Last year’s predictions for 2023 generally overlooked or underestimated dynamics in areas like geopolitical events and environmental changes. So, in 2024, instead of making predictions, let’s look at the useful information already out there to see how it might help strategy in the coming year.
Bosch CEO Stefan Hartung recently told the German business newspaper Handelsblatt that he expects 2024 to be more challenging than anticipated, with 2025 likely following suit.
While challenges exist, opportunities remain in technology, innovation and regulatory/government incentives.
In Chinese culture, 2024 is deemed the Year of the Wood Dragon, combining dragon characteristics with the nurturing wood element. This combination signifies growth, progress, and abundance, creating an ideal period for fresh starts and long-term success.
These are the areas I see worth focusing on in 2024 to maintain competitiveness:
1. Politics: Worldwide elections in 2024, including the U.S. presidential election, European parliamentary elections , and general elections in India and Russia, will shape global dynamics. Outcomes may influence policies on climate change, immigration , and economic growth.
2. Economy: Global economic challenges persist, influenced by geopolitical tensions affecting supply chains The U.S. faces a GDP growth slowdown, while Europe is recovering from Russia's impact, and China is dealing with real- estate challenges.
3. Electric Vehicle Strategy: Europe may experience delays in electric vehicle and battery production due to U.S. market priorities, while Tesla's expansion in China and advancements in chip manufacturing will impact the EV sector.
4. Regulations: In the U.S., the proposed Clean Competition Act (CCA) would impose a carbon-border adjustment on energy-intensive imports while incentivizing the decarbonization of domestic manufacturing. The Foreign Pollution Fee (FPF) Act, introduced in Congress in November 2023, would impose a fee on products imported into the United States that are “dirtier” than their domestic alternatives. Moreover, at the beginning of 2024, a fee on certain methane emissions took effect in the U.S. While insignificant on its own, it marks the first U.S. federal-level effort to price greenhouse gas emissions to combat climate change.
EU regulations—including the Carbon Border Adjustment Mechanism (CBAM) and battery regulations—emphasize sustainability. The Corporate Sustainability Reporting Directive (CSRD) strengthens reporting rules, aligning with global efforts to combat climate change.
5. Energy: Global efforts to reduce energy consumption continue, marked by the EU's increased energy- efficiency target. Regional variations in the demand for oil, gas, and coal are expected, with significant growth in renewables, particularly solar and wind energy.
The Inflation Reduction Act supercharged the U.S. economy and boosted clean energy technology in 2023. In 2019, renewables surpassed coal as an energy source in the U.S. There is still great potential in wind and solar, which are the fastest-growing renewable sources but contribute to just about 6% of the total energy used in the U.S.
6. Environment and climate: Despite global efforts like COP28, challenges persist in transitioning to a net-zero economy. Key players, including China and India, must balance energy demands of industry and individuals energy needs with environmental goals. Potential policy shifts in the U.S. with the upcoming presidential and Congressional elections highlight ongoing challenges in climate efforts.
7. Government incentives: Countries like the UK, EU, and the U.S. continue to offer incentives for manufacturing sectors. Investments in R&D, circular economy initiatives, and renewable hydrogen production receive substantial support.
8. Technology: Anticipated integration of gGenerative AI into operational systems and its impact on manufacturing processes are a key focus for efficiency and innovation, as are interoperability and advancements in digital twins and the industrial metaverse.
9. Innovation: Manufacturing innovation incentives provided by the U.S. Federal Research and Development (R&D) Funding —the largest-ever investment for federal R&D—and the European Innovation Fund shape the sector. FertigHy's low-carbon fertilizer in Europe, Chinese smartphone manufacturer Xiaomi's entry into electric vehicles, and Northvolt's sodium-ion battery showcase are just a few ongoing advancements with high-impact potential.
10. People & Wellbeing: Prioritizing employee wellbeing, fostering diversity, and creating open environments for mental- health discussions will be critical for organizational success.
11. Cybersecurity: The rising trajectory of cyber-attacks in the industrial environment will pose ongoing challenges. Recommendations for business leaders include focusing on building resilient operations, creating collaborative partnerships, and prioritizing trust, diversity , and sustainability.
Happy 2024 and Year of the Wood Dragon!
Jan Burian is associate vice president, research, head of IDC Manufacturing Insights EMEA and leader of IDC's Worldwide Manufacturing Circular Economy Strategies research program.
