© Viacheslav Iacobchuk | Dreamstime.com

CEO Survey Shows Major Attitude Shift

July 20, 2020
The vast majority of respondents – about 8 out of 10 – do not envision a full recovery by next summer.

“The only constant in life is change.” -- Heraclitus, 6th century B.C.

Over the past 150 years, as science, technology, and free enterprise gave humans increasingly more control over their living standards, their lives, and nature itself, we’ve come to expect stability. Prior to the Great Recession, the last time we saw double-digit unemployment was 40 years before. The last pandemic to kill as many people worldwide as COVID occurred more than 50 years ago.

Five months ago, that sense of constancy vanished. Between the pandemic, the economic collapse, and the heightening of social and racial divisions in our society, it turns out the foundation of our house was built on sand, not rock. Our world has changed dramatically in a very short time, and if you ask manufacturing leaders, it will never again be the same.

Asking is what we decided to do: In early July, Manufacturers Alliance undertook a poll of CEOs at global industrial manufacturing firms around the country, to get a pulse for how their outlook for the economy and their businesses might change in the coming year. The results may not be surprising, but they are very telling, particularly about the extent of change that lies ahead.

Diverging Outlooks on the Economy and Industry. First, we asked to what extent they agreed or disagreed with the occurrence of certain economic milestones by June 2021. The vast majority of CEOs – about 8 out of 10 – do not envision a full recovery by next summer. In fact, when asked about when aggregate demand would reach pre-pandemic levels, 60% felt it wouldn’t happen until a vaccine was available.  

One hurdle to full recovery is this country’s trade and commercial ties with China. China saw a historic slump of almost 7% in the first quarter of the year—and even as Beijing predicts a V-shaped recovery, global economists are projecting less than 2% growth for the year. With such dire news, 70% of the CEOs believe China will not attain 6% annualized GDP growth by next summer, the rate said to be the threshold for the politically tolerable growth. Moreover, with the U.S.-China trade war quietly intensifying, three-fourths believe the United States’ accelerated “de-coupling” from China will affect their operations globally. 

Shifts in Business Models and Operations. Next, we asked the group the extent to which they agreed or disagreed about specific supply chain and production trends over the coming 12 months. The fallout from COVID-19 continues to disrupt supply chains and operations globally. Thus, a significant majority, 85%, believe a large proportion of their production for regional markets around the world will be located in-country to help mitigate future disruptions. Just under two-thirds believe a larger proportion of their supply chain will be located in-country, suggesting a broad de-risking of supply and logistics networks.

Regarding their own companies’ ability to reshore a portion of their production, two-thirds say that their domestic automation capabilities will play a large role in their decision-making process.

The novel coronavirus has done more to alter workplace arrangements than any event since the development of the assembly line. Roughly eight out of 10 CEOs forecast that dramatic design changes will be permanently incorporated into their shop floors for worker health and safety.

Finally, a whopping 85% say their annualized investment in smart factory initiatives will be rising. This jibes with the findings of a MAPI-Deloitte study from 2019 that found more than 85% of industrial manufacturers believe that smart factory initiatives will be the main driver of manufacturing competitiveness in the next five years. The pandemic has simply pushed up the timetable for digitalization and virtualization.

The Evolution of Workplace Dynamics. We also asked CEOs the extent to which they agreed or disagreed about certain workforce trends over the coming 12 months. The resumption of business travel is up in the air (pun intended): when asked if air travel would return to at least 75% of pre-pandemic levels, roughly half agreed and half disagreed. Less murky is the transition of certain employees to full-time remote work: a slight majority of CEOs predicted that at least 25% of their salaried employees would be completely working virtually by summer 2021.

Finally, on one of the biggest workforce issues manufacturers face, not surprisingly, almost 90% of CEOs said their companies planned to introduce or expand internal forums to openly discuss diversity and inclusion issues. Added to this initiative, two-thirds expected to hire or promote at least 20% more underrepresented employees than before.

For manufacturers, change is obviously the new normal.

Stephen Gold is president and CEO of MAPI, the Manufacturers Alliance for Productivity and Innovation.

Popular Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!