Our survey reveals that over the past year manufacturers have embarked on a raft of initiatives in a bid to boost their business prospects. Yet while many of the measures they have taken are commonly seen during hard times—such as management and structural tweaks, fixing operational inefficiencies and laying off staff—there is also evidence that companies are coming up with new, more innovative strategies for boosting business.
Such innovation is necessary. Our survey shows that although manufacturers are generally optimistic about their own business prospects, they are less confident about their ability to access previous levels of capital. Their customers' finance prospects are also a source of concern. "Things have improved, but for our customers it's still troublesome to get project financing," says Per Hornung Pedersen, chief executive of REpower, the German wind turbine manufacturer.
Many respondents worry that the costs of raw materials, transport and energy will rise, and that increased competition and shrinking markets will pose risks to their business. To cushion themselves against these risks, manufacturers have sought cheaper suppliers, or simplified their supply chains, or tried to reduce their energy consumption.
But recession has provided opportunities too. With plenty of downtime on their hands and reluctance on the part of many companies to get rid of their most valuable asset—skilled employees—manufacturers have been putting their houses in order and building competitive advantage. More than one-third of respondents to our survey retooled their product development processes to get goods to market more quickly, while 30% diversified into new product markets. Some are investing in skilled workers—Dyson, the British company best known for its vacuum cleaners, announced in April that it planned to double the size of its R&D team by hiring 350 new engineers and scientists.
Manufacturers in some sectors, such as technology, hardly broke their stride in the downturn. Apple launched its iPad technology in April, in a move reminiscent of its decision to launch the iPod music player during the last global downturn. Furthermore, although many manufacturers have developed service divisions as a result of the downturn, some technology service companies have branched into manufacturing—witness the move by Google to enter the smartphone space.
