Manufacturing sector reshoring, diversifying and holding inventory amid pandemic – Property Magazine International

by admin on June 29, 2020

As the manufacturing sector begins to reopen around the world, new trends are emerging in response to the global COVID-19 pandemic, according to new research by Cushman & Wakefield.

Cushman & Wakefield analyzed the impact of COVID-19 on the global manufacturing sector and how countries around the world are currently positioned and projected to rebound. As manufacturers seek to safeguard production lines while plotting a path to profitability, Cushman & Wakefield’s 2020 Global Manufacturing Risk Index assesses the most suitable locations for global manufacturing among 48 countries in Europe, the Americas and Asia.

Within the report, countries have been ranked 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.

China retains top position on the baseline scenario ranking, followed by the United States in second.

“Both China and the U.S. offer a large consumer market, ample labor supply and incentives at both the federal and state level, as well as an established infrastructure network,” said Jason Tolliver, global head of newCommerce research at Cushman & Wakefield. “With the rapid adoption of technology into production processes, the U.S. and its higher-cost workforce could start to be better aligned to compete with China for manufacturing jobs.”

Baseline Rankings
County 2019 2020
China 1 1
United States 2 2
India 4 3
Czech Republic 6 4
Canada 5 5

“We’re seeing a severe disruption in economic activity across the board and the data we’ve been able to accumulate has shown the benefits and pitfalls of our global interconnectivity,” said Lisa Graham, EMEA Head of Industrial Research at Cushman & Wakefield. “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 report also examined political and economic risk factors, showing Canada topping the list in 2020, up one spot from 2019 and pushing the United States into the second spot. Singapore jumped from sixth place to third, Germany moved from seventh to fourth and China rounded out the top five.

Risk Ranking
Country 2019 2020
Canda 2 1
United States 1 2
Singapore 6 3
Germany 7 4
China 5 5

The third category studied was overall cost ranking, including labor and operating costs. In this category, this year’s MRI cost scenario rankings reflect the broad impact of the US-China trade dispute on regional positioning. While China retains its lead position, Vietnam and India jumped to second and third positions respectively.

“The manufacturing shift towards Southeast Asia has been a long time in the making. As minimum wages in China grew, more orders for labor intensive products, such as clothes, toys and shoes, shifted to less expensive locations,” said Tolliver. “However, despite government initiative to attract manufacturers by Southeast Asian countries, China retains a clear infrastructure advantage with the ability to efficiently move goods via road, rail or sea transport.”

Cost Ranking
Country 2019 2020
China 1 1
Vietnam 4 2
India 6 3
Malaysia 3 4
Indonesia 5 5

“The current pandemic leaves many unanswered questions as to what is in store for the global manufacturing sector,” said Tolliver. “We’re optimistic about its future, but it will ultimately depend on the industry’s components that are currently flourishing, as well as those countries and manufacturers that are still operable during the current onset of new challenges.”

Original Source

{ 0 comments… add one now }

Leave a Comment

Previous post: