Labor productivity top factor for competitive manufacturing

Labor productivity is the top factor for becoming competitive in the manufacturing sector, according to a new global survey commissioned by Kronos Incorporated and conducted by IDC Manufacturing Insights.

Following labor productivity, the primary factors are modern infrastructure, government support and foreign direct investment, the survey finds.

Of the factors that can improve work force productivity are training and continuous improvement of the existing work force at 68.2 percent and investment in technology at 63.3 percent.

“The modern manufacturing work force is going beyond its proud legacy of continuously driving higher levels of productivity through continuous improvement and is augmenting that legacy by being the pivotal resource in creating strategic advantage,” says Bob Parker, group vice president of research at IDC Manufacturing Insights. “Complexity is a given in our global supply chains, and it is not just information that gives us advantage but people with the skills to use that information. As our surveys and detailed interviews confirmed, managing corporate capabilities through the work force is a competitive necessity.”

Among the issues impacting productivity is absenteeism, according to respondents from Brazil at 24 percent, France at 26 percent and Mexico at 22 percent. Respondents that say absenteeism is not a problem are Australia at 42 percent, Canada at 48 percent, United Kingdom at 46 percent and the United States at 44 percent.

To improve global competitiveness, 45.5 of respondents say manufacturing companies should maintain existing facilities as is while investing in work force operational excellence methodologies, including strategies for more effective labor cost control, minimized labor law compliance risk and improved work force productivity.

Developed as well as emerging economies are affected by shortages of skilled production employees at 68 percent in Brazil, 36 percent in China, 22 percent in Germany, 44 percent in Mexico and 26 percent in the United States.

“Manufacturers today are judged on a world stage and their treatment of labor is under the scrutiny of governments, downstream supply chain partners and end consumers,” says Gregg Gordon, senior director, manufacturing practice group of Kronos. “With developed countries facing high levels of unemployment and falling wages, emerging nations can no longer rely on low cost labor as a growth strategy. They will need to develop a skilled, productive work force 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 work force is becoming a competitive differentiator for manufacturers everywhere.”


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