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 Manufacturing CEOs fighting for market share
Manufacturing CEOs fighting for market share

Manufacturing CEOs fighting for market share

ECONOMIC NEWS

Fin24 - Jun 21st 2016, 09:35

Cape Town - Competition for market share in the manufacturing sector is fierce, with many CEOs planning aggressive growth strategies, showed a KPMG report. 

The 2016 KPMG International Global Manufacturing Outlook (GMO), based on a survey of 360 senior executives, stated that 74% of manufacturing company CEOs reported growth as a high priority over the next two years.

“There are fierce competitions being fought over every scrap of market share available and we will certainly see winners and losers," said KPMG’s global chair of industrial manufacturing Doug Gates.

He said maintaining the status quo will not drive growth. "Manufacturers need to do something different in order to win market share in today’s environment.”

The survey showed the responding CEOs plan to achieve their growth objectives through multiple channels.

With a preference for organic growth over mergers and acquisitions activity, most manufacturing CEOs indicated they will leverage opportunities in entering new markets, and make changes to current service and product mixes.

Entering new markets

Among the survey respondents, 92% are stepping up their focus on entering new markets over the next two years. Forty-three percent say their primary motivation for foreign investment is to capitalise on lower cost manufacturing opportunities, and 34% say it is to gain access to new markets.

Ironically, the report stated that while many Western manufacturers are talking about a ‘sell to China’ strategy, 44% of respondents from China and 47% of those from India said that gaining access to new markets was the primary reason behind their foreign investments.

Changing and investing in new services and products

Of the respondents indicating plans to change their product range, 56% seek to make significant investments to launch one or more new products into the market, while 39% will invest to launch one or more new services.

“Whether investing in incremental improvements for existing products or inventing entirely new products and services, what is clear is that manufacturers recognise an urgent need to increase their investment into innovation and research and development (R&D)," said Gates.

Over the past three years KPMG has been tracking manufacturers’ investment intentions.

"The KPMG data shows that, following a drop in R&D in 2014, investment expectations skyrocketed in 2015 and seem set to continue to grow in 2016," said Gates.

More than one in five of all the survey respondents expect to spend more than 10% of revenues on R&D over the next two years.

Taking the manufacturing floor high-tech

Respondents also showed progression towards an integrated manufacturing strategy and a digital factory.

Twenty-five percent of the CEOs say they have already invested in 3D printing and additive manufacturing technologies, with an equal number having already invested in artificial intelligence and cognitive computing technologies.

The GMO survey showed that the use of robotics on the manufacturing floor is also likely to attract significant investment, with almost two-fifths of CEOs saying they will definitely channel significant amounts of their R&D investments towards robotics over the next two years.

Gates noted that manufacturers are evolving into industry 4.0 and becoming more digital.

"Investments into new manufacturing technologies are a way to enhance agility, flexibility and speed to market when designing and launching new products and services – critical elements for manufacturing companies to win in the marketplace,” he said.

Respondents in the survey represented the six industry sectors of aerospace & defence, automotive, conglomerates, medical devices, engineering and industrial products, and metals.
 

Read more about: markets | manufacturing | gmo | economy

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