84% of U.S. Manufacturers Anticipate a Recession in Next Two Years
American manufacturers aren't seeing the future through rose-tinted glasses.
About 49% of U.S. manufacturers expect a recession to hit in 2025, with 84% predicting it will happen within the next two years, according to new research conducted and released today by software development company CADDi.
However, the proprietary research, which is based on a survey of more than 330 U.S. manufacturing professionals, suggests that manufacturers are making financial decisions based off incomplete information.
The research said 60% of procurement professionals have sourced a part at a higher cost than what they knew was possible because they didn't have access to sufficient supplier data to negotiate effectively. The same percentage of respondents said they've missed an opportunity to consolidate suppliers and/or negotiate a volume discount because they didn't have access to historical cost data associated with similar parts.
Additionally, 71% of sales professionals have quoted or sold an unprofitable deal for their company because they didn't have access to the historical engineering and procurement data they needed.
"American manufacturers are feeling pressure from every angle – the economy, talent shortage, rising competition from China and Mexico and more," CADDi CEO Yushiro Kato said. "Our research indicates that data and collaboration issues are exacerbating the pressure. Internal teams can't access the information they need to do their jobs and make smart and profitable decisions fast enough, which increases the stakes for manufacturers that don't take steps to address the inefficiencies."
Key findings from CADDi's research, The American Manufacturing Pressure and Productivity Index, includes:
- Talent challenges remain top pressure drivers, including a lack of access to skilled labor (56%) and equipping current employees to step into strategic roles (50%).
- Speed to market, which 23% of manufacturers say is a 2025 priority, is at risk.
- 77% of procurement professionals say that every few projects they need to find a new part, product or supplier because the one they found didn't meet engineering's specifications.
- 68% believe at least half of their institutional knowledge will be lost forever in the next decade when senior executives retire.
- 27% of manufacturers fear they aren't transforming fast enough to survive (27%).
- 45% of senior management leaders cite digitally transforming their operations as a top business pressure.
- 51% said navigating political demands to bring more production onshore is a top three pressure point.
Pervasive Data Issues Undermine Productivity and Competitiveness
Sales, procurement and engineering teams generally spend at least 25% to 50% of their workdays tracking down critical information to do their jobs and ensuring the accuracy of this information.
When asked about their biggest frustrations, inadequate documentation (73%) – missing part numbers, dimensions and material properties – topped the list for procurement. Sales professionals cited long quotation processes due to needing to track down relevant information (67%) and poor collaboration and communication with procurement and engineering that leads to delays and misunderstandings (33%).