To take advantage of digitization, industrial manufacturers need new operating models, aggressive hiring, smart partnerships, and targeted investments.
Industrial manufacturers inhabit a world littered with uneasiness. Global demand for manufactured products is growing at a snail’s pace. Output is expected to increase just 3.1 percent in 2016 and 3.4 percent in 2017, according to the International Monetary Fund. Growth is dampened by Brexit concerns and political uncertainties. Foreign trade is at historically low levels, and, although oil prices have recovered a bit recently, they are not rising enough to undo the collapse in drilling and concomitant retraction in the rest of the energy supply chain.
More problems could be in the offing. New nationalist governments around the world, including the United States, are threatening to further undermine the free flow of goods, creating more uncertainty and constraints upon manufacturing growth. The ripple effects of any attempts to reset trade agreements would be felt in the industrial manufacturing sector; manufacturers with plants in Mexico and China could see their business models decline quickly under the weight of increased import duties and tariffs. Many will take a wait-and-see approach, delaying capital expenditure investments until more clarity on actual policies emerges.
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