Mindshare with Manufacturing CEOs
CEO Outlook: November 2022
Manufacturing has continued to grow in 2022 despite the challenges of supply chain issues, labor shortages, and an uncertain economic environment. However, none of those challenges will be disappearing any time soon. Manufacturers Alliance surveyed manufacturing CEOs to find out what issues are concerning them, and how they plan to mitigate challenges and thrive.
General economic and global market volatility increased as CEOs' biggest concern, and talent was still the second item affecting business. And while the rest of the top six reflects much of the headlines this year, it's worth noting that political instability and sustainability/ESG objectives took the number seven and eight spots.
Supply chain issues are still number three on the list, but executives noted that there were some bright spots: Component availability was improving, suppliers had productivity and logistics improvements, lead times were shortening, and more raw materials were available.
More than 3/4 of manufacturing CEOs are actively working to stabilize their Asian supply chains. Some tactics noted include switching to suppliers in Southeast Asia instead of China, expanding the supply base, multi-sourcing key materials, and working with vendors to relocate production. Additionally, many companies are switching to suppliers in the U.S., Mexico, India, and Europe. However, at least one CEO pointed out that their supply chain headaches were mostly in the U.S.
Construction of new manufacturing facilities in the U.S. has grown 116% over the past year, with chip factories being built in Phoenix, AZ, aluminum and steel plants being added across the south, and many companies expanding the size and production capabilities at existing plants.
With the ongoing conflict between Russia and Ukraine, Europeans are expecting energy shortages into 2023. More than half of manufacturers were expecting to be impacted. How were they mitigating this concern? CEOs listed solutions like locking in contracts where they could, shifting production, accelerating sustainability initiatives, conservation programs, and adjusting hours of operation. Additionally, some noted that they expected demand to decrease in the coming months.