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A view of U.S. Manufacturing

By Tim Hanley - April 02, 2013

Bzi_foc_glb_ho_1522_hiRecently I had a chance to spend two days with a group of CEOs leading manufacturing companies around the United States (U.S.). I find that participation in these types of meetings provide a great venue to discuss top industry issues. In addition to world-class speakers at the meeting, one of the things I find particularly refreshing is the chance to interact with the leaders from large companies as well as small and medium size manufacturers to get a pulse of what is happening in manufacturing.

A high-point of the session was a CEO panel which featured a vibrant discussion on the key issues facing manufacturing today. These leaders have a relative consensus that business domestically is continuing to grow, although this growth is somewhat muted by the many headwinds that exist in the current manufacturing environment. Unanimously this group of CEOs indicated that they are spending more time than ever before in Washington, D.C. as they find it is critically important for them to ensure that legislators are well aware of the issues that are important to them as the primary providers of employment.

Among the top issues discussed included the:

•    Importance of tax reform in the U.S.
•    Energy security (and the impact of shale gas on the cost of energy)
•    Looming shortage of talent
•    Importance of continuing investment in infrastructure (roads, ports, rails, etc.)

The U.S. has one of the highest corporate tax rate of many of the major manufacturing economies. While tax reform is currently being debated in the U.S., there did not currently seem to be a consensus among CEO’s on the extent of the tax reform, which might take place in the near term, but there was agreement that change was needed to be globally competitive.

Not surprising, one of the other significant topics of discussion was energy. In fact, there were several sessions during the meeting dedicated to the energy landscape. Despite the many headwinds experienced in the U.S., the benefit of the significant presence of shale gas and its downward pressure on energy costs was viewed by executives as a real positive. Who would have guessed just a short time ago the U.S. would be looking to potentially be energy secure, and the advantages could offer in competing globally.

One very important underlying theme heard throughout the meeting was the importance of being globally competitive. Speaking of this topic, I wanted to remind you again of a report prepared by Deloitte in conjunction with the U.S. Council on Competitiveness entitled the 2013 Global Manufacturing Competitive Index Report. The good news for the U.S. is that global CEOs surveyed believe that the U.S. has improved its competitiveness capabilities since 2010, moving up one spot from fourth to third in current manufacturing competitiveness, behind China and Germany. However in five years, executives surveyed expect the U.S. to fall a bit further behind due to the rise of India and Brazil, and drop to the world’s fifth most competitive manufacturing nation. As I indicated above, this sentiment is at least in part a result of policy and regulatory disadvantages, as well as high labor, corporate tax, and unemployment rates, along with sluggish GDP growth. 

It goes without saying that the U.S. will continue to have a major global impact in manufacturing and we will continue to keep an eye on the challenges and opportunities faced by U.S. manufacturers.

Look forward to connecting with you all again next month—likely from another corner of the world. 


Tim HanleyTim Hanley is the Global Leader of the Manufacturing Industry group of Deloitte Touche Tohmatsu Limited (DTTL). In his global industry leadership role, he directs strategic initiatives and investments to grow Deloitte member firm market share within the manufacturing industry. During his distinguished 32-year career, Hanley has led teams serving all business aspects, including consulting with top management regarding organizational financial strategy development and execution, acquisitions, and market development. Follow @TimPHanley and @DeloitteMFG on Twitter .

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Tim, Great article. Thanks for providing those manufacturing executives' areas of focus. As we ramp up our manufacturing operations research for 2013, it will be interesting to see how executive challenges and objectives align with your post, especially when we analyze by country.

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