Manufacturing Trends for 2015
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Manufacturing Trends for 2015

05/02/2015

According to the Manufacturer’s Alliance for Productivity and Innovation, manufacturing will continue to grow faster than the economy as whole in the coming year. Manufacturing production is expected to grow 4.0 percent in 2015 and 3.6 percent in 2016, with growth drivers being energy infrastructure, the housing supply chain, transportation infrastructure, medical care expansion, widespread growth abroad, and less domestic policy uncertainty.

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An Industry Week article addresses five manufacturing trends likely to shape the market in the coming year:

  • “SMAC Stack” adoption [will] gain speed. A manufacturing comeback is being driven by SMAC: social, mobile, analytics, and cloud. The SMAC Stack is becoming an essential technology tool kit for enterprises and represents the next wave for driving higher customer engagement and growth opportunities. The need to innovate is forcing cultural change within a historically conservative "if it's not broke don't fix it" industry, and SMAC is helping early adopters in the manufacturing market increase efficiencies and change.
  • Social media [will] further impact business model innovation. Social media is forcing manufacturers to become more customer-centric. The traditional business-to-business model is becoming outdated because today's connected consumers are better informed and expect products on-demand. This consumer purchasing style is not only having an impact on brand-oriented value chains, but is transforming traditional B2B to B2B2C models.
  • Internet of Things (IoT) will increase automation and job opportunities. A renewed focus on science and engineering education is cultivating a manufacturing workforce that can manage highly technical systems and allow for greater automation. This frees up employees to put their talents to work on R&D, which is helping to redefine what it means to have a career in manufacturing. Further, IoT allows for condition-based maintenance, which is driving efficiencies as businesses save on labor and service costs.
  • Greater capital investment. Recent government and industry reports show an uptick in capital investment funding. As manufacturers become focused on capturing value through innovation, original design, and speed to market, they are increasing spend for upgrading plant, equipment, and technologies.
  • The emergence of "next-shoring." The rise of a more technical labor force to manage supply chain operations—combined with rising wages in Asia, higher shipping costs, and the need to accelerate time to market to meet retailer and consumer demands—has led to more companies shifting their manufacturing strategies from outsourcing overseas to developing products closer to where they will be sold.

A recent column in Forbes sees the last point as a question, with reshoring (i.e., next-shoring) and offshoring remaining an ongoing debate in the sector. According to the piece, both strategies have their challenges:

  • For reshoring: labor (i.e., finding skilled labor), rising electricity costs despite the decline in natural gas and coal prices, a more stringent domestic regulatory environment, and the fact that for many companies overseas markets are growing faster than domestic ones
  • For offshoring: rising labor costs (particularly in China), the inherent disadvantages of a longer supply chain, and issues related to quality management

Finally, while manufacturing production is rising, manufacturing employment will not grow remarkably because of it. Manufacturers continue to get greater productivity from their established assets.

Posted by Manufacturing Insights Team

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