Sarah Raehl—senior manager at Deloitte Consulting—advises companies in their facility and location strategy decisions to determine where to locate operations on a global scale to enable access to new markets, cost cutting and increased availability of talent.

1. Manufacturing Competitiveness
Investment Trends and What
That Means for You
4 December 2015
Sarah Raehl
Deloitte Consulting LLP

2. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
The US continues to be a recipient of significant Foreign Direct
Investment (FDI)
• Annual FDI in the US has averaged $200B / year for
the last 8 years
• The continued expansion of the global market is
creating a more competitive investment climate
World inflows of FDI
‌‌United States
‌‌2007
‌‌$221B, 11%
‌‌2013
‌‌$193B, 14%
‌‌Europe
‌‌2007
‌‌$856B, 44%
‌‌2013
‌‌$239B, 17%
‌‌China
‌‌2007
‌‌$156B, 8%
‌‌2013
‌‌$258B, 19%
Attractiveness to expanding businesses – both foreign and
domestic – is key to economic growth within the global market
Source: OECD international direct investment database
Note: Percentages indicate each country/region’s percentage of total global
FDI
Asia
European
Union
Rest of
World
United
States

3. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
• Total US FDI has risen steadily over time, increasing 38.7% between 2007 and 2013 to $2.8
Trillion
• During that time manufacturing rose over 44% to $936B, accounting for over a third of total US
FDI
Manufacturing continues to be the largest FDI sector
0
100
200
300
400
500
600
700
800
900
1000
2013 MFG by Segment$ billion
US total FDI by sector (historical cost basis)
Source: US Bureau of Economic Analysis
Electrical equipment
Computers & Electronics
Metals
Food
Machinery
Transportation Equipment
Chemicals
Other Manufacturing

4. What
is
driving
these
trends?

5. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
A new generation of digital design and collaboration tools is enabling
manufacturers to save time and money in product development and
manufacturing, potentially freeing up funds for such things as innovation
Advanced materials with superior performance characteristics, such as
carbon fiber composites, ceramics, and nanomaterials are increasingly
finding uses in large consumer-oriented industries, which may impact
supply chains to streamline access
New processes such as additive manufacturing (e.g. 3D printing) are
influencing everything from product design to material selection, to supply
chain configuration
Increased push for product customization in less time, while balancing
cost and risk demands
Focus is shifting from manufacturing as a cost to be minimized to a strategic lever to drive long term
success through product differentiation
New technologies are shaping the future of manufacturing and offering
companies new ways to compete, innovate, and grow
New Uses of IT
New Materials
New Production
Processes
Shifting Demand Patterns

6. Where
is
next?

7. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
• 50+ companies responded to the survey
• Fabricated Metal Products and Machinery Manufacturing were the top segments represented in the survey
• Average revenue of participant organizations was $500M to $10B while the employee count was 1,000 to 10,000
Deloitte, in partnership with MAPI, conducted a survey of US manufacturers
regarding the evolution of their global footprint through 2020
25%
23%
18%
8%
8%
4%
4%
10% • Fabricated Metal Products
• Machinery
• Miscellaneous
• Transportation Equipment
• Electrical Equipment, Appliance
and Component Manufacturing
• Chemicals
• Plastics and Rubber Products
• Other
9%
26%
14%
46%
0%
6%
$10M to
$100M
$100M to
$500M
$500M to
$1B
$1B to
$10B
$10B to
$30B
> $30B
Primary Industry of Survey Respondents Annual Revenues of Survey Respondents

8. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
Market opportunities, the search for talent, and concerns with business
disruption risk have historically been primary location decision drivers
Regulatory Climate
Favorable government support
Talent Availability
Search for engineers and skilled
production workers, particularly
welders and machinists
Business Disruption Risk
Minimize exposure to natural,
political, economic, and
infrastructure risks that can
disrupt production
Infrastructure Quality
Robust and reliable
infrastructure to minimize
production disruptions
Proximity to Existing Customers
Reduce time and cost to get
products to end market
New Market Opportunity
Growing purchasing power and sheer
size of markets such as China and Brazil

9. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
The location drivers are expected to shift by 2020 to account for
advances in technology and investment in skills
Key Location Drivers Today Key Location Drivers in 2020
New Market
Opportunity
Proximity to
Existing
Customers
Talent
Availability
Business
Disruption
Risk
Infrastructure
Quality
Regulatory
Climate
New Market
Opportunity
Proximity to
Existing
Customers
Talent
Availability
Business
Disruption
Risk
Technology
Advances
Educational
Infrastructure

10. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
Shifting priorities and the evolving global landscape have resulted in
two complementary trends - expansion and new growth
• 98% of respondents plan to
add operations where they
have an existing footprint
• Within the existing footprint,
the highest number of
investments by 2020 is
expected in China and the
United States
1. Data shown for top 10 countries
3
4
4
3
4
7
8
14
24
24
3
3
5
5
5
5
9
16
23
30
2
2
4
3
7
9
17
20
21
2
2
5
6
3
8
2
22
16
0 10 20 30 40 50 60 70 80 90 100
Czech Republic
Italy
Poland
United Kingdom
Germany
Brazil
India
Mexico
United States
China
Primary Production
Secondary
Production
Number of Investments
Number of Investments by 2020 in Countries
Where Companies Have Existing Manufacturing Presence
Survey Question: In the countries where your company currently has a manufacturing presence, what additional investments within the manufacturing footprint do you envision making
by 2020?1

11. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
• While Brazil, China and India continue to be leading candidates for new manufacturing investments, countries such as
South Africa, Turkey and Vietnam are also being considered
54% of respondents plan to invest outside of their existing footprint,
with a focus in Asia and South America
2
2
3
4
4
4
6
7
7
7
0 2 4 6 8
Saudi Arabia
Russia
Poland
Vietnam
Turkey
Mexico
South Africa
India
China
Brazil
1. Data shown for top 10 countries
Number of Companies
Survey Question: What countries do you anticipate your company
will enter (or are considering for entry) by 2020? 1
Number of Companies Looking to
Enter New Markets
Country
Talent
Access
Serve
New
Markets
Cost
Reduction
Opportunity
Proximity to
Resources /
Suppliers
Incentives
Favorable
Logistics /
Supply Chain
Brazil
China
India
Mexico
Poland
Russia
Saudi Arabia
South Africa
Turkey
Vietnam
High Importance
Moderate Importance
Limited Importance
Reasons for Expanding Footprint

12. How
can
you
compete?

13. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
Demonstrating a deep talent pool, robust ecosystem, and supportive
business environment will be key to competing for manufacturing
investment Talent Availability
• Existing talent availability
• Pipeline of talent
• Relevant industry concentration
Timing to Market
• Development ready real estate options
• Site readiness – prepped and ready to go
• Utilities – in place, reliable, scalable, and sustainable
• Road access – in place
• Permitting & environmental studies – complete or able to be expedited
Attractive Cost Structure
• One-Time (land/building, construction, site prep, capital, permits)
• Ongoing (labor, logistics, taxes, utilities, facility)
• Incentives (Upfront, Ongoing)
Fit
• United front for attracting business (regional level)
• Brand image and company culture
• Desirable place to live (expats & Americans)
Enabling
Manufacturing
Talent
Availability
Timing to
Market Cost
Fit

14. #ED411Copyright © 2015 Deloitte Development LLC. All rights reserved.
Proactively identifying and addressing challenges within your target
ecosystems can be a key differentiator in the long-term
Manufacturers
Universities/
tech colleges
Growth
fundin
g
Growt
h
fundin
g
Investment
return
3D printing
service
providers
• Software developers
• Material providers
Industry trade
groups
Startups
Financers
Suppo
rt
service
s
Talen
t
Training
Talent
Research
Researc
h funding
Mentorship
Leadership
Shared research
Development Partnerships/
Research
Training
input
Shared
research
Jobs /
internships
Mfg input /
partnerships
Job
s
Training
Training
3D Printing
Representative 3D Printing Ecosystem

15. Locations that excel at demonstrating favorable talent
pools, ecosystems, and supportive business
environments are likely to be the big winners in the race
to attract manufacturing investments in the future

16. Copyright © 2015 Deloitte Development LLC. All rights reserved.
Member of Deloitte Touche Tohmatsu Limited