November 18, 2019 Deloitte 2020 Manufacturing Outlook

As the risk of a global economic downturn grows, the industrial manufacturing industry faces a challenging landscape in 2020 replete with trade tensions, muted job growth, supply chain volatility and an ongoing skilled talent shortage. Yet, despite these headwinds, industry leaders are rapidly developing coping strategies—not only to weather the brewing storm, but to thrive in spite of it.

Paul Wellener, Deloitte’s US Industrial Products and Construction practice leader, shares insight into these and other topics in his 2020 Manufacturing Industry Outlook. Key highlights include:

• Divesting to invest: Manufacturers are streamlining and realigning around key markets and customers to get their “houses in order” as financial markets increasingly reward focus in core businesses over diversification. 2020 is expected to yield lower overall M&A deal volume, but higher value deals for those that do occur.
• Building digital muscle: Continued trade uncertainties are driving manufacturers to reevaluate their supply chain and distribution networks in 2020. To build resiliency into their networks, many are adding digital technologies (e.g. AI and robotics that increase visibility and transparency) that enable them to respond to market-based threats or opportunities and flex production and resources as necessary. Smart factory leaders are also partnering with suppliers, channels and customers to drive productivity.

 Doing good is good business: More than 25% of manufacturers have expressed a genuine commitment to improving the world, including evaluating how renewable energy sources can help deliver on sustainability goals. And doing good can improve the bottom line: 40% of those who expressed that commitment say CSR initiatives have helped them generate new revenue streams.

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