direct ace-to-ace interviews with nearly
80 U.S. business, academic, scientic, and
labor leaders.Tis research reached a disturbing conclu-
sion that should raise a red fag or U.S. poli-
cymakers, business leaders, and the American
public: the United States is perceived as
ranking ourth in global manuacturing com-
petitiveness, behind China, India, and Korea,
and it is expected to all behind Brazil as well
within the next ve years.
Deloittes collaboration with the Council
has yielded the ollowing reports: Te Global Manuacturing Competitiveness
Index, a biennial survey o about 400 global
manuacturing CEOs that pinpoints talent-
driven innovation as the most important
driver o global manuacturing competi-
tiveness, ollowed closely by cost o labor
and materials; energy costs and policies;
economic, trade, nancial, and tax systems;
and quality o physical inrastructure.
Te Ignite series consists o three reports
that oer recommendations to U.S.
policymakers on improving Americas
manuacturing competitiveness.
Based on interviews with the CEOs rep-
resenting organizations such as Deere, Ford,
General Electric, Lockheed Martin, andHoneywell, Ignite 1.0 outlines the changes
executives eel are needed in energy and tax
policy, the regulatory and legal environment,
and inrastructure investment to improve U.S.
manuacturing competitiveness.
Ignite 2.0 builds on these perspectives and
recommendations. Based on interviews with
the presidents o institutions including MI,
the University o Michigan, Michigan State
University, Ohio State University, Carnegie
Mellon, Georgia ech, and the University o
Caliornia, as well as directors o key national
laboratories in the United States, this second
report ocuses on how policymakers and
the business, academic, and scientic com-
munities can work together to ensure that
America has a highly skilled and talented
workorce, and to create pathways that drive
innovation through basic and applied research
to commercialization.
Finally, Ignite 3.0 outlines recommenda-tions on linking U.S. policy with job cre-
ation rom labor leaders such as Leo Gerard,
president o the United Steelworkers Union;
Bill Hite, general president o the United
Association o Plumbers and Pipetters; and
R. Tomas Buenbarger and Own Herrnstadt,
both with the International Association o
Machinists and Aerospace Workers.
ogether, the Ignite reports provide a
set o recommendations capable o orm-ing the oundation o a long-term U.S.
manuacturing strategy.
Appendi B:
The U.S. ManuacturingCompetitieness Initiatie
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A Deloitte series on making America stronger
For nearly ve years, Deloitte has workedwith the Manuacturing Institute and itsormer president, Emily Stover DeRocco, to
investigate the average Americans view o
manuacturing and the growing skills gap
in the United States. wo recurring sur-
veys conducted jointly by Deloitte and the
Manuacturing Institute oer unique views o
the eectiveness o policymakers and business
leaders in ensuring that the United States con-
tinues to have a robust manuacturing sector,
as well as the challenges manuacturing execu-
tives ace concerning employee education, tal-
ent cultivation, and perormance management.
Tese two reports are:
Unwavering Commitment: Te Publics View
o the Manuacturing Industry oday, which
reports the results o an annual research
program, gauging the American publics
perspectives on manuacturing. Findingso the third annual survey, released in
September 2011, suggest that despite re-
quent swings o public opinion on a wide
range o topics, Americans remain steadast
in their commitment to creating a strong,
healthy, globally competitive manuacturing
sector in the United States.
Boiling Point? Te Skills Gap in U.S.
Manuacturing, based on an annual, nation-
wide survey o company executives, which
seeks to answer several important questions
about the nature o the skills and talent gaps
in manuacturing today:
What impact is the skills gap having on
company perormance?
How is it evolving in the ace o contin-
ued economic and competitive chal-
lenges? Which manuacturing jobs are
being aected the most?
What does the uture o talent look like?
What upcoming trends are companies
preparing or today? How ast are these
changes occurring?
Appendi C:
Understanding Americanperceptions o manuacturingand tackling the growing skillsgaps in the United States
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Manufacturing Opportunity
1. Deloitte and Te Manuacturing Insti-tute, Unwavering Commitment, p. 3.
2. Peter Marsh, Emerging Economies FlexManuacturing Muscle, Te Financial imes(March 14, 2011), http://blogs..com/beyond-brics/2011/03/14/emerging-economies-fex-manuacturing-muscle/#axzz1kRi1RNyE.
3. Deutsche Bank Group/DB Advisors, TeDecline o U.S. Manuacturing: Fact or Fic-tion?(Frankurt am Main, March 2011), p. 1,
https://www.dbadvisors.com/content/_me-dia/DAM466_CloserLook0311.pd.
4. Uday Karmarkar, Te Increase in U.S.Manuacturing Jobs Is Nothing to CheerAbout, Harvard Business Review (January20, 2011), http://blogs.hbr.org/cs/2011/01/why_the_increase_in_us_manuac.html.
5. Report: US Lost 28% O High-echManuacturing Jobs, Manuacturing.Net,January 19, 2012, http://www.manuactur-ing.net/news/2012/01/report-us-lost-28-o-high-tech-manuacturing-jobs.
6. Economic Policy Institute, Updated Employ-ment Multipliers or the U.S. Economy, by JoshBivens (August 2003), http://www.epi.org/page/-/old/workingpapers/epi_wp_268.pd.
7. Deloitte and Te Manuacturing Institute,Unwavering Commitment: Te PublicsView o the Manuacturing Industry oday(2011), p. 1, http://www.deloitte.com/as-sets/Dcom-UnitedStates/Local%20Assets/Documents/us%20cip%202011PublicViewon-ManuacturingReport%20090811.pd.
8. Deloitte and Te Manuacturing Institute,Unwavering Commitment, pp. 7 & 9.
9. Deloitte analysis.
10. Deloitte and Te Manuacturing Insti-tute, Unwavering Commitment, p. 3.
11. Deloitte and Te Manuacturing Insti-tute, Unwavering Commitment, p. 2.
12. Deloitte and Te U.S. Council on Com-petitiveness, 2010 Global ManuacturingCompetitiveness Index(June 2010), p. 14,http://www.deloitte.com/assets/Dcom-Global/
Local%20Assets/Documents/Manuacturing/dtt_2010%20Global%20Manuacturing%20Competitiveness%20Index_06_28_10.pd.
13. http://www3.weorum.org/docs/WEF_MOB_FutureManuacturing_Report_2012.pd
14. http://www.themanuacturinginstitute.org/~/media/A07730B2A798437D98501E798C2E13AA.ashx
15. Deloitte and US Council on Competitiveness,2010 Global Manuacturing Competitiveness In-dex, p. 7.; and Deloitte ouche ohmatsu, 2010.
16. Deloitte and Te U.S. Council on Com-
petitiveness, 2010 Global Manuactur-ing Competitiveness Index, p. 7.
17. Bureau o National Aairs, Aspen InstituteSays U.S. Companies Will Provide Moreraining in 21st Century, Daily Labor Report(March 6, 2003), http://www.aspenwsi.org/Publications/WSI-DailyLaborRpt.pd.
18. Deloitte and Te Manuacturing Institute,Boiling Point? Te Skills Gap in U.S. Manu-acturing(October 2011), pp. 1, 9 & 11.
19. Deloitte and Te U.S. Council on Com-petiveness, Ignite 2.0: Voices o American
University Presidents and National LabDirectors on Manuacturing Competitiveness(August 2011), p. 22, http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_auto_Ignite2_111711.pd.
20. Deloitte and Te U.S. Council on Com-petiveness, Ignite 1.0: Voice o AmericanCEOs on Manuacturing Competitiveness(January 2011), p. 28, http://www.compete.org/images/uploads/File/PDF%20Files/Ignite_1-0_FINAL_02.14_.11_.pd.
21. QS opUniversities, 2010 QS Asian UniversityRankings: a Case o Quantity over Quality orMainland Chinas Universities?, http://www.topuniversities.com/university-rankings/asian-rankings/2010-qs-asian-university-rankings-case-quantity-over-quality-main.
22. Deloitte and Te Manuacturing Insti-tute, Unwavering Commitment, p. 3
23. Georgetown University Center on Educa-tion and the Workorce, Whats it Worth:Te Economic Value o College Majors,by Anthony P. Carnevale, Je Strohl and
Michelle Melton (May 2011), pp. 74-82,http://www9.georgetown.edu/grad/gppi/hpi/cew/pds/whatsitworth-complete.pd.
Endnotes
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A Deloitte series on making America stronger
24. It is important to note that the recommenda-tions were not consistent between stakeholders.While many agreed on a number o topics,there were some dierences between cohortsand these represent recommendations out-lined in one or more o the Ignite reports.
25. Deloitte and Te U.S. Council onCompetiveness, Ignite 2.0, p. 18.
26. Gray, J. V., B. omlin, and A. V. Roth,Outsourcing to Contract Manuacturers:
Te Eect o Power and Path-DependentCosts, Production and Operations Man-agement(18[5], 2009), 487-505.
27. German Federal Ministry o Educationand Research, he High ech Strategy orGermany(Bonn, 2006), http://www.bmb.de/pub/bmb_hts_en_kurz.pd.
28. Deloitte and Te U.S. Council onCompetiveness, Ignite 2.0, p. 30.
29. Deloitte and Te U.S. Council onCompetitiveness, 2010 Global Manu-
acturing Competitiveness Index.30. Deloitte and Te U.S. Council on
Competiveness, Ignite 2.0, p. 31.
31. Te Manuacturers Alliance/MAPI and TeManuacturing Institute, Te ide Is urning:An Update on Structural Cost Pressures FacingU.S. Manuacturers (November 2008), p. 1,http://www.mapi.net/Structural_Costs/Docu-ments/Structural_Cost_Study___2008.pd.
32. Deloitte and Te Manuacturing Insti-tute, Unwavering Commitment, p. 4.
33. Te ax Foundation, National and State Cor-porate Income ax Rates, U.S. States and OECDCountries, 2011, January 14, 2011, http://www.taxoundation.org/taxdata/show/23034.html.
34. Deloitte and Te U.S. Council on Com-petitiveness, 2010 Global Manuactur-ing Competitiveness Index, p. 33.
35. Deloitte and Te U.S. Council onCompetiveness, Ignite 1.0, p. 18.
36. Daniel Karnis, Navigating the R&D axCredit,Journal o Accountancy(March2010), http://www.journaloaccountancy.com/Issues/2010/Mar/20092122.
37. National Bureau o Economic Research, DoStronger Intellectual Property Rights IncreaseInternational echnology ranser? EmpiricalEvidence rom U.S. Firm-Level Panel Data,by Lee G. Branstetter, Raymond Fismanand Fritz C. Foley (July 2005), http://www.people.hbs.edu/oley/IPRReorm.pd.
38. National Export Initiative, Report to the Presi-dent on the National Export Initiative: Te Ex-port Promotion Cabinets Plan or Doubling U.S.
Exports in Five Years (Washington, D.C., Sep-tember 2010), p. 1, http://www.whitehouse.gov/sites/deault/les/nei_report_9-16-10_ull.pd.
39. Deloitte and Te U.S. Council on Com-petiveness, Ignite 1.0 and Ignite 3.0
40. Deloitte and Te U.S. Council on Competive-ness, Ignite 1.0, p. 21; and Ignite 3.0: Voice oAmerican Labor Leaders on ManuacturingCompetitiveness (December 2011), p. 9, http://www.compete.org/images/uploads/File/PDF%20Files/Ignite_3.0_FINAL_.pd.
41. Deloitte and Te U.S. Council onCompetiveness, Ignite 3.0, p. 29.
42. China plans dra immigration law, (Xi-nhua), 16:53, China Daily, May 22, 2010
43. Gita Wirjawan, China: A Catalyst or In-rastructure Development, Te Jakarta Post(May 7, 2010), http://www.thejakartapost.com/news/2010/05/07/news-analysis-china-a-catalyst-inrastructure-development.html.
44. U.S. Council on Competitiveness, Drive.Private Sector Demand or Sustainable EnergySolutions A Comprehensive Roadmap to
Achieve Energy Security, Sustainability andCompetitiveness (September 2009), http://www.compete.org/images/uploads/File/PDF%20Files/CoC_-_DRIVE._Private_Sector_Demand_or_Sustainable_Energy_Solutions,_Sept09_.pd.
45. ASES Green Collar Jobs report orecasts37 million jobs rom renewable energy andenergy eciency in U.S. by 2030, Americansolar Energy Society, http://www.ases.org/index.php?option=com_content&
view=article&id=465&Itemid=58
46. Deloitte and Te U.S. Council on Com-
petiveness, Ignite 3.0, pp. 19 & 30.
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