The Business Challenges for Western Manufacturing

 Increasing globalization and e-business technology trends are reshaping market environments and bringing competition to the doorstep of even the smallest of manufacturers. Traditional customers in Automotive and Industrial manufacturing sectors are increasingly aware that fast-growing supply markets such as China and India can offer not only lower costs but increasingly better quality, and are being forced to look at them seriously. In recent times, booming demand from these countries for all kinds of products is also causing a rethink about manufacturing in these locations. In the case of India, the ready availability of skilled technical staff provides an opportunity to reduce costs along the entire product life cycle, not just on the shopfloor.   

The smaller companies that have traditionally supplied to these large companies face considerable challenges. Whether they are able to cope with these changes depend on their ability to understand that the rules of the game are changing fast and to convert these threats into opportunities. 

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But many companies have difficulty coping with these new challenges. In an analysis of the results of smaller manufacturing companies in the engineering sector, we found that around 30% were not generating enough cash to cover investments in the future. Even cash required for restructuring - plant closures, layoffs - was considered hard to find, let alone the funds needed for investment needed to grow the business.    click to enlarge

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