Inflation and supply chain crisis require greater agility for U.S. manufacturers
Industrial products (IP) sector leaders are still grappling with supply chain disruptions and labor shortages, while also being hit with the double whammy of inflation and the prospect of recession, highlighting the importance of agility. It has increased even more than before. These and other pressures on the industry caused U.S. manufacturing production to contract in both May and June. But looking to the future, the Control of Inflation Act and his CHIPS and Science Act could have important and positive implications.
Nearly three in four (73%) sector leaders say rising production costs (including wages, raw materials, energy and inventory) pose a “moderate or severe” risk to their business. Masu. As a result, even more leaders (77%) say they are increasing the prices of their products and services. Meanwhile, most IP executives (57%) report that their businesses are rationalizing their product portfolios in the face of the current challenging environment, perhaps to protect shrinking profits.
The industry continues to be plagued by supply chain crises, with 71% saying supply chain crises pose a moderate or severe risk to their business. Nevertheless, a similar number (75%) report improving the resilience of their supply chains. Looking ahead, 45% of industry leaders believe supply chain disruptions will ease over the next year.
Workforce issues also remain a pain point, with 77% of respondents agreeing that issues around talent acquisition and retention pose a risk to their business. IP executives are expanding permanent remote work options for roles that enable it (64%) and increasing compensation (retention bonuses, off-cycle raises) for existing employees. Despite the challenging working environment, most IP leaders (69%) say their business is “very or moderately” agile in responding to changes in the workforce and acquiring talent. U.S. manufacturing employment unexpectedly increased by 30,000 in July 2022, suggesting ongoing efforts may be paying off.
Given the recent surge in cyberattacks against the industry, 75% of IP executives say more frequent and/or more widespread attacks are a moderate or severe risk to their organization. The majority (82%) say they are closely monitoring cybersecurity, privacy, and data protection policies in place, and 76% say they are revising or strengthening their cyber risk management. Most IP sector leaders (73%) say their organization is “very or moderately” agile in a changing cyber environment.
