U.S. manufacturers to keep eye on consumer demand, studies show

January 14, 2013

While there has been a gradual swell of optimism and confidence in the U.S. manufacturing industry, recent research has shown that many companies are still keeping their eyes firmly fixed on the fickle nature of consumer demand.

The recent release of the Global Manufacturing Outlook by KPMG showed that while manufacturers have apparently weathered the financial storm of the economic downturn, the volatile nature of the market could ensure that lean enterprise will provide a measure of stability. According to the authors of the report, the “global economic recovery is proving to be fraught with false starts, market volatility and macroeconomic uncertainty,” with the research showing that the continued revival will rely on forces beyond the control of most manufacturers.

Just under 45 percent of respondents to the KPMG survey claimed that input cost volatility was their biggest challenge over the next 24 months, with manufacturing executives planning to focus on cost management rather than expansion, although many of these also admitted that quality management in manufacturing was expected to play a significant role in their business model.

The findings of the KPMG study were echoed in part by a separate poll of North American manufacturers that was conducted by Accenture, a management-consulting firm. The researchers found that senior executives at U.S. manufacturing firms were optimistic about the growth of their companies in the next 12 to 24 months, although the unpredictable nature of consumers was seen to be a major hurdle to cross.

The Accenture study revealed that 67 percent of manufacturing firms were worried about stagnant customer demand in 2013, with the authors of the report warning that manufacturers “need agile operating models to surpass the competition.” This was demonstrated in the responses of manufacturers who claimed to be already working on ways to improve their market share, with over 80 percent of those surveyed revealing that they were looking at cost reductions and operational efficiency.

The study also found that relocation was one of the driving factors behind increased efficiency measures at U.S. manufacturers. Sixty-five percent of respondents advised that they had changed the location of some parts of their assembly line or supply chain in the last two years, with an increasing number of “recovery leaders” using the principle of lean enterprise to ensure continued stability.

“Recovery leaders find themselves aligned with a new business environment in a way that is allowing them to sprint more confidently into the future,” noted Mark Pearson, managing director of Accenture, in a recent interview with IndustryWeek.