A renewed focus on cost savings and customer relationships shaped the decisions made by advanced manufacturing (AM) companies during 3Q20. With revenues at or below 3Q19 levels for many, companies streamlined operations through cost control and divestitures. Understanding customer needs has become more critical than ever as manufacturers create differentiated solutions that support changing business models in a transforming industrial environment.
The 3Q20 Advanced Manufacturing Quarterly (pdf) analyzes the top themes (market forces and company responses) discussed by the leaders of 32 AM sector companies (including those from the aerospace and defense (A&D), industrial products (IP) and chemical subsectors) during the public earnings calls with analysts in October and November 2020. This update tracks the movement of these themes from quarter to quarter to provide a perspective on shifts in the AM landscape.
Themes that stood out, among the top 10, include the following:
- Business reorganization or restructuring rose to second position this quarter. Cost reduction, now included in this theme under our updated framework, drove streamlining activities at many companies. Divestitures allowed companies to better focus resources on key growth markets while acquisitions were held to stringent cost savings targets. Digital tools are being deployed more widely to maximize productivity measures such as factory uptime.
- Competitive positioning is new to the list at third position. Product and service quality are becoming more important than ever as manufacturers strive to hold on to market share. Outcome-based pricing models are being offered more frequently to customers, especially those in challenged end markets, such as oil and gas. Acquisitions and joint ventures are enabling companies to bring differentiated products and services to market more quickly.
- Customer acquisition and connectivity, also new to the list, is at sixth position. Manufacturers are investing to understand their customers better. Sales teams are being expanded in growth markets, enabled by new mobile apps with detailed information about customer needs and opportunities. With this knowledge, companies can create and deliver unique solutions that will help their customers not only survive difficult economic conditions, but emerge with stronger and more resilient business models.