Funding, production costs and war for talent identified as biggest concerns for manufacturers looking to expand
A new survey conducted by leading global design and consultancy firm Arcadis has identified the biggest concerns preventing manufacturers from investing in their production facilities.
The Industrial Capital Expenditure Survey has found that manufacturing executives are most concerned about availability of funding, the lack of available talent and increasing production costs when considering expanding their businesses, with uncertainty about return on investment and quality of product also cited as “concerning”.
The survey canvassed the opinion of more than 70 executives at industrial manufacturers spread across the globe, all with a responsibility for managing their company’s capital delivery programs.
Together, the respondents represented companies generating over US$300 billion in revenues each year across diverse industry sectors including manufacturing & technology, automotive, pharmaceutical, chemicals, heavy industrials and consumer goods.
Tjerk van der Meer, Global Sector Leader at Arcadis said that despite being reluctant to sanction an investment in their production facilities, executives were “cautiously optimistic” about their sector with nearly nine out of ten (87%) stating that the outlook for their industry would either improve or stay the same over the next 12 months.
“The outlook for manufacturing sectors is broadly positive, which is great news, however manufacturing companies are challenged to adapt their production capacity and facilities to meet clients’ need, due to shortages in available capital and skilled workers,” he said.
“As digital technologies come to the fore, we see a need to ensure that any investments into building new, or upgrading existing, production facilities are flexible and demonstrate a clear return on investment to succeed.”
Findings suggest that companies operating in the chemicals sector were the most confident that their built asset portfolios were delivering strong returns.
According to the report, 89% of respondents in this sector rated their performance as good or very good, compared with a survey average of 66%.
Similarly, 78% of executives in the chemicals sector felt that their portfolios were flexible enough to support their business, compared to 52% on average.
The survey found that “the war for talent” the most difficult in the automotive and fast moving consumer goods sectors, with 80% of executives in both industries rating it difficult to find and retain the right people to deliver capital programs.
“Overall, our survey presents a positive picture for the industrial manufacturing sectors. Many are taking a mature, future focused approach to their capital programs, however, companies cannot afford to rest on their laurels in the changing and price-constrained market,” Mr Meer continued.
“While progressive companies can embrace technology and data platforms to improve their capital delivery, all can learn from best practices across different sectors and in different countries.”
The full report is available at: www.arcadis.com/industrialcapex.