Industrial manufacturing

Industrial Manufacturing

Industrial manufacturing CEOs are more optimistic this year, but energy costs are still a question mark. They’re worried about a slowdown in new growth markets and rising labour costs. And they’ll need to ramp up risk management to cope with transformational trends, like technology, shifts in economic power, and resource scarcity and climate change.

Confidence is stabilising as economic worries lessen
Industrial manufacturing CEOs are more confident than last year. Like their peers across the sample, they’re much less worried about the global economy than last year, although exchange rate volatility is still a big concern. CEOs are slightly less confident than the overall sample, with just 34% very confident of growth, compared to 39% overall. And they’re keeping the pressure on costs, with more planning a cost reduction initiative over the coming 12 months.

Energy still a big question mark
Far more industrial manufacturing CEOs are concerned about high and volatile energy costs (70% vs. 56% overall) – and a third of CEOs say they are extremely concerned. That continues a trend we’ve seen in previous years and reflects the energy-intensive nature of manufacturing.

Global shifts in economic power are already having a big impact
Like their peers in other sectors, most industrial manufacturing CEOs believe technological advances (81%) and global shifts in economic power (60%) will transform their businesses in the next five years. Indeed, more industrial manufacturing CEOs are already relying on new markets – 26% see them as the main opportunity to grow their business over the next 12 months, vs. just 14% of CEOs overall. So it’s not surprising that a possible slowdown in high-growth markets is also a much bigger concern for sector executives.

More industrial manufacturing CEOs are also concerned about rising labor costs in high-growth markets (68% vs 58% overall). They’re right to worry. Greater competition for labour and social pressure to raise salaries in line with productivity growth will cause greater wage convergence over the next 15 years.

And resource scarcity and climate change is higher on the sector’s agenda too
Industrial manufacturing CEOs are far more conscious than other CEOs of the huge role resource scarcity and climate change will play – 60% see it as a transformative trend, compared to just 46% of CEOs across the sample.

But the risk function will need to up it’s game
The large majority of industrial manufacturing CEOs are convinced they’ll need to make changes in a whole range of areas, with customer growth and retention, technology investments, and the use and management of data and data analytics at the top of their list. More than three-quarters see a need to change their approach to managing risk too, but only 31% have a change programme underway or completed . And just 29% believe their risk management function is well-prepared to execute their future plans –fewer than across the overall sample (40%).

70%of industrial manufacturing CEOs worry about high or volatile energy costs.

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68%of industrial manufacturing CEOs are concerned about rising labor costs in high-growth markets

 

Raw materials prices, energy costs, and labour costs in high growth markets stand out as business threats

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CEO interview quotes

"Let’s start with building trust in people and customers. We measure the development of employee satisfaction and customers’ satisfaction extensively every year. For me, these two measurements are the most important annual results, because they tell us of how trust within the company and with customers is developing."

Matti Alahuta
President & CEO, Kone

"By far the best growth opportunities during the last few years in our industry have been, and also during the next years, will be in Asia Pacific – in the fast-developing countries there. Good examples are China and India. "

Matti Alahuta
President & CEO, Kone

Interested in more? Use the data explorer to browse through additional industry data

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Interested in more? Use the data explorer to browse through additional industry data

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