Metals

48%

of metals CEOs are extremely concerned that shaky economic growth will hurt their prospects

15th Annual Global CEO Survey

Metals industry insights

Metals CEOs are worried about how the economy and macroeconomic threats will impact growth. To cope, they're cutting costs, improving processes and working on managing risks. They aren't as focused on short-term talent issues, but are committed to developing workforces for the long term. What else did they tell us?

Uncertain economic outlook weighing heavily on metals CEOs. Metals CEOs worry about the global economy. 58% expect it to get worse this year, and only 10% believe it will get better. 48% of metals CEOs say they’re ‘extremely concerned’ that uncertain economic growth will hurt their prospects. Top lines may suffer -- 30% are 'not very confident' of revenue growth over the next 12 months.

Metals CEOs worry about the global economy

Metals CEOs using process innovation to cope with high energy costs. 75% of metals CEOs are worried about energy costs slowing down growth, so they're targeting energy usage as part of cost reduction efforts. Improved processes help, and 80% are increasing this type of innovation. Reducing energy usages improves their carbon footprint, a key priority. 72% are increasing investments around climate change.

Metals CEOs are spreading their innovation bets

Other types of innovation important too. Compared to the overall sample, slightly more metals CEOs are increasing their emphasis on every type of innovation, from new products to improving existing products to developing new business models.

Metals CEOs investing in raw material access. 77% of metals CEOs expect to increase their investment in securing natural resources that are critical to business, a quarter say these increases will be 'significant'. That will help address risks posed by mineral and metal scarcity.

Talent constraints hurt the bottom line, future prospects. 40% of metals CEOs say talent is costing more than anticipated. And the opportunity costs may be even higher. More than a third of metals CEOs say that talent constraints are already negatively affecting their ability to achieve growth forecasts in overseas markets and deliver innovation.

Quotes

Baba Kalyani

Managing Director, Bharat Forge Ltd View profile

This plant (in Mundhwa, Pune) is the world’s largest forging facility and operates at a WIP (work in progress, or in-process inventory) of 11 days. In 2008, the WIP was 40 days. When you are lean, you are able to respond to market changes faster, without incurring heavy costs.

Baba Kalyani

Managing Director, Bharat Forge Ltd View profile

For us, every market is attractive: opportunities fall with a downturn and rise with an upswing. And sometimes markets can be strong irrespective of the GDP growth. For instance, North America has been going through the financial crisis, but for us, it is a very strong market.

Baba Kalyani

Managing Director, Bharat Forge Ltd View profile

In every business, you have to periodically evaluate the new technologies and the margins. It’s more to do with products than markets. In our business, some products become commodities while others become technology. And our focus is on products that require high technology.

Baba Kalyani

Managing Director, Bharat Forge Ltd View profile

You can’t change an approach to innovation in one year. To built innovation capabilities you need a minimum of about 15 years. It will take us another five to seven years to become as innovative as companies in the West. But we will get there for sure.

Baba Kalyani

Managing Director, Bharat Forge Ltd View profile

Europe has the best universities and technical institutes but it has an ageing population. By 2020, it will be very short of talent.

Baba Kalyani

Managing Director, Bharat Forge Ltd View profile

The Millennial generation is far more talented, quicker and far savvier with technology. There has been an explosion in digital technology, in social networking. And companies that take the lead in digital technology will become more attractive to the younger generation.

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