Armed with unparalleled access to information on pricing and profitability, buyers have never been better informed on the total cost of ownership (TCO).
A typical B2B buyer is more than halfway (57%) through the purchase process before contacting sales, with the majority of research being done online. However, nearly two-thirds of industrials are still in the very early phases of their digital marketing journeys.
Top-performing companies are eight times more likely to take a value-based approach toward pricing.
A TCO approach pays dividends: industrials that measure and buy based on TCO are 35% more profitable.
The New Workforce
Labor markets are transforming—the manufacturing workforce is aging, and women and minorities make up an increasingly large share of the workforce. What are manufacturers doing to attract and retain the next generation of talent?
From 1980 to 2020, the U.S. white working-age population is projected to decline from 82% to 63%. During the same period, the minority portion of the workforce is projected to double (from 18% to 37%) and the Hispanic/Latino portion is projected to almost triple (from 6% to 17%).
Manufacturing’s future will be found in a younger and more diverse workforce, but younger employees are not gravitating toward manufacturing. Only 37% of U.S. adults would encourage their children to pursue a career in manufacturing.
The STEM workforce is no more diverse today than it was 15 years ago. Women make up only 18% of the advanced manufacturing workforce and African-American and Latino workers combined make up only 16%.
Globalized Economic Risks & Opportunities
With 45% of U.S. manufacturing generated overseas, the sector has never had more exposure to global economic and political forces.
Market opportunity already plays a significant role in manufacturing footprint decisions, but for nearly 50% of companies it will be the critical decision factor by 2020. The availability of a strong local talent pipeline is another crucial factor.
The average U.S. manufacturer has currency exposure in four global regions. Half of U.S. companies will enter at least two new markets in the next five years, only increasing their currency exposure.
The rise in political uncertainty has decreased GDP by $150 billion and employment by 1.1 million. If uncertainty returned to 2007 levels, capital investment would jump 1.5%
Ever-changing regulatory requirements make it increasingly difficult (and costly) for manufacturers to succeed globally. This hurts manufacturers, employees, customers, and taxpayers alike.
Between 1998 and 2012, the cost of complying with manufacturing-related rules grew far more rapidly (7.6%) than manufacturing output (0.4%). Only 10 years ago, FCPA resolutions cost corporations $7.3 million on average. In 2014, that ballooned to $156 million.
Between 1981 and 2012, more than 2,000 regulations directly affecting manufacturers were issued. That’s 1.5 per week, every week for three decades. What’s the annual cost of complying with merely the major ones? $726 billion.
Corporate tax rates are 38% lower in China and 26% lower in Germany. Manufacturers predict that within five years regulatory and tax concerns will have twice the impact on footprint decisions compared to today.
Technology’s Promise & Peril
The digital revolution is delivering amazing opportunities as well as a Pandora’s box of risks, where intellectual property can be stolen and online reputations tarnished in seconds.
Connected devices outnumber the world’s population by 50%, and manufacturing stands to gain nearly $4 trillion from the adoption of the Internet of Things, thanks to reduced costs, improved asset utilization, and improved productivity.
However, 70% of the most commonly used IoT devices contain security vulnerabilities. More than half of executives surveyed said it’s unlikely or highly unlikely that they could detect a sophisticated attack, despite the average breach costing nearly $4 million.
While 83% of manufacturers have or are in the process of developing a bring your own device policy, 80% are concerned about data loss protection. Only 9% of CIOs report having an accurate inventory of personal data for employees and customers.