When COVID-19 shut down factories, the impacts were felt across the globe. Many facilities require workers on the floor, which meant that companies had to invest in airflow and infiltration improvements. Higher costs, reduced output, delayed supplies and a decline in consumer demand caused problems.
The HLB Survey of Business Leaders gauged manufacturing leaders’ confidence levels across the globe, aiming to determine how they plan to grow revenue and build resilience into their operations. Surprisingly, most manufacturing leaders are more confident than their global peers. In fact, the great majority have confidence that their company will grow revenue over the next 12 months.
Increased demand in some sectors
The COVID-19 pandemic drove up demand for manufacturing in certain sectors, such as pharmaceutical and medical equipment. However, others, such as food and beverage manufacturers, saw reduced demand for out-of-home products.
After over a year of restrictions, people are anxious to spend money on goods and services. Consequently, leaders anticipate a surge in consumer and wholesale spending.
Weaknesses
Rising costs and supply chain issues continue to be one of the biggest worries for manufacturers. 62% of leaders worry about international trade flow disruption and 58% have concerns over geopolitical uncertainty.
Before the pandemic, international trade tensions highlighted procurement and distribution problems. The Suez Canal was just one incident – a combination of challenges such as Brexit, bottlenecks at ports and an ongoing container shortage, caused the average container wait times to increase and skyrocketed spot freight rates.
Top growth priorities
Increasing operational efficiency and reducing costs are at the top of the list for most industries. Compared to their global peers, manufacturing leaders are 15% more likely to focus on operational efficiency. Whilst this type of improvement is always a goal, there is no doubt that the pandemic and ongoing logistical issues emphasised its importance.
43% of executives also consider launching new products a crucial action that must be prioritised. Moreover, 41% are focusing on organic growth versus 37% of their global peers. Using existing resources to enhance sales and increase output fits the overall goals for efficiency and cost reductions.
Appealing to a diverse and skilled labour force continues to be a priority for manufacturers and 29% aim to invest in human capital. Although many warehouse and factory positions require on-site workers, 65% of leaders believe remote working will make it easier to source talent as technological advancements can enable virtual oversight of critical processes.
What is more, 24% will prioritise the adoption of emerging technologies. Upskilling workers to meet upcoming technology needs will help manufacturers navigate changes.
Factories that adopt state-of-art processes, equipment and products may have an easier time attracting tech-savvy and diverse individuals.
Going green
During the pandemic, many companies put green initiatives on the back burner. However, 72% of business leaders in manufacturing are making changes to their business, to profit in the low-carbon economy. Since many regions focus on a greener economy by 2030, manufacturing leaders must act now to ensure compliance and growth. Fortunately, potential tax credits or government initiatives may help manufacturers start small with green goals. By testing various tactics on a smaller level, companies can assess which activities are sustainable and explore ways to create greener businesses at scale.
Climate concerns also expose potential opportunities for certain manufacturing segments. Companies can reach a larger market segment while producing goods geared toward climate-aware individuals. Moreover, sourcing raw materials closer to home and increasing operational efficiencies can also support sustainability objectives.
Confident in ability to adapt post-pandemic
Any challenge opens the door for opportunity, especially for businesses that can adapt quickly. The HLB Survey of Business Leaders found that 93% of manufacturing executives are confident in their ability to successfully steer the business in a new direction in response to the impact of COVID-19.
The Hazlewoods International team can advise manufacturing businesses on tax regimes, legal structures, business practices and more, optimising them for international trade. Please do get in touch with the team should you have any further queries or if you would like an idea of our fees to assist you.