The first post in a series based on the National Center for the Middle Market's new research report Middle Market Manufacturing: How to Thrive in a Transforming Environment, this article explores five major issues that are dramatically changing the playing field for mid-sized manufacturers.
If you judge only by recent revenue and employment growth numbers, it’s a good time to be a mid-sized manufacturer. Middle Market Indicator data show steady revenue and employment growth and a marked improvement in the industry since the end of 2015. But that doesn’t mean it’s smooth sailing. On the contrary, middle market manufacturing executives find themselves in the midst of industry transformation where everything from how they make products to what they make and sell is changing fast.
In our latest research, we uncovered five key areas of change that present challenges as well as opportunities and new pathways to growth for middle market manufacturers. Individually, each challenge is formidable. Taken together, they present a scenario where the overall challenge is significantly greater than the sum of the parts, for together they are causing manufacturers to rethink virtually every aspect of the way they operate.
Here’s what’s happening, and how the best manufacturers are rising to the challenge:
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Competition is more intense, and it’s coming from everywhere.
Nearly nine out of 10 middle market manufacturers say competition is greater than it was five years ago. Globalization is the root cause, along with consolidation along the value chain.
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Collaboration with both suppliers and customers is intensifying and becoming more important.
Customers want more speed, more reliable cycle times, and more transparency, and manufactures are asking for the same from their suppliers. Working more closely with partners both up and downstream is becoming a requirement for doing business.
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“Smart” products and value-added services are entering the scene.
In general, product mixes are becoming somewhat less diversified. But more and more manufacturers are including some intelligent devices or IoT-compatible devices in that mix. They’re also adding services, such as installation, maintenance, financing, and consulting, to strengthen customer relationships and increase revenues.
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Technology is changing how manufacturers operate--mostly for the better.
Nearly all—90%—of mid-sized manufacturers say technological advances have had a positive impact, enabling greater productivity, customization, and growth. But advanced technology means retooling factories and rethinking security. Indeed, cybersecurity will be the most important technological consideration for manufacturers in the next five years.
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Finding talent is a problem.
More than two-thirds (64%) of middle market manufacturers say it’s hard to find people with the right technical skills. As product/service mix, technology, and the manufacturer’s role in the value chain continue to evolve, talent management challenges will surely mount as well, requiring manufacturers to consider new ways of finding, training, and retaining talent.
Get the Full Findings
To learn more about these key challenges in the manufacturing environment, how they intersect and overlap, and how the fastest-growing manufacturers are responding, download our full research report, Middle Market Manufacturing: How to Thrive in a Transforming Environment.
Next in this series
Post 2: The Evolving Role of Technology in Manufacturing: 7 Insights Worth Noting
Post 3: Manufacturing Is a Riskier Business: How to Mitigate New Risks and Embrace More Opportunities