As the manufacturing industry begins to climb out of the recession and companies look for ways to restart growth, what will the shape of the recovery look like? This is a question being pondered by manufacturers, technology suppliers, analysts, and market watchers.
Wes Olson, managing director of manufacturing in the U.S. and Canada at Cisco Systems, Inc., believes that a number of macro-economic indicators suggest that manufacturers are eager to move ahead quickly in the new year. “Inventory levels are at record lows and I see a serious overcapacity in manufacturing as well,” Olson said in an interview. “The next four to six months will see fairly aggressive action by manufacturers. They will refill the pipeline.”
But, Olson said, by the start of the third quarter, manufacturers will be evaluating their next steps, including employment plans. In fact, the new MA Outlook poll shows that most manufacturers are not planning to rehire now. “By mid-year, manufacturers will be deciding whether to expand capacity and perhaps restart hiring,” he said.
Making good decisions in this regard, of course, will require that manufacturers have reliable information. While the Outlook poll clearly shows that manufacturing is well-integrated into most respondents’ planning processes, many still suffer from a lack of real-time information and cross-functional systems integration. “Talking about planning is one thing,” Olson said. “Making it happen is another. It is a question of execution.”
Meanwhile, technology investments, showing a modest rise in the poll, may get greater emphasis, particularly if ROI can be achieved sooner than in 12 months, Olson said. Chief among manufacturers’ purchase intentions in 2010, according to the poll, are computer systems, wireless technology, and automation platforms. Olson also expects continued IT outsourcing, managed services, and IT consolidation this year.