CEOs Optimistic About Company Revenue Growth

Sept. 12, 2012
Despite Economic Uncertainties, Industrial Manufacturing CEOs Look to Change Course for a Brighter Future by Reevaluate Strategies
About the Author
Aaron Hand is the managing editor for Control Design and for Industrial Networking. Email him at [email protected] or check out his Google+ profile.If you don't like your future, change it. Despite feeling gloomy about prospects for the general economy in the year ahead, industrial manufacturing CEOs around the world show considerable optimism about their own companies' chances at revenue growth during the same period.

This isn't like Monty Python's merry players, who despite facing certain death by crucifixion continue to "look on the bright side of life." These CEOs are confident about their companies' futures because they're committed to changing tactics in order to capture more growth opportunities.

Reporting on its annual global survey of CEOs, PricewaterhouseCoopers (PwC) says that 40% of the CEOs in the industrial sector expect the global economy to decline in the next 12 months, and only 18% believe the global economy will improve. Despite this, almost four-fifths of the industrial manufacturing CEOs are somewhat or very confident of revenue growth during the same period.

Generally, the overall economic outlook strongly influences demand for machinery and equipment, so it would stand to reason that where goes the economy so goes the industrial market. But industry is determined to buck the trend, apparently.

PwC surveyed 1,258 CEOs based in 60 different countries, and talked to a further 38 CEOs face-to-face. The analysts broke down their report to look specifically at industrial manufacturing — based on interviews with 156 CEOs in 41 countries — to learn that this sector is committed to increasing global business despite economic, regulatory and other uncertainties. The CEOs are willing to revisit their strategies to rethink the way they survive in a down economy.

Altogether, 71% of the industrial manufacturing CEOs expect to change course this year, with 13% expecting to make fundamental changes. They are reconfiguring markets, managing the consequences of micro risks that could lead to macro disruptions, and trying to put the right talent in place.

As part of their growth strategies, industrial manufacturing CEOs are also reining in costs, with 78% of them implementing a cost-reduction initiative over the past 12 months, and 70% expecting the same in the next 12 months. That's not necessarily just the dreaded job cuts, but the result of innovative ideas creating more efficient operations.

By way of example, this drive for innovation in manufacturing has been a common theme among automation suppliers. I've gotten to visit a few manufacturing locations recently — Phoenix Contact's facility in Ann Arbor, Mich.; Beckhoff Automation's headquarters in Verl, Germany; and two Siemens plants in Guadalajara, Mexico — where the need to rethink direction has come up repeatedly.

Phoenix Contact, for example, has restructured the way it goes to business, focused on whole solutions rather than simply components. The company has hired a range of market sector experts, and the Ann Arbor facility is built around providing more turnkey solutions to various vertical markets.

At his company's headquarters in Verl, Hans Beckhoff recently spoke to a small group of industry journalists about where his company has been, and where it's headed. He spoke of optimizing existing manufacturing and infrastructure for sustainable and efficient use of resources. He puts the onus on his engineers to find innovative ways to develop solutions. "If engineers don't solve the problems, then politicians have to do it," he tells them. "You don't want that."

Siemens has a 3i Program in which it rewards employees for coming up with "ideas, innovations and initiatives" that will improve work efficiencies and save the company money. In Guadalajara, they showed press members an example where "Programa 3i" was responsible for a more ergonomically arranged workstation that significantly improved productivity. The seemingly intuitive way of grouping like wires in bundles that were within arm's reach was an idea more likely to come from an operator who was having to bend over and search every time he needed another wire.

This is a small example in the general scheme of things — Siemens' program reportedly has saved the company hundreds of billions of dollars over the years — but simply points to the kinds of ways that the manufacturing sector is rethinking the way it operates. According to PwC's survey, 68% of industrial manufacturing CEOs say they are focusing more heavily on innovations designed to reduce the cost of existing processes.