Our recent global survey about manufacturing points to one main truth: for manufacturers, it's currently all about growth. An astounding 97% of the survey respondents ranked "exploiting opportunities for growth" as either a medium, high, or extremely high priority—with 74% falling into the latter two categories. But as Doug Gates, KPMG's Global Chair of Industrial Manufacturing, points out: "everyone says they expect to grow their market share... yet there are no indications that the size of the market is going to increase dramatically." What that means is that even if there's a will, there may not be a way—for everyone.
Competition here, there, and everywhere
Some sectors seem particularly likely to bottleneck, points out KPMG Global Head of High Growth Markets Mark Barnes, because market experts foresee slow growth and pricing issues—the aerospace, defence, and automotive industries fall into this category.
The answer will be to start looking at new markets and adjacent sectors for growth opportunities. Indeed, 56% of the survey respondents report planning, to a "significant" degree, to enter new geographical markets in the next two years. In discussing expanding to new markets, Kim Metcalf-Kupres, VP and CMO of Johnson Controls, had the following to say: "China needs to be part of your strategic roadmap. Whether or not you are investing in China, the reality is that you will certainly be competing with China."
Leading manufacturers are preparing for these changes by making sure their business models are demand-driven and responsive, and reassessing the long-term market outlook and tweaking their business objectives accordingly.
Out with the old
Besides distancing themselves physically, manufacturers can also put some distance between themselves and their competitors by investing in new products and services. Nine in ten of our survey participants report "significantly" or "to some extent" planning to change their services offerings, and nearly as many (84%) say the same about their product offerings.
Unsurprisingly, digitalisation is playing a large role in product and service development. Khozema Shipchandler, VP and CFO of GE Digital, says that digitalisation "offers a profound opportunity for manufacturers to drive massive improvements in their internal operations and bring untapped sources of value to their customers." Even though it's tempting to create a new product simply out of a newfound technological ability to do so, it's important to remember that new products and services should arise from an identifiable need. How can manufacturers add value for their customers? How can they draw on the technologies at their disposal to deliver that value? These are the questions on manufacturers' lips.
Naturally, product development would be dead in the water without increased investment in research and development. One fifth of our respondents say that they will spend upwards of 10% of their revenue on R&D in the next two years; and over half (56%) will make "significant investments" in order to launch one or more new products.
In the field
We asked each of our sector leaders about the greatest threat to their sector of expertise, and about what companies are doing differently to drive growth—here are their answers:
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