Despite the apparent consensus that the global manufacturing industry is currently in a state of contraction, a surprising number of manufacturers are confident in its growth in the near future.
The 2016 KPMG Global Manufacturing Outlook (GMO) Survey polled 360 C-level manufacturing executives, of which 80 were US-based. Respondents for the poll included executives from across the aerospace, automotive, medical, engineering, industrial and metals industries.
Surprisingly, 65 percent of US respondents (64 percent globally) reported a confidence that their company will grow over the next 12-24 months. Additionally, 54 percent of US respondents (46 percent globally) believe that the global economy will improve, voting either “Confident” or “Very Confident.”
Their optimism is reflected in increased investments in R&D for advanced manufacturing technologies. 39 percent of all respondents reported they would devote more revenue into R&D over the next two years. 25 percent reported having already made such investments for R&D into AI, cognitive computing, and additive manufacturing technologies.
According to the KPMG GMO survey, 15 percent of US respondents expect to spend more than 10 percent of revenues on R&D over the next two years, compared to 21 percent of respondents across the rest of the globe.
53 percent of US respondents, versus 56 percent globally, say they will spend between four to 10 percent of their revenues in R&D over the next two years.
“Manufacturers recognize a failure to evolve will leave their organization in a non-competitive position,” said Doug Gates, KPMG’s global chair of industrial manufacturing. “The need to become more digital has never been greater. Investments in new technologies are a way to enhance agility, flexibility and speed to market when launching new products and services-critical elements for manufacturing companies to win in the market place.”
As much as the growing investment in advanced manufacturing can be seen as a sign of optimism, it can also be interpreted as a response to increasingly fierce competition.
KPMG GMO cites 42 percent of US respondents (45 percent globally) are concerned about the relevance of their products or services, while 31 percent (42 percent globally) feel concern over competitors taking business away from them.
“Manufacturers are going to face really fierce competition over every scrap of market share available and there will certainly be winners and losers,” Gates said.
Brian Heckler, national sector leader of industrial manufacturing for KPMG in the US, believes manufacturers will need to analyze their products and services as well as the technology behind them.
“Investing in innovative solutions and services is at the top of the agenda for manufacturers,” said Heckler. “Whether investing in incremental improvements for existing products or inventing entirely new products and services, it is clear manufacturers recognize the need to increase their investment in innovation.”
The 2016 Global Manufacturing report was conducted by Forbes Insights in early 2016 and can be read in full at kpmg.com.