Labour productivity number one factor in global competitiveness, report says

What’s the most important factor for manufacturing success? A new report says it is labour productivity.

 The survey, commissioned by Kronos Incorporated and conducted by IDC Manufacturing Insights, looked at 11 countries and found that labour productivity ranked highest as a factor for achieving manufacturing success. Factors such as modern infrastructure, government support, and foreign direct investment ranked in varying degrees after productivity.

The survey asked manufacturers from Canada, Australia, Brazil, China, France, Germany, India, Mexico, Spain, the U.K., and U.S. about current trends in global manufacturing, and 70 per cent of all respondents cited manufacturing as the single most important industry for their country’s economic health.

When it comes to labour productivity, almost two-thirds (74.7 per cent) of respondents agreed that a high level of labour productivity is very or extremely important for achieving manufacturing success.

When asked about factors that can improve workforce productivity, training and continuous improvement of the existing workforce was the top choice, with 68.2 per cent of all respondents noting it as effective. Investment in technology followed next, with 63.3 per cent.

And what are some of the issues impacting productivity? The survey found that absences can get in the way, but not as much in Canada, which, along with Australia, the U.K. and the U.S. agreed absenteeism is not a significant issue. Brazil, France and Mexico, however, cited absenteeism as a bigger problem in manufacturing.

How does the future of manufacturing look as a career option for the next generation? Survey respondents were optimistic, with 88.2 per cent of all respondents were very or somewhat positive about encouraging younger relatives to consider manufacturing as a practical career option.

The respondents were also asked about one strategy that they would recommend for global competitiveness. The winning recommendation, at a combined 45.5 per cent, was that manufacturing companies should keep existing facilities as is and invest in workforce operational excellence methodologies, which comprise of strategies for more effective labour cost control, minimized labour law compliance risk, and improved workforce productivity.

“Manufacturers today are judged on a world stage and their treatment of labour is under the scrutiny of governments, downstream supply chain partners, and end consumers. With developed countries facing high levels of unemployment and falling wages, emerging nations can no longer rely on low cost labour as a growth strategy,” says Gregg Gordon, senior director, manufacturing practice group, Kronos and author of Lean Labor.

“They will need to develop a skilled, productive workforce to compete globally. Also, as manufacturers seek growth internationally, they are required to invest in economic development by foreign governments; specifically good paying, local jobs. With increased global scrutiny, competition, and supply chain complexities, the workforce is becoming a competitive differentiator for manufacturers everywhere.”