Manufacturing competitiveness around the globe, Mexico in top ten

By Adina Moloman

Sources: http://247wallst.com; www.bcg.com, www.ft.com

According to a new research released in April 2014 by The Boston Consulting Group (BCG), Companies Manufacturing in Mexico have grown more competitive over the past decade compared with manufacturing facilities in China, Brazil and most of the world’s other major economies.

The study is reviewing the manufacturing costs in the 25 biggest exporting countries. Cost competitiveness includes several elements such wages, productivity growth, favorable currency rates, energy costs.

According to BCG private study due to rising wages and higher energy costs it has diminished China’s long-standing edge over Mexico and also over the United States. The value of China’s currency has risen more than 30% against the U.S. dollar over the past decade and Chinese electricity costs rose 66%.

Brazil has lost even more competitiveness than China since Brazil factories are 23% more expensive by not improving efficiency enough due to rising energy and labor costs.

The top ten manufacturing countries are Indonesia, India, Mexico, Thailand, China, Taiwan, Russia, Netherlands and United States.

The start of large-scale U.S. shale gas production in 2005 has diminished the energy cost in the United States and neighboring Mexico and Canada in the last decade.

The same study shows a different reality in Europe where UK’s manufacturing costs are lower than France or Germany, but still 9 per cent higher than the US. Only the UK and the Netherlands have kept their competitiveness thanks to steady productivity growth.

Higher energy costs and low productivity growth or even productivity decline are the main reasons for the lost of competitiveness in most European manufacturing countries.

Australia was the most expensive country for manufacturing among the 25 countries. Its costs were 30% higher than those in the United States.