In recent years, frustrated manufacturing executives may have felt like they were running furiously just to keep pace. They could hardly be blamed, what with manufacturing’s traditional focus on cost efficiency and quality relegated to mere table stakes in a capricious economy.
After a half-decade of running on the treadmill, manufacturers are once again positioning themselves to achieve growth. An Accenture survey found that 89% of 81 senior manufacturing executives at U.S.-based companies with global operations are expecting growth. In fact, about four in 10 companies surveyed already have successfully restored either their production or profitability levels beyond pre-recession levels of 2007.
Yet our analysis found there is a group of companies that have performed even better in the last few years: those that already have surpassed both their 2007 production and profitability performance levels. We refer to these companies—which constitute about 33% of those surveyed—as our "recovery leaders."
Our recovery leaders have seen their revenue recover much more quickly from the recession than other manufacturers: They were more likely than the balance of the group to say their revenue had grown by at least 6% since June 2009, and were less likely to anticipate little (less than 2%) or no growth in the future.
Why were recovery leaders better able to rebound from the recession? When comparing leaders with the rest of the sample, we found intriguing differences in how the groups approached their talent, location and capital investment.
All of our respondents reported a large amount of churn in their manufacturing locations. Overall, 65% reported having relocated some manufacturing locations in the past 24 months, while 62% opened new facilities in different locations. Forty-three percent of all respondents said they are considering further relocations in the next two years. What separated leaders from the rest was the rationale for their location changes, which in turn influenced their approaches to site selection.
When they relocated, leaders and non-leaders alike were motivated by the reduction of operating costs (100% versus 87%).
In opening new operations, leaders reported doing so not so much to reduce costs (47% to 61%), but to take advantage of unique skills in the new location (42% versus 10%). Non-leaders were more likely to say they opened a new facility to increase customer responsiveness (21% versus 39%).