A sobering report card by the Boston Consulting Group (BCG) on the economics of manufacturing among the top 25 exporting countries has placed Australia as the worst performer.
It categorises Australia as “losing ground” and as a traditional high-cost economy that “continues to deteriorate because of a lack of productivity gains and increases in energy costs.”
On an index of competitiveness, where the US sits at 100, Australia scores 129.6, with Switzerland on 125.4, France on 124.3 and Belgium on 123.3. In 2004, Australia’s index was just 108.9, highlighting the country’s deterioration in the ensuing 10 years.
Only Australia and Brazil’s index declined by more than 15 points between 2004 and 2014, which means that Australia has performed worse than most of its peers.
The report found the Australian labour costs component has risen from 27.2 in 2004 to 45.4 in 2014, while energy costs have risen strongly to 2.9. This is less than most countries except the US, Canada, Russia, India and Indonesia.
Interestingly, Mexico has become a cheaper place to manufacture goods than China.
“Indeed, Australia lost ground in each cost area in our index – wages, productivity, energy, and currency exchange rates,” the report added.
A full copy of the report can be found here.
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