2021 manufacturing industry outlook has been saved
2021 manufacturing industry outlook
Exploring future trends in manufacturing
2020 has been a year like no other in recent history, and the US manufacturing industry has felt the impact. Along with declines in production, forced shutdowns in the early days of the pandemic caused a significant dip in manufacturing employment levels. In our 2021 outlook, we look at the future of manufacturing and outline four trends for the year ahead.
The manufacturing industry looks for ways to make itself disruption-proof
Before the pandemic hit, the manufacturing industry was working to regain the momentum it had reached after the 2008 recession. However, after the first wave of pandemic-driven shutdowns, segment recoveries for various manufacturers have been uneven. Looking ahead to 2021, the recovery may take longer to reach pre-pandemic levels, as Deloitte projections based on the Oxford Economic Model (OEM) anticipate a decline in annual manufacturing GDP growth levels for 2020-2021, with a forecast of -3.7% for 2020 and -5.4% for 2021.
Reeling from the effects of a global pandemic-driven shutdown, US industrial production (-16.5% year over year) and US total factory orders (-22.7% year over year) saw a steep decline in April, followed by suppressed improvement. The current US Industrial Production Index stands at 101.5 in September (the most recent month available), a substantial dip from its pre-pandemic level of 110. Production and order levels are still below 2019 levels, but the trajectory of the decline has slowed. Total industrial capacity utilization improved to 71.5% in September, up from 64.1% in April; however, it’s still below pre-pandemic levels of 77%.
2020 also experienced a significant dip in manufacturing employment levels, largely due to forced shutdowns in the early days of the pandemic and suppressed orders, with April recording manufacturing’s lowest employment levels since 2010. Despite recent gains from much of the country’s manufacturing base back in operation, employment levels in October are still 621,000 lower than in February. All of these indicators have created an environment of ongoing uncertainty, although 63% of executives in Deloitte’s post-election poll are showing a somewhat or very positive outlook on business. Explore our four manufacturing industry trends for 2021 and beyond to see how things are shaping up.
Podcast: 2021 manufacturing industry outlook
Four manufacturing industry trends
Agility could be key to manufacturing industry resilience
The year ahead will vary for manufacturers depending on where they have felt the greatest impact from the pandemic. For some, it will focus on rebuilding lost revenue streams; for others it could require recalibrating supply networks to serve different market demands. But for all manufacturers, it should include a commitment to increasing agility in operations. By continuing to invest in digital initiatives across their production process and supply network, manufacturers can respond to the disruptions caused by the pandemic and build resilience that can enable them to thrive.
Manufacturing industry leaders can start by identifying use cases that solve for specific challenges on which the pandemic has cast a spotlight, such as fluctuating end-market demand. Manufacturers should set goals for data capture and analysis across the global manufacturing footprint, as this step alone is a key to identifying breakpoints and opportunities for improvement. And finally, manufacturers should consider how digital twins (of products, processes, and/or production environments) may hold the key to ensuring that manufacturing thrives through the next disruptive event. Even after a year like 2020, it could be right around the corner.
Energy and industrials trends in 2021
Our industry outlook collection, covering oil, gas, and chemicals; power, utilities, and renewables; and industrial products and construction, evaluates sector landscapes to help executives better plan for success and unforeseen challenges.
In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.