Manufacturers Unsure About Meeting Growth Goals

Aug. 23, 2007
New study reveals only 1 in 5 U.S. manufacturers consider themselves world class.

U.S. manufacturers are not very confident about their ability to increase revenues to the levels necessary to ensure that they will be able to either maintain or improve their standing in the global marketplace. Less than two in five (39.9%) thought they would grow over the next three years according to a study released on Aug. 23 by Capgemini. The study "Leading Through Growth" was conducted in May 2007 by IndustryWeek Custom Research and included respondents restricted to the job titles of CEO, COO, president, CIO, CFO and CMO.

The study showed that manufacturing performance may also be compromised by the fact that very few -- on average less than 20% -- of the 273 respondents consider their companies to be "world class" in the revenue generating areas of product innovation, operational excellence and customer retention.

As a result, manufacturers are considering a host of initiatives for growth. The most popular are:

  • Implementing continuous improvement practices outside of production (56.5%)
  • Increasing training (49%)
  • Making larger investments in capital assets (38.3%)
  • Outsourcing some current functions (32.4%)
  • Hiring more people (32%)
  • Seeking mergers and/or acquisitions (28.5%)

"As our study shows, two-thirds, or 67%, of the most often cited strategies for improving performance and growth relate to people management," said Gary Baldwin, vice president and North American Manufacturing Industry leader for Capgemini."

Additional findings include:

  • A very small percentage of the surveyed executives believe their companies are "world class" in product innovation (18%), operational excellence (14%), and customer retention (21%). In each of these critical growth areas, the respondents say they could strengthen their positions by knowing more about their customers.
  • Two thirds (67.8%) of U.S. manufacturing executives say the biggest challenges to customer attraction and retention are increased demands imposed by customers and global competition.
  • Executives overwhelmingly say they would reinvest cost savings in the business to improve their ability to deliver in changing market conditions. Specifically, they would:
    • Buy new machinery (53.4%)
    • Improve processes (45.8%)
    • Create new products (30.0%)
    • Improve product innovation (24.5%)
    • Build new plants (20.9%)

"Most U.S. executives believe that further insight into their customers' needs would make them more successful, but U.S. manufacturers admit they don't know their customers well enough," Baldwin said. "This lack of customer intimacy hampers product innovation, lifecycle management and time to market."

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