In this article, we will be taking a look at the top 20 manufacturing countries in the world. To skip our detailed analysis, you can go directly to see the top 5 manufacturing countries in the world.
According to the World Bank, around 17% of the global GDP comes from the manufacturing sector. In 2021, manufacturing contributed around $16 trillion directly, and trillions more indirectly as it is the backbone of several other industries, most of which would not be possible if the manufacturing industry was to shut down. While it contributes significantly more to the GDP of industrialized nations, namely first world countries, its importance still cannot be understated for developing countries, whose standard of living can only improve once it shifts from a more agricultural based society to an industrialized, manufacturing based one. On the other hand, manufacturing also allows countries to improve and make more efficient their agricultural processes, thus improving efficiency and increasing output, which again can result in higher standards of living.
At the start of 2022, KPMG asked the CEOs of some of the top manufacturing companies in the U.S. and beyond on what was on their minds for the year, not to mention expectations. At the time, a lot of the problems that almost all industries in the world are facing right now weren’t as pronounced, which is why the focus was more on recovering from the Covid-19 pandemic, climate change and geopolitics, not to mention an increased focus on ESG, which is one of the most important investment considerations right now. Another important consideration was improving digitization to improve efficiency and purchase technologies to transform the entire value chain.
However, as we all know, 2022 was a year like no other, with inflation spiraling out of control in most countries while central banks continued to hike interest rates to combat inflation. Most countries saw record levels of inflation while decades high levels of inflation were reached in others. This led to economic activities slowing down in most nations while many countries were expected to, or were already, in a recession. However, according to Deloitte, despite headwinds faced by the manufacturing industry which include labor shortages, high inflation which has peaked in some countries in 2022 and others in 2023, and a fluctuating economy, the sector has still continued to surpass expectations. According to Deloitte, some of the insights that KPMG had for 2022 are still applicable for 2023 which include leveraging digital technologies while ensuring global supply chain continuation. Even though manufacturing displayed surprising resilience in 2022, mostly as a result of its successful recovery from the pandemic, it will have to continue to invest in advanced technologies to maintain or improve its growth rate. While some of the top manufacturing countries in the world have made it a priority to encourage manufacturing companies to digitize and innovate, other countries still lag behind. Companies which demonstrate higher digital agility have shown greater resilience to market fluctuations and hence, gain a competitive advantage in what is a very saturated landscape.
One of the biggest concerns for the manufacturing industry, one of the most labor-intensive industries out there, is a labor shortage and shifting demands from potential labor. Manufacturing companies have to improve their working environment and find ways to reduce turnover in an industry where the turnover rate is high, as despite record levels of hiring, job openings are still close to all-time highs in the sector. While layoffs are not as significant as in other industries such as tech, which suffered a devastating 2022, voluntary separations are still quite high and continuing worker shortages and supply chain limitations will result in a reduction in efficiency, output and margins.
Perhaps the biggest concern bar none is global supply chain issues, which was cited as such by 72% of the executives surveyed by Deloitte. To counter this, many manufacturers, including Johnson & Johnson (NYSE:JNJ), Apple Inc. (NASDAQ:AAPL) and The Procter & Gamble Company (NYSE:PG) are focusing heavily on digitization while changing their stocking philosophy and moving to build local operations. To add to this, many companies are also investing in smart factories including Bosch and Honeywell International Inc. (NYSE:HON). In its Q4 2022 earnings call, The Procter & Gamble Company’s (NYSE:PG) CEO said “where you happen to have manufacturing operations located has a big impact on your ability to supply the market. And we had — we were pretty significantly impacted by the location of some of the shutdowns, namely Shanghai, where we have manufacturing centers and important contract manufacturer supply. So that’s one of the reasons for some of the noise within the share comparison.”
While most companies have operated with impunity thanks to lobbying efforts for decades if not centuries, environmental, social and governance (ESG) have become increasingly important in recent years, with companies required to disclose their work in this area and the improvement it provides to society in general. This means that manufacturing companies which want to succeed in the long-term have to rethink their ESG implementation and reassess operational changes across value streams.
To determine the top manufacturing companies in the world, we relied on data from the World Bank, and ranked each country according to its 2021 manufacturing output in USD. These 20 countries alone accounted for 75% of the total global manufacturing output of $16 trillion. So, let’s now take a look at the countries which dominate the manufacturing sector, starting with:
20. Saudi Arabia
Total manufacturing value added in 2021: $108.8
Saudi Arabia’s riches mainly come from its oil deposits but the company has been working on diversifying its economy. In March 2023, the Saudi Ministry of Industry and Mineral Resources issued 124 new industrial licenses, which will result in $640 million in additional investments.
19. Netherlands
Total manufacturing value added in 2021: $109.7
Despite being a relatively small country, the Netherlands is still one of the top manufacturing countries in the world, and recently Votech and Fischbein International expanding their manufacturing presence in the country recently.
18. Poland
Total manufacturing value added in 2021: $113.6
Poland’s manufacturing sector has increased significantly in the last two decades, and recently Mercedes announced an investment of 1 billion euros to build its first electric-only van plant.
17. Thailand
Total manufacturing value added in 2021: $136.7
Thailand registered a 7.3% increase in its manufacturing output in 2021 as compared to the previous year, with its foray into electric vehicles resulting in the country dominating EV production volumes.
16. Switzerland
Total manufacturing value added in 2021: $144.0
“Made in Switzerland” has long been an indicator of the highest possible quality which is why the country’s manufacturing future has to be ” a combination of local product design and engineering with regional network structures in various global clusters, supporting cost-efficient production and near-shore supply chains. This shift ultimately leads to changing job profiles and business models”, according to PwC.
15. Brazil
Total manufacturing value added in 2021: $155.2
The biggest manufacturing country in Latin America, Brazil’s industrial output has been negatively impacted which resulted in the country seeking investments from China in a bid to diversify its manufacturing sector.
14. Spain
Total manufacturing value added in 2021: $164.7
In December 2022, Spain’s manufacturing output continued to decline for the 6th consecutive month though its decline was at a slower rate as compared to the previous months.
13. Ireland
Total manufacturing value added in 2021: $174.5
Ireland is counted among the top manufacturing countries in the world, with Eli Lilly and Company (NYSE:LLY) investing almost half a billion dollars into a manufacturing site in the country, while the government recently opened an advanced manufacturing center in Limerick.
12. Turkiye
Total manufacturing value added in 2021: $181.9
The recent massive earthquake in Turkiye and Syria which claimed over 50,000 lives, has had a major impact on Turkiye’s manufacturing sector, with an exodus in its southeast putting the sector at risk.
11. Indonesia
Total manufacturing value added in 2021: $228.3
One of the biggest economies in the world, many U.S. investors are considering investing in Indonesia instead of Mexico even as the U.S China trade war continues unabated.
10. Mexico
Total manufacturing value added in 2021: $230.1
Mexico’s manufacturing industry has continued to increase in size as many companies are moving production closer to the U.S. to reduce supply chain impact but still take advantage of lower cost of labor and manufacturing in Mexico, making it one of the top manufacturing countries in the world.
9. Russia
Total manufacturing value added in 2021: $257.0
According to The Moscow Times, Russian manufacturing hit a 6 year high in 2022 even as it is under severe sanctions from Western nations due to its unprovoked invasion of Ukraine.
8. France
Total manufacturing value added in 2021: $262.6
Right now, protests are raging in France after the government’s attempt to increase retirement age from 62 to 64 years. However, luckily for the country, the protests are expected to have minimal impact on the country’s economy. After three consecutive months of improvement, the manufacturing sentiment in France fell in March 2023.
7. United Kingdom
Total manufacturing value added in 2021: $274.9
Sales of goods make up around 50% of the UK’s total exports, which shows the importance of the manufacturing sector to the country’s economy. 2.5 million people are employed in the UK’s manufacturing sector, providing an output of £183 billion. British American Tobacco p.l.c. (NYSE:BTI) and Unilever PLC (NYSE:UL) are some of the biggest manufacturers in the country.
6. Italy
Total manufacturing value added in 2021: $314.1
European countries have a strong presence in our list of the top manufacturing countries in the world, and Italy is the second-largest manufacturer in the continent, which is expected to see higher growth in February 2023. Technical machinery, vehicles, pharmaceuticals and plastic are all some of the biggest industries in the manufacturing sector in Italy.
Click to continue reading and see the top 5 manufacturing countries in the world.
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Disclosure: None. Top 20 manufacturing countries in the world is originally published at Insider Monkey.
