Quality Magazine

From the Editor: Focus on Growth

November 1, 2011
Large manufacturers are ready to shift gears.



While the name of the game the past few years has been controlling and cutting costs, senior manufacturing executives are apparently loosening the death grip on their wallets, according the 2011 Global Manufacturing Outlook from KPMG International.

The KPMG annual survey of 220 manufacturing executives-including 61 in the United States-from global companies with at least $1 billion in revenue found that businesses are cautiously optimistic on near-term prospects and are shifting their stances from cost containment to a focus on top-line growth as a priority in the next two years.

During the past two years, in addition to cost containment, U.S. executives were most focused on customer relationships, process efficiencies and shared services. Looking at their top priorities for the two years ahead, 26% of the U.S. executives say they will focus on top-line growth, followed by 13% saying R&D and innovation, and 12% indicating customer relationships, according to the report. Seventy-nine percent of U.S. respondents were either very optimistic or optimistic about their company’s business outlook for the next two years.

When asked to compare the primary focus areas of their growth strategies in the next two years with the two previous years, the survey revealed a shift in focus: 56% of manufacturers globally are planning to sell new products in new and existing markets during the next two years, up from 37%.

This eagerness to release new products was evident at the recent Quality Expo, held Sept. 20-22 at Chicago’s McCormick Place. A bevy of new products was unveiled at the show, and I spoke with several marketing people whose companies plan to release new products in the first quarter of 2012, a good indicator going into an IMTS year. It’s encouraging when one considers how many companies traditionally wait until IMTS to make a splash with new products.

I’m also seeing more new product announcements come across my desk than in recent memory, a sure sign that more money is going toward product development-whether it’s brand new product or a tweaking of existing products.

“Many companies emerged from the 2008-2010 downturn with significantly reduced cost structures, more cash and liquidity, and a laser focus on their customers and markets. These survivors have the mindset and strategy to define the standard of success in the next five years,” said Jeff Dobbs, KPMG’s global head of Diversified Industrials and a partner in the U.S. firm.

Where do you think manufacturing is headed in the short and long term? Is the industry poised for growth or is this recent revival a response to pent-up demand that will eventually fizzle out? Share your thoughts with me at campbellg@bnpmedia.com , or with other members of the Quality community at the Quality Magazine LinkedIn Group page, the Quality Facebook page and on Twitter .