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US manufacturers unsure of meeting growth targets: Capgemini news
27 August 2007

Less than half of US manufacturers are very confident they can meet their own growth goals, says a new Capgemini study. The study also finds that only one in five American manufacturing executives considers their companies global scale in key areas.

On an average, the study, Leading Through Growth, notes that less than two in five or only 39.9 per cent US manufacturing executives are "very confident" of being able to increase revenues sufficiently to maintain or improve their position in the global marketplace over the next three years with their current resources.

Manufacturing performance may also be compromised by the fact that very few — less than 20 per cent — of the 273 respondents consider their companies to be global standard in the revenue generating areas of product innovation, operational excellence, and customer retention. As a result, manufacturers are considering a host of initiatives for growth. The most popular are:

  • Implementing continuous improvement practices outside of production (56.5 per cent)
  • Increasing training (49 per cent)
  • Making larger investments in capital assets (38.3 per cent)
  • Outsourcing some current functions (32.4 per cent)
  • Hiring more people (32 per cent)
  • Seeking mergers and/or acquisitions (28.5 per cent)

According to Gary Baldwin, vice president and North American Manufacturing Industry leader for Capgemini , two-thirds, or 67 per cent, of the most often cited strategies for improving performance and growth relate to people management. Manufacturers are considering multiple and complex strategies, but for many companies, the real solution can be much more straightforward, he says.

Baldwin notes that by partnering with external companies who possess deep industry insights and global resources, manufacturers can address the people management challenges.

In his view, an experienced and trusted third-party provider can not only help manufacturers meet the challenges unique to their industries, but will also provide the types of resources they need to meet their revenue targets and achieve sustained business growth into the next decade.

The Capgemini study Leading Through Growth was conducted in May 2007 by IndustryWeek Custom Research and included respondents restricted to the job titles of CEO, COO, president, CIO, CFO and CMO.

Highlights of the study:

A very small percentage of the executives surveyed believe that their companies are of a global standard:

  • In product innovation (18 per cent)
  • In operational excellence (14 per cent) and
  • Customer retention (21 per cent)

In each of these critical growth areas, the respondents say they could strengthen their positions by knowing more about their customers:

  • Less than half (39.9 per cent) of manufacturing executives are very confident they can increase revenues enough to maintain or improve their current market position over the next three years with their current resources
  • A higher percentage - but still less than half (47.6 per cent) of the executives are very confident they can adequately address the challenges their companies face in the coming year; issues include rising costs, increased competition, escalating customer demands and shortage of skilled workers.
  • Two thirds (67.8 per cent) of US manufacturing executives say the biggest challenges to customer attraction and retention are increased demands imposed by customers and global competition.

Executives overwhelmingly say they would reinvest cost savings in the business to improve their ability to deliver in changing market conditions. Specifically, they would like to:

  • Buy new machinery (53.4 per cent)
  • Improve processes (45.8 per cent)
  • Create new products (30 per cent)
  • Improve product innovation (24.5 per cent)
  • Build new plants (20.9 per cent)

Baldwin noted that among the myriad of challenges faced by manufacturers, the most critical issue is managing customer relationships.

He said that most US executives believed that further insight into their customers'' needs would make them more successful, but US manufacturers admit they don''t know their customers well enough, Baldwin said. "This lack of customer intimacy hampers product innovation, lifecycle management, and time to market," he says.

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US manufacturers unsure of meeting growth targets: Capgemini