What’s Happening in the Manufacturing Industry Around the World?

Despite global upheavals, the United Nations Industrial Development Organization (UNIDO) reports the manufacturing industry around the world is growing at 2 percent per annum. Indications are this will continue, with signs of a slight increase in 2016.

Most manufacturing growth is taking place in developing countries as well as in the Emerging Industrial Economies (EIE), which together are sustaining overall growth of 5 percent. Industrialized economies are lagging far behind, and despite initial forecasts of 3 per cent growth in 2015, manufacturing growth remains below 2 percent.

However, when the results for the industrialized economies are broken down, it becomes clear that East Asia, which incorporates Korea, Japan and the surrounding countries, is facing negative growth in manufacturing, Europe is struggling at just below 2 percent, while North American manufacturing is striding ahead at 2 to 3 percent per annum. What is also interesting is that both Europe and East Asia are only just recovering from a manufacturing recession that saw negative growth in 2012 and 2013, whilst throughout this period North American growth remained steady. China, which is grouped within the EIE, has continued to experience sustained growth rates between 7 and 9 percent.

According to the KPGM 2015 CEO outlook survey, business confidence in the U.S. is higher than overall global confidence. According to the report, North American companies are adopting aggressive growth strategies with particular focus on internal growth within North America. In Europe, manufacturing companies are still struggling to recover momentum following the serious banking and liquidity crises that hit that part of the world. In the Far East, countries such as Korea and Japan are suffering from lackluster internal growth exacerbated by strong currencies.

Although Chinese growth has slightly slowed, the country, along with other Far Eastern countries, still remains amongst the lowest cost manufacturing areas. Consequently, American companies are still continuing to offshore production to these countries, although there are signs that the trend may be slowing. One reason seems to be linked to a realization that “Next Shoring,” the manufacture of goods close to where they will be sold, makes economic sense along with shorter delivery times allowing for a faster turnaround time. Although this doesn’t mean that offshoring manufacture in the Far East will necessarily be cut, it does mean that the manufacturing industry around the world is seeking to manufacture products in regions close to where there is a demand.