- Latest research highlights companies moving from a cost-driven to a value-driven approach when assessing their manufacturing footprint globally.
- Countries that embrace this shift will enhance their attractiveness for foreign investment. By adopting innovative manufacturing policies, these countries are likely to experience improved growth, including higher GDP and a larger share of global value chains.
- The report identifies seven critical country-readiness factors driving private sector decision-making and shaping countries’ attractiveness amidst the rewiring of global value chain for the evolving industrial landscape to guide policy-makers and industries.
Geneva, Switzerland, 10 December 2024 – A new report released today by the World Economic Forum provides a comprehensive framework for governments and companies identifying the factors that make a location attractive for investment in manufacturing and supply chains.
Ongoing geopolitical, technological and environmental disruptions are prompting companies to rethink their supply chain network design, with over 90% of leaders prioritizing regionalization and close to two thirds of manufacturers adopting a “power-of-two” geographical approach, ensuring the majority of their direct spending is sourced from two separate regions.
Five key trends are driving this shift – including a move to more regionalized hubs, a transition to a digital-first model of operations, the adoption of more innovative approaches to sustainability and a deeper focus on skills and customer value.
“As global value chains undergo a profound transformation, countries and companies have a unique opportunity to redefine their competitive edge,” said Kiva Allgood, Head of the Centre for Advanced Manufacturing and Supply Chains, World Economic Forum. “This report highlights how countries that deploy innovative policies and invest across these seven factors can position themselves as leaders in the evolving manufacturing landscape, driving economic growth and societal progress.”
Amidst this rewiring and a shift towards regionalization, companies are looking beyond the cost advantage to consider resilience, performance and sustainability. The report, Beyond Cost: Country Readiness for Manufacturing and Supply Chains, released in collaboration with Kearney, finds that foreign investment is increasingly favouring countries that proactively invest in and adopt policies in seven key readiness factors – Infrastructure; Energy and resources; Technology; Labour and skills; Fiscal and regulatory policies; Geopolitical landscape; Environmental, social and governance.
The report identifies the top three countries in each readiness factor, according to the select indices underpinning each factor, with Singapore and Denmark appearing most frequently in the top list.
It also provides examples of policy interventions and data-driven insights on how countries at all stages of industrialization can leverage these factors to boost production attractiveness and gain a competitive edge amidst reconfigurations. The list below presents the top performing country for each readiness factor, as well as examples of countries profiled in the report for investing in competitive industrial strategies.
Infrastructure
- Top performing country: Denmark
- Country case study: Malaysia’s New Industrial Master Plan 2030 integrates physical and intelligent infrastructure through initiatives such as the National Semiconductor Strategy (NSS). The NSS has pledged $5.3 billion to construct new industrial parks, invest in technology training and create partnerships with industrial players like Nvidia and Intel to position the nation as a neutral manufacturing destination.
Energy and resource
- Top performing country: Chile
- Country case study: Nations like Singapore have taken a proactive leadership role in partnering with industrial organizations by committing to supply renewable energy to supplement what facilities cannot produce independently, such as from solar sources. This strategy supports both national and private sector climate goals and ensures a reliable path to achieving net-zero emissions.
Technology
- Top performing country: United States
- Country case study: Israel has established itself as a leader in advanced technology by investing over $50 billion in Intel to develop cutting-edge R&D and fabrication facilities. This partnership has positioned Intel as the country’s largest private sector employer, providing jobs for around 11,700 individuals and driving 1.75% of the country’s GDP (2022).
Labour and skills
- Top performing country: Australia
- Country case study: The SkillsFuture Initiative in Singapore is a public-private partnership aimed at enhancing workforce capabilities through financial incentives, offering over 25,000 training courses in collaboration with universities, polytechnics and business associations. In 2024, the government allocated $2,225 million to target skills in AI and the green economy, expanding company training committees to develop tailored in-house training programmes for high-growth sectors.
Fiscal and regulatory policies
- Top performing country: Singapore
- Country case study: Mexico’s streamlined regulatory frameworks and tax incentives played a pivotal role in securing Audi’s investment to build the San José Chiapa plant. This partnership has led to the creation of over 5,300 jobs and the production of nearly 200,000 vehicles in 2023.
Geopolitical landscape
- Top performing country: Ireland
- Country case study: The EU-Vietnam Free Trade Agreement has successfully balanced national interests with global integration, leading to a 50% growth in Vietnamese exports to the EU. This trade deal has not only expanded market access but also diversified value chain partners, adding resilience through global trade.
Environmental, social and governance
- Top performing country: Norway
- Country case study: At the national level, the Netherlands’ 2016 Circular Economy policy aims to reduce primary material use by 50% by 2030. This target is supported by substantial investments in industry and the promotion of circular practices among businesses and consumers. By strengthening standards and incentivizing sustainable production, the Netherlands is positioning itself to hit long-term climate goals.
“With over 2 billion voters across 50 countries having cast ballots in 2024, 2025 will be a critical year for every company reliant on cross-border operations,” said Per Kristian Hong, Partner and Americas Strategic Operations and Performance Lead, Kearney. “Plans to accelerate a sweeping range of policies, intended to reset global trade through tariffs and export controls, will require businesses to re-assess their network manufacturing footprint beyond merely low-cost alone. A more complex and nuanced decision-making process is needed, that considers flexibility and a country’s ability to deliver environmental change in line with global strategic priorities.”
To increase production readiness and attractiveness for the future of manufacturing and supply chains requires significant public sector policy design and investment in collaboration with companies. For countries looking to achieve these goals, coordination and alignment is required between the public and private sectors to ensure policies, interventions and investments target the needs of the private sector and help realize the benefits of production readiness more quickly and effectively.
The findings in this report build on the first country readiness report that served to provide insights on the impact of the Fourth Industrial Revolution and the key components companies can consider for the transformation of their production systems.
