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Ford Motor Company of Canada's Oakville Assembly Plant on Jan. 4, 2013.Fred Lum/The Globe and Mail

The world's manufacturing map is being redrawn, and Canada may struggle to remain a primary destination for factories, new research by a prominent global consultancy shows.

Among the world's biggest exporting countries, Asian countries such as China and India remain among the cheapest places to assemble pieces of metal, mould plastic and stitch clothes. But that advantage is very much of the present and not necessarily of the future, according to The Boston Consulting Group (BCG), which will publish Friday an exhaustive analysis of the relative competitiveness of the 25 biggest exporting countries.

China's cost competitiveness has declined by as much as 15 per cent since 2004. Wages have more than doubled and the cost of energy has soared. That is giving other countries a legitimate chance to compete with China, a shift that could reshape the flow of international investment.

Canada, however, is not among the countries likely to benefit. Its relative competitiveness compared with other major exporters as a place to make things has declined just as much as China's over the past decade, according to BCG's analysis. Canada's neighbours in North America, on the other hand, are fast closing the gap with Asia, raising serious questions about whether Canada can expect significant new investment in manufacturing as the global economy strengthens.

"It is a real challenge for Canada," Justin Rose, a partner at BCG, said of Canada's diminished status relative to the United States and Mexico.

The BCG study crystalizes one of the main reasons the Bank of Canada says it has had to leave its benchmark lending rate unchanged at an extraordinarily low level of 1 per cent for more than three years. The central bank has repeatedly justified its stance by noting Canadian companies are less competitive than their peers, in part because of a stronger currency. Canada's productivity rates, which measure the amount of economic output per worker, chronically lag those of other major economies.

A decade ago, the prevailing view was that the cost of production was so cheap in Asia and parts of eastern Europe that there was little the rest of the world could do to keep up.

That no longer is true. BCG ranked the 25 countries in the study as "rising stars," "holding steady," "losing ground" and "under pressure." The only rising stars were the U.S. and Mexico, meaning they are gaining on all their peers. Wages in the U.S. and Mexico are growing only moderately and their exchange rates are stable, while productivity rates in both countries are increasing and the price of energy is decreasing.

"Manufacturing competitiveness is becoming global," said Mr. Rose. "Ten years ago, you had to go to China because no matter what, it was going to be cheaper. It's a much more nuanced decision now on where to locate manufacturing."

A handful of European countries, including Italy and Switzerland, and Russia have suffered competitiveness declines of a similar magnitude of Canada and China. Australia and Brazil fared even worse, as BCG estimates their competitive position has plunged by at least 15 per cent.

Mr. Rose said Canada falls under the "losing ground" category with many European countries. Unlike Europe, Canada's weakness is concentrated almost entirely in lagging productivity. Electricity costs in Canada are about the same today as they were in 2004, and natural gas prices are significantly cheaper. Energy prices are dramatically higher in Europe and Asia.

The good news is that productivity is something that is within Canada's power to change, unlike energy prices, which are determined by global markets, Mr. Rose said. An emphasis on research and development and policy changes that reduce the cost of doing business could change Canada's fortunes, he said.

BCG estimates a Canadian factory worker produces about 60 per cent as much as an American factory worker. To come up with a measure of "absolute productivity," the firm averaged manufacturing gross domestic product per worker and value added per worker. By that measure, productivity in the U.S. has grown by 19 per cent and 53 per cent in Mexico over the past decade.

The average growth rate for the 25 countries studied was 27 per cent. Canada's productivity growth over the period measured: 1.3 per cent.