Manufacturing businesses in general have behaved very differently during the Coronavirus pandemic to how they responded to the global financial crisis back in 2008. Of course, the root causes of these two disasters are markedly different, but nevertheless both episodes have managed to bring industry to a standstill, wreck entire economies and cause widespread disruption and distress to companies and households alike. Significantly, both have also led to permanent change for the better – from the way we run our businesses to how we conduct our personal lives.
When the banks and other financial institutions hit the buffers 13 years ago, investment in technology, plant, and equipment virtually ground to a halt – most banks were not in the mood (or position) to lend money to anyone. By contrast, this time around companies of all sizes and denominations had to adapt very quickly or face the prospect of going under. Our current enemy is a deadly disease, not a lack of funds.
A recent study by accountants Deloitte revealed that, despite all the market shocks, 62% of global manufacturing leaders are currently investing in digital factory plans. A separate survey by America’s MAPI (Manufacturers Alliance for Productivity and Innovation) found that 85% of leaders agreed that digital factory investments would rise by the middle of this year. The vice chairman and leader of Deloitte’s US industrial products and construction practice, Paul Wellener, remarked: “The companies that are able to make the right kind of strategic investment at the time when their competitors might be retrenching, are the ones able to come out on top.” In other words, companies trying to get back to the way they operated before the pandemic are heading in the wrong direction.
The industrial landscape has changed and is continuing to change. Whether it comes in the form of Zoom, Webex or Microsoft Teams meetings helping us to maintain contact with customers, suppliers and staff, or new digital tools that streamline processes and help us innovate on the shop floor, the conclusion is the same: if we want to remain competitive, and for our order books and margins to grow, we have to move with the times. We have to invest.
If nothing else, the pandemic has also taught us that whilst short-term profit margins are obviously important, it is vital that we ‘future-proof’ our businesses to be resilient and sustainable if another unforeseen crisis appears out of nowhere. The least we can do is to learn the lessons from the past year about protecting not just our businesses but also our workforces.