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India is in top 3 manufacturing hub position globally in terms of operating conditions and cost competitiveness

Awantika Mohanty • 16/07/2020
Cushman & Wakefield, today released the Manufacturing Risk Index report in their webinar on Changing Global Manufacturing Landscape. Cushman & Wakefield conducted two part webinar series where the first session was on 9th July, focused on inputs/ opinion of Industrial firms and Developers. The second session held on 16th July, which was planned to target State Industrial Bodies and International Business Bodies.

In its annual ranking of the most suitable locations for global manufacturing among 48 countries in Europe, the Americas and Asia Pacific, Cushman & Wakefield has assessed that India is in top 3 this year and the upcoming manufacturing hub globally from an operating conditions and cost competitiveness perspective. 

The annual Global Manufacturing Risk Index (MRI) scores each country against 20 variables that make up the three final weighted rankings which cover conditions, cost and risk. The data underpinning the MRI comes from a variety of reliable sources, including the World Bank, UNCTAD and Oxford Economics. 

Baseline Scenario
From a baseline scenario ranking that looks equally at operating conditions and cost competitiveness but does not consider impact from the current pandemic, China retains the top spot, followed by the United States in second and India in third position.

Baseline Rankings

Country

2019

2020

China

1

1

United States

2

2

India

4

3

Czech Republic

6

4

Canada

5

5

 

Cost Scenario
The MRI cost scenario places greater emphasis on cost reduction to give a higher score to countries where operating costs, including labor are lower. While China retains its lead position, Vietnam and India jumped to second and third positions respectively.

Cost Rankings

Country

2019

2020

China

1

1

Vietnam

4

2

India

6

3

Malaysia

3

4

Indonesia

5

5

 

Risk Scenario
The MRI’s risk scenario favors countries presenting lower levels of economic and political risk, while considering rising geo-political risk. In this scenario, Canada and the United States ranked first and second in 2020, supported by their natural resources, ample labor pools, federal and state incentives, large consumer markets and infrastructure, especially in a less predictable and less secure global environment. Transparency, investments in infrastructure networks and the absence of geopolitical concerns contributed to higher ranking positions for both Singapore and Germany, third and fourth respectively.

Risk Rankings

Country

2019

2020

Canada

2

1

United States

1

2

Singapore

6

3

Germany

7

4

China

5

5

 

 

The 2020 MRI also includes analysis of the impact of COVID-19 on the global manufacturing sector and ranked countries by their projected ability to restart their manufacturing sectors once confinement measures are relaxed and business starts to return to normal. This “bounce-back-ability” ranking is based on six key variables and is weighted according to its estimated contribution to manufacturing sector recovery. Several countries in Asia Pacific including China, Thailand, South Korea, Australia and Japan are assessed to be in the top quartile in terms of a fast recovery.

On the report release, Mr Anshul Jain, MD- India & SE Asia  commented, “In the backdrop of the COVID-19 scenario, the government has reiterated its agenda to launch fresh measures that would give a boost to setting up of a more conducive environment to make India a manufacturing hub. At a time like this, India ranking amongst top 3 on the most suitable locations for global manufacturing comes as a shot in the arm for the country.”

COVID-19 and the resultant disruption in economic activity across the world has re-ignited the debate about the benefits of re-shoring. However feasible and desirable, reshoring on a mass scale is not realistic and will not happen in the immediate term. Instead, to build resilience in the event of a second pandemic wave or second lockdown period, manufacturers are more likely to address the two most pressing vulnerabilities: materials and component sourcing and supply chain disruptions.

The most likely measures taken by manufacturers in reaction to the COVID-19 pandemic are:

  • Immediate- to short-term: Holding more product and component inventories. 
  • Medium-term: Diversifying component sourcing including an emphasis on localising or “nearshoring” components to be closer to plants while holding more inventories. 
  • Long-term: Reshoring for some sectors, locating plants and component sources closer to each other as well as supply chain and production line restructuring that would make just-in-time inventory management possible again

To download the report, visit the 2020 Global Manufacturing Risk Index page.

 

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