Manufacturers shift focus from cost to growth

Posted on 20 Sep 2011 by The Manufacturer

Top-line growth focusing on new product development, strategic acquisitions and increasing production capacity in high-growth markets is the main priority for manufacturers worldwide.

The increased focus on growth has been revealed by KPMG’s 2011 Global Manufacturing Outlook which has shown a clear shift from manufacturer’s strategies for the previous two years which saw top-line growth and cost containment as equally important.

The survey reveals that more than half of manufacturers globally (56%) are planning to sell new products in new and existing markets over the next two years (up from 37%). In the UK this shift is reflected with 30% of manufacturers expecting to sell new products in both existing and new markets (up from 13%).

According to Jeff Dobbs, KPMG’s Global Head of Diversified Industrials, the focus by manufacturers on the global financial crisis has now shifted slightly. “Today we are seeing that despite an increasing set of cost challenges, manufacturers are realigning their business models to prioritize top-line growth,” said Dobbs.

Other key findings:
• Top 5 countries from which manufacturers expect to increase sourcing over the next 12 – 24 months: China (42%), USA (36%), India (30%), UK (13%) and Germany (10%)
• Key challenges for businesses over the next 12 – 24 months: Price volatility on key input costs (44%), uncertain demand (35%), Lack of access to capital and credit (10%)
• Top 5 countries for new business growth: China (40%), USA (41%) India (30%), Brazil (20%), Germany (13%)
• Primary approach for achieving new growth: Increasing production capacity (28%), Joint Ventures & Strategic Alliances (25%), Investing in research and development (22%)