2023 manufacturing industry trends – instil confidence amid uncertainty
January 4, 2023
With recession looming, the ongoing war in Ukraine, labour shortages and supply chain issues, the beginning of 2023 is nothing short of challenging for the manufacturing sector. According to the International Monetary Fund, global growth is forecast to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. Energy prices were 40% higher in 2022 than the year before and will remain elevated in 2023. Energy-intensive and reliant on investments, industrial manufacturing has been the most vulnerable to the effects of the worsened economic outlook and energy price shocks.
To mitigate the risks, companies are looking for ways to increase efficiency and productivity – by adopting new technologies, modernising their software and hardware systems and upskilling their employees. In addition, appealing to environmentally conscious stakeholders is no longer a “nice-to-have”. Advancing a Circular Economy and opting for greener, more sustainable processes is one of the top manufacturing trends this year.
In this blog post, we outline some of the biggest manufacturing trends of 2023, with insights into how transparency and communications can help instil confidence, retain customers and foster brand loyalty.
Focusing on environmental, social, and governance (ESG) impact
Customers, employees, consumers and investors want to support purpose-driven companies that stand for something meaningful – beyond revenue and brand-building. They want to engage with brands that contribute to a better, greener world. While many manufacturers already report on their contributions to a more sustainable future, further progress is required to hold the global average temperature increase to 1.5 °C above pre-industrial levels – in line with the Paris Agreement goal.
Switching to energy- and resource-efficient technologies, making operational changes across their value chains and enhancing their ESG commitments will set producers on the right path to remain competitive and emerge stronger after the economic downturn.
From a communications point of view, there is a greater demand for transparent and comprehensive sustainability reporting from consumers, retailers, supply chain participants and investors. Communicating what your brand stands for and what actions you take to achieve your ESG goals will help you build trust and loyalty among stakeholders. Doing well by doing good will continue to hold true in 2023.
Digital transformation under the spotlight
The COVID-19 pandemic has propelled the adoption of digital technologies across the manufacturing sector. The trend is here to stay. According to Deloitte, “companies with higher digital maturity have shown greater resilience.” It is not surprising, as data-driven processes, smart technologies, remote control and interconnectivity have the potential to increase efficiencies and productivity throughout the entire supply chain, the back office, factory automation and more.
Hannover Messe – one of the key knowledge-sharing platforms for manufacturers – references a new phase in the digitalisation of industry. This phase includes such important elements as machine learning, the industrial internet of things (IIoT), 3D printing and 5G. These technologies are already available, proofs of concept exist, while the promise of plug & play, as well as mass production, is still to be fulfilled.
As industrial manufacturers are looking for ways to increase efficiency and productivity, digital technology is just what they need. Staying abreast of technological advancements is crucial in an era of accelerated innovations.
Retaining and nurturing talent
Manufacturers globally are facing tighter labour markets and are struggling to find workers due to the older generations leaving the workforce for good and younger talent changing jobs en masse. A Euromonitor study states that more than 40% of the population in Europe will be aged 50+ years in 2030, further reducing the labour pool. Similarly, almost half of the US population will be in their 40s or older by 2040, according to demographers from the University of Virginia.
Moreover, one in five workers say that they are “extremely likely” or “very likely” to change jobs within the coming year. Knowledge-intensive, the manufacturing sector is severely affected by losing experienced employees.
Attracting and retaining talent will be a top priority for most manufacturers in 2023, as well as knowledge transfer and training. Partnering with suppliers who incorporate training and support can relieve the strain on companies already short on staff. Digitally enhanced technologies such as Augmented Reality (AR) allow service support to connect and collaborate with companies virtually in real-time and remotely guide training or servicing, boosting productivity and employee satisfaction.
Preparing for the future
Presented with unprecedented challenges, 2023 is going to test industrial manufacturers globally. Listening to consumer and employee demands, driven by environmental concerns, the cost-of-living crisis and disruptive digital innovations, and aligning efforts to address these needs, will be paramount for companies’ success. Manufacturing brands that stay true to their audiences – internal and external – and who communicate consistently, have a better chance of weathering the storm, turning challenges into opportunities.
To find out about FINN Partners’ Manufacturing capabilities and expertise visit https://www.finnpartners.com/uk/sector/manufacturing/