Emerging technologies and the rapid advancement of IOT, A.I and Blockchain will impact us all. Take a look at our Outlook 2020: Emerging Trends in Electronics.
As we now embark on our journey into the next decade, we would like to identify some trends relevant for Original Equipment Manufacturers (OEMs). We’ve spent the better part of 2019 collaborating and working with local industry leaders on changing the economic narrative. In particular, we’ve focused on emerging technologies in IIOT (industrial internet of things), Blockchain and enhanced communication. We see increased desire for local companies to come together and focus on a shop local premise. Consistent messaging and collaboration from Government further advocates this trend. From a global perspective we need to view this through another lens. Most importantly is planning and executing ahead of 2020 forecasting.
Globally, the manufacturing sector has seen much upheaval over the last several years. Emerging economies have entered the ranks of the world’s top manufacturers. A global recession primarily driven by the US market crash, and the Canadian energy sector have contributed significantly to the manufacturing deficits. The trickle-down effect has filtered into all business sectors, including manufacturing.
In spite of this turbulence, the manufacturing sector still remains an important driver for national and global economies. OEMs must have a finger on the pulse of this sector, to be able to understand and navigate its fluctuations.
A recent report from McKinsey Global Institute appraised the evolution of the manufacturing sector.
In developed economies, manufacturing will drive innovation and productivity. The manufacturing sector is not homogeneous and is comprised of at least five groups of industries: global innovation for local markets, regional processing, energy and/or resource-intensive commodities, global technologies/innovators, and labour-intensive tradable goods.
The report found that the manufacturing sector develops with industrialization, but it hits a ceiling at 20-35% of GDP, after which it falls as does its employment share.
As nations continue to develop, new consumers will create demand and by 2025 most global consumption will occur in emerging economies. This is a big opportunity for manufacturers, however the environment in which they operate will be characterized by ambiguity and uncertainty.
The manufacturing of products and services are becoming increasingly more integrated. In fact, services from logistics and R&D to advertising make up an increasing share of manufacturing.
The long-term outlook sees the sector’s employment stagnating because of technologies that improve productivity and the price pressures from the global landscape. However, there remains the need for OEMs to attract and retain highly-skilled people with the right experience to fill key positions. The emphasis will be on quality over quantity of people employed.
Companies are investing in structures that will enhance collaboration with clients and vendors, collection and assembly of market information, as well as optimize communication. Quality management, lean manufacturing systems, and improved productivity continue to be top priorities.
A Market Research Engine report expects the Electronics Manufacturing Services (EMS) market to grow to more than $675 billion USD by 2024 at a compounded annual growth rate of 7.5%.
It identifies the following drivers, restrictors and opportunities for the EMS sector:
A 2019 Industry Market Trends report by Linchpin points to the Internet of Things as an important, wide spread industry for OEMs to consider. The report notes the following trends:
The need of the era would be twofold:
The prudent OEM would become a networked enterprise that adopts complex tools to analyze and make sense of large amounts of data, allowing them to respond quickly to evolving market conditions.
Research and development can be a game-changer in an age of innovation and disruption. OEMs must engage the right people on their teams who will be able to handle increasingly complex global supply chains.
According to a 2016 Kronos study, fewer manufacturing executives identify product development life cycle times and equipment capabilities as distinguishing factors from their competition. This points to an area of opportunity for OEMs. In order to respond to market demands, OEMs will have to find ways to shorten the product development life cycle without sacrificing quality.
In general, economic forecasters believe that the outlook for manufacturing is bright, although they believe OEMs will have to adapt and evolve nimbly and intelligently to change.
At August, we appreciate the challenges that an OEM faces while functioning in a volatile world economy that is in perpetual flux. We have the expertise and experience to help you map out your path to success in this environment. If you would like to learn more on the manufacturing outlook for 2020, or if you just want chat, we are here for you. Contact us today.