Labour Productivity is the Number One Factor for Global Competitiveness in Manufacturing: Survey
A new global survey commissioned by Kronos Incorporated and conducted by IDC Manufacturing Insights revealed that labour productivity ranked the highest among all 11 countries surveyed as the most important factor for achieving manufacturing success . Factors such as modern infrastructure, government support, and foreign direct investment ranked in varying degrees after labour productivity.
News Facts
-- Manufacturing managers, directors, and executives from sectors including automotive, food and beverage, machinery and equipment, and textiles across Australia, Brazil, Canada, China, France, Germany, India, Mexico, Spain, the U.K., and U.S. were surveyed for current trends in global manufacturing. Respondents from mature economies fared similar to emerging nations when rating manufacturing’s importance, with 70 percent of all respondents citing manufacturing as the single most important industry for their country’s economic health. India was the only deviation with 32 percent claiming manufacturing was detrimental to the economy – well above rates of any other country (U.S. was next at 14 percent)
-- India ranked the least amongst developing economies (at 60 percent) when asked about government support for the manufacturing industry with China rating it the highest, at 82 percent. This emphasizes the manufacturing industry’s concerns about not enough government focus on reforms and growth. The recent labour-related turmoil in manufacturing plants in India further stress growing needs for labour reforms and more proactive government support.
-- However, when asked about the future of manufacturing as a career option for the next generation, 92 percent of Indian respondents agreed that manufacturing was a practical career option. Overall 88.2 percent of all respondents were very or somewhat positive. Australia and China ranked the lowest, with 74 and 70 percent respectively.
-- When asked about the factors that affect the success of manufacturers, majority of all respondents, at a combined 74.7 percent agreed that a high level of labour productivity is very or extremely important for achieving manufacturing success. While emerging nations rated the need for modern infrastructure higher than mature economies, labour productivity still topped as the main driver of success among all countries. Brazil, Mexico, and Spain scored the highest regarding labour productivity, with 82 percent in all three countries noting it to be very or extremely important. China, France, India, and Germany scored relatively low, with 66, 66, 68, and 68 percent.
-- Brazil respondents ranked the need for modern infrastructure the highest, with 88 percent rating it as very or extremely important. China, India, Mexico, and Spain followed with 82 percent in all four countries, and 66 percent in the U.S. agreed about modern infrastructure’s importance.
-- When asked about factors that can improve workforce productivity, training and continuous improvement of the existing workforce was the top choice, with 68.2 percent of all respondents noting it as effective. Investment in technology followed next, with 63.3 percent
-- And what are some of the issues impacting productivity? The survey found that absences can get in the way. When asked if absenteeism was not a problem, India at 36 percent had the highest number of respondents that disagreed, suggesting absenteeism to be a larger issue than other countries. Australia, Canada, U.K., and U.S. respondents agreed the most, with 42, 48, 46, and 44 percent respectively, demonstrating absenteeism to be a smaller issue. Brazil, France, and Mexico cited absenteeism as a relatively big problem in manufacturing, with 24, 26, and 22 percent respectively agreeing.
-- When asked about shortage of skills required for specialized manufacturing jobs, Germany and the U.S. demonstrated a higher availability of skilled workers, with only 2 and 6 percent respectively agreeing that there is a shortage. Brazil and Mexico scored the highest demonstrating a greater lack of specialized manufacturing workers, with 40 and 28 percent agreeing to a shortage. China, India, and Spain followed, with 20, 18, and 20 percent, suggesting the need for greater government involvement in driving reforms and investing in workforce skills development.
-- The respondents were also asked about one strategy that they would recommend for global competitiveness. The winning recommendation, at a combined 45.5 percent, 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.
Supporting Quotes
-- James Thomas, country manager – India, Kronos
“This survey very aptly brings out the dichotomy faced by the Indian manufacturing sector today. On one hand, we are receiving feedback on how critical a vibrant modern manufacturing sector is for India and the optimism of the industry regarding a career option for the future generation. On the other hand we are witnessing concerns around governmental support, infrastructure woes, and inadequate platforms for "right skilling" India's youth to contribute more effectively to manufacturing. It's time to give our manufacturing sector, which has been the unsung hero of the Indian economy, its due and a little more care and nurture.”
-- Gregg Gordon, senior director, manufacturing practice group, Kronos and author of Lean Labour
“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 un-employment and falling wages, emerging nations can no longer rely on low cost labour as a growth strategy. 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.”
-- Bob Parker, group vice president of research, IDC Manufacturing Insights
“The modern manufacturing workforce 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. 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 workforce is a competitive necessity.”
Supporting Resources
-- About IDC Manufacturing Insights
-- See an infographic about this survey highlighting labour productivity issues in manufacturing.
-- Check out a related Time Well Spent cartoon on the topic of labour productivity.
-- Connect with Kronos via Facebook, Twitter, Google+, LinkedIn, and YouTube.
-- Subscribe to our workforce management blogs.
Survey Methodology
The basis for this study includes new primary research with 550 workforce management stakeholders across 11 countries: Australia, Brazil, Canada, China, France, Germany, India, Mexico, Spain, United Kingdom, and the United States. The companies included in the research were from the manufacturing industry and included a diverse collection of both discrete and process manufacturers. Participating firms were required to have a minimum of 200 employees. Respondents were recruited from both the IT organization as well as the Human Resources organization to ensure that line of business and technologist perspectives were well represented. The online survey was fielded for four weeks in March and April 2012.
The survey effort was augmented by 19 formal in-depth interviews with senior leadership from global manufacturers based in the following countries: Canada, China, India, United Kingdom, and the United States. Interviews were conducted by phone and spanned 60-90 minutes each.
About Kronos Incorporated
Kronos is the global leader in workforce management solutions that enable organizations to control labour costs, minimize compliance risk, and improve workforce productivity. Tens of thousands of organizations in 100 countries — including more than half of the Fortune 1000® — use Kronos time and attendance, scheduling, absence management, HR and payroll, hiring, and labour analytics applications. To learn how Kronos uniquely delivers complete automation and high-quality information in an easy-to-use solution, visit www.kronos.com or www.kronos.in
News Facts
-- Manufacturing managers, directors, and executives from sectors including automotive, food and beverage, machinery and equipment, and textiles across Australia, Brazil, Canada, China, France, Germany, India, Mexico, Spain, the U.K., and U.S. were surveyed for current trends in global manufacturing. Respondents from mature economies fared similar to emerging nations when rating manufacturing’s importance, with 70 percent of all respondents citing manufacturing as the single most important industry for their country’s economic health. India was the only deviation with 32 percent claiming manufacturing was detrimental to the economy – well above rates of any other country (U.S. was next at 14 percent)
-- India ranked the least amongst developing economies (at 60 percent) when asked about government support for the manufacturing industry with China rating it the highest, at 82 percent. This emphasizes the manufacturing industry’s concerns about not enough government focus on reforms and growth. The recent labour-related turmoil in manufacturing plants in India further stress growing needs for labour reforms and more proactive government support.
-- However, when asked about the future of manufacturing as a career option for the next generation, 92 percent of Indian respondents agreed that manufacturing was a practical career option. Overall 88.2 percent of all respondents were very or somewhat positive. Australia and China ranked the lowest, with 74 and 70 percent respectively.
-- When asked about the factors that affect the success of manufacturers, majority of all respondents, at a combined 74.7 percent agreed that a high level of labour productivity is very or extremely important for achieving manufacturing success. While emerging nations rated the need for modern infrastructure higher than mature economies, labour productivity still topped as the main driver of success among all countries. Brazil, Mexico, and Spain scored the highest regarding labour productivity, with 82 percent in all three countries noting it to be very or extremely important. China, France, India, and Germany scored relatively low, with 66, 66, 68, and 68 percent.
-- Brazil respondents ranked the need for modern infrastructure the highest, with 88 percent rating it as very or extremely important. China, India, Mexico, and Spain followed with 82 percent in all four countries, and 66 percent in the U.S. agreed about modern infrastructure’s importance.
-- When asked about factors that can improve workforce productivity, training and continuous improvement of the existing workforce was the top choice, with 68.2 percent of all respondents noting it as effective. Investment in technology followed next, with 63.3 percent
-- And what are some of the issues impacting productivity? The survey found that absences can get in the way. When asked if absenteeism was not a problem, India at 36 percent had the highest number of respondents that disagreed, suggesting absenteeism to be a larger issue than other countries. Australia, Canada, U.K., and U.S. respondents agreed the most, with 42, 48, 46, and 44 percent respectively, demonstrating absenteeism to be a smaller issue. Brazil, France, and Mexico cited absenteeism as a relatively big problem in manufacturing, with 24, 26, and 22 percent respectively agreeing.
-- When asked about shortage of skills required for specialized manufacturing jobs, Germany and the U.S. demonstrated a higher availability of skilled workers, with only 2 and 6 percent respectively agreeing that there is a shortage. Brazil and Mexico scored the highest demonstrating a greater lack of specialized manufacturing workers, with 40 and 28 percent agreeing to a shortage. China, India, and Spain followed, with 20, 18, and 20 percent, suggesting the need for greater government involvement in driving reforms and investing in workforce skills development.
-- The respondents were also asked about one strategy that they would recommend for global competitiveness. The winning recommendation, at a combined 45.5 percent, 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.
Supporting Quotes
-- James Thomas, country manager – India, Kronos
“This survey very aptly brings out the dichotomy faced by the Indian manufacturing sector today. On one hand, we are receiving feedback on how critical a vibrant modern manufacturing sector is for India and the optimism of the industry regarding a career option for the future generation. On the other hand we are witnessing concerns around governmental support, infrastructure woes, and inadequate platforms for "right skilling" India's youth to contribute more effectively to manufacturing. It's time to give our manufacturing sector, which has been the unsung hero of the Indian economy, its due and a little more care and nurture.”
-- Gregg Gordon, senior director, manufacturing practice group, Kronos and author of Lean Labour
“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 un-employment and falling wages, emerging nations can no longer rely on low cost labour as a growth strategy. 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.”
-- Bob Parker, group vice president of research, IDC Manufacturing Insights
“The modern manufacturing workforce 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. 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 workforce is a competitive necessity.”
Supporting Resources
-- About IDC Manufacturing Insights
-- See an infographic about this survey highlighting labour productivity issues in manufacturing.
-- Check out a related Time Well Spent cartoon on the topic of labour productivity.
-- Connect with Kronos via Facebook, Twitter, Google+, LinkedIn, and YouTube.
-- Subscribe to our workforce management blogs.
Survey Methodology
The basis for this study includes new primary research with 550 workforce management stakeholders across 11 countries: Australia, Brazil, Canada, China, France, Germany, India, Mexico, Spain, United Kingdom, and the United States. The companies included in the research were from the manufacturing industry and included a diverse collection of both discrete and process manufacturers. Participating firms were required to have a minimum of 200 employees. Respondents were recruited from both the IT organization as well as the Human Resources organization to ensure that line of business and technologist perspectives were well represented. The online survey was fielded for four weeks in March and April 2012.
The survey effort was augmented by 19 formal in-depth interviews with senior leadership from global manufacturers based in the following countries: Canada, China, India, United Kingdom, and the United States. Interviews were conducted by phone and spanned 60-90 minutes each.
About Kronos Incorporated
Kronos is the global leader in workforce management solutions that enable organizations to control labour costs, minimize compliance risk, and improve workforce productivity. Tens of thousands of organizations in 100 countries — including more than half of the Fortune 1000® — use Kronos time and attendance, scheduling, absence management, HR and payroll, hiring, and labour analytics applications. To learn how Kronos uniquely delivers complete automation and high-quality information in an easy-to-use solution, visit www.kronos.com or www.kronos.in