Our predictions for manufacturing in 2021
Those of you who recognise the names Scotty, LaForge and O’Brien will immediately identify them as the overworked but trusty engineers of the Star Trek franchise. You might also recall that whilst Scotty spent most of his time in the belly of the Enterprise desperately trying to put out fires and push steaming tubes back into polystyrene blocks, the later characters spent their time on the bridge, where all the information was available to them in one place. How does this relate to where we are headed in 2021? we hear you ask. We will come to the point about centralised digitalization in a while, but on a more basic level the recent rate of technological acceleration in our engineering connectivity already makes television programmes set centuries in the future look outdated. Sit back and allow us to take you through our stellar predictions for the coming year.
The money bit
The first thing to say on the financials is that most of the reports out in general circulation have an agenda. And who are we to argue with that? The UK engineering industry wants to see a ramp up in production and spend; 2020 was a tough year for manufacturing services and we’re all looking for a light at the end of the tunnel. But what are those in the know really predicting? That 2021 will be a year of two halves; the first six months will remain tough until the roll out of the COVID vaccine programme is well underway. However, by the end of 2021 the global economy should be back to pre-pandemic levels of output. According to Deloitte’s Manufacturing Industry Output Report, the manufacturing economy may take a little longer to recover, with the current trajectory of the decline slowing but not yet showing an upward trend, and order levels still sitting below those of 2019. Having said that, feedback from many British engineering business owners is that they have a positive outlook for the year ahead with demand surging and supply chain disruptions creating a manufacturing industry which is more determined than ever before to show strength and resilience. And that view is certainly repeated across our own customer base.
The supply chain revolution
Recent decades have seen the demand for cost-cutting and efficiencies lead to the trend for a reduced supply chain and the globalisation of manufacturing, particularly among OEMs. However, a study by McKinsey shows that Covid rendered those businesses immobile and unresponsive, leading them to rethink their approach to procurement. According to Bettina Büchel, Professor of Strategy and Organization at IMD, was quoted in their recent article about the localisation of supply chains as saying that change to localisation was already underway; as with many other facets of our lives, Covid has simply accelerated this change.
McKinsey’s study tells us that creating resilience within supply chains will be a key focus for the coming year. Changes are likely to include dual sourcing of materials, increased stock levels and a shift away from the globalisation of manufacturing; great news for British manufacturing which has long suffered the effects of offshoring. Localisation of a supply chain, also known as ‘nearshoring’, does carry the risk of increased costs and therefore the elevation of consumer prices, so it is likely that components of assemblies will continue to be manufactured overseas but with localised alternatives. Platforms like Geomiq provide the best of both worlds, allowing you to use a global network of suppliers whilst only dealing directly with a local business.
The benefits of a UK-based engineering supply are clear: improved control of quality of services such as CNC machining and sheet metal, leading to increased customer satisfaction and better relationships between OEMs and SMEs. Similarly, ensuring you have a local supplier of fast-turnaround parts made through 3D printing and rapid prototyping allows for phenomenal levels of agility and the ability to react to sudden or increased demand.
Geomiq’s Co-founder and CCO William Hoyer Millar had this to say about the change in supply chain philosophy:
Brexit is further accelerating the significant shift to Glocalisation as businesses focus on balancing localised and globalised supply chain options in order to stay competitive. A once in a generational opportunity for a digitally enabled UK Manufacturing Industry and technology solutions such as Geomiq.
Industries to look out for
Renewables: with younger generations and government policies driving demands for sustainability, investors are looking to renewables industries for the chance to reap returns.
Oil & Gas: in stark contrast to green energy growth, after the massive fall in global oil demand in April the industry has recovered well but is still showing a loss and Deloitte predicts that the sector is unlikely to recover to pre-Covid levels.
Aerospace: once the vaccine programme is fully rolled out, travel and tourism is expected to springboard. However, for those in aerospace manufacturing, the downturn in 2020 will have a lasting effect. The industry is predicting that it will be 3-5 years before the key players are back on track with existing build programs, and new airframe builds won’t be underway until 2030.
Automotive & EV: the UK motor industry is expected to show a decline, with Covid impacting both manufacturing output and consumer confidence. However, there is a big push by the motor engineering industry to scale up EV battery production in the UK and focus on development into what is seen as a key technology of the future.
How to get ahead
Industry 4.0 has been a buzzword in manufacturing services for half a decade now, and most of us have made moves toward integrating disparate systems for better information and therefore improved decision-making. What the past year has clearly demonstrated, however, is that this data needs to be available from anywhere, all the time. And that means working in the cloud, not on local servers or local machines. The key focus for manufacturing companies in 2021 will be on digital investment and use of the cloud to allow for remote, real-time reporting and data-driven decision making in a world where responsiveness is critical to getting ahead of the competition.
This continued digitalization means that whilst employment levels may continue to decline in Q1, we will see the up-skilling of existing and incoming workforces, enabling staff at all levels to work within the cloud for centralised but mobile control – which, in turn, should lead to a stronger Q4 and spill over into 2022.
Hands up, we shoe-horned in a bit of classic cult television as a segue to a piece about our predictions for 2021 mostly just for the love of all things geeky. But it does make a good point; with the way things are headed, not only would there have been no need for a centralised bridge on the Enterprise, chances are, many of the crew could have stayed in their home office in their PJs and still managed to do a fair amount of their work (perhaps excluding first contact).