Which Manufacturing Threats are Real, and Which are Exaggerated?
With the current state of the manufacturing industry, it’s easy to find negativity in headlines. From trade tensions to climate change, inflation to a recession, it seems like every negative factor in the public eye somehow affects manufacturing. But are these admonishments real, or is it just easy to kick an industry while it’s down? A recent PwC survey of global manufacturing CEOs shines a light on what’s actually worth worrying about, and what headwinds might not be blowing as strong as we think they are.
Possible Threats to the Manufacturing Industry
When asked to rank the top threats to manufacturing, the CEOs around the world showed a relatively united front. The survey points to results that are “less existential and more related to the ease of doing business.” Top answers included (T-1) over-regulation (35%), (T-1) policy uncertainty (35%), (2) availability of key skills (34%), (5) cyber threats (30%), and (9) speed of technological change (28%).
Many of these answers are on-par with drudging headlines about manufacturing. But there’s also truth in what’s not mentioned by the industry’s top executives. For example, (13) climate change and environmental damage (19%) rank low on the list of urgencies within manufacturing. Moreover, cost of materials and scarcity weren’t even mentioned. These topics are commonly cited as headwinds battering manufacturing, yet global CEOs aren’t concerned. Why?
Data would seem to indicate that these issues may not be as pressing as some headlines make them out to be. This isn’t to say that climate change and materials scarcity aren’t problems — they most certainly are! Rather, the perspective is one of industry momentum. For instance, greenhouse emissions attributed to industrial manufacturing have declined over the last decade. Over the same time period, the availability of key skills has diminished in the face of growing demand, creating a widening skills gap with no clear answer.
The most pressing issues facing manufacturing today are those that threaten to shrink it. As manufacturing contracts to its lowest level since 2009, CEOs are worrying less about the existential factors and focusing more on those they can ostensibly control. According to the PwC survey report, “CEOs are more mindful of what’s going on in their immediate purview as they await greater clarity on government actions and market conditions.”
The simplest truth is this: The manufacturing economy has contracted and is in danger of entering a lengthy recession. CEOs are looking at the factors directly contributing to this situation. Climate change isn’t forcing recession. Material prices aren’t causing contraction. Trade tensions are. Lack of a skilled workforce is. These are the immediate headwinds — the real ones. And while factors like climate change are very real, they’re not the ones driving manufacturing down.
In an age with 24-hour news cycles quick to nab attention with headlines, it’s easy to pile on manufacturing’s already apparent problems. But not every headwind the headlines make out is a real one. The ones that are real are the ones directly preventing manufacturing from getting back on its feet.