from hindsight to foresight: reorienting manufacturing to ...€¦ · from hindsight to foresight...

7/15/2020

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From Hindsight to Foresight: Reorienting Manufacturing to Return to Growth

July 15, 2020

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Roadmap

F R O M H I N D S I G H T T O F O R E S I G H T

2020 Hindsight

Industry Resilience Outlook Q&A

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2020Hindsight

Industry Resilience Outlook

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JANUARY: TRAVEL RESTICTIONS SPIKEQ: Is your company restricting employee travel to any countries in Asia in light of the coronavirus outbreak?

China only73%

China and other

countries16%

Not restricting travel 8%

Don't know3%

n=73 manufacturing executives responding to an online survey in mid-January. 4


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Yes90%

No7%

Unsure3% Yes, at one

facility14%

Yes, in multiple facilities

45%

No41%

MARCH: FACILITY DEEP CLEANING WIDESPREADQ: Has your company conducting deep cleaning in any of its facilities in response to the COVID-19 outbreak to date?

n=29 MAPI executives responding to an online survey in March.

Q: Does your company have policy and procedures in place for “deep cleaning” when an employee has been exposed to or tested positive for COVID-19 in a facility?

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Note: The CDC recommends use of a labeled hospital-grade disinfectant to mitigate pathogens such as coronavirus. Industrial “deep cleaning” can include wiping down high-touch surfaces with sprays and disinfectants as well as more aggressive steps, such as foggers to spray chlorine disinfectant


APRIL: MANAGING OPERATIONAL COSTS

n=35 finance executives responding to an online survey in April.

Q: For each of the following operational costs, what action is your company taking or considering at this time?

77%

48%

40%

26%

23%

23%

20%

14%

9%

20%

40%

48%

46%

65%

36%

14%

43%

14%

3%

9%

14%

6%

23%

14%

14%

26%

3%

3%

14%

6%

9%

26%

20%

51%

9%

9%

26%

9%

T&E spend

Non-business expenditures

Consulting/contractor spend

Technology upgrades

CapEx investments

Marketing spend

Real estate costs

Contracts with service providers

Payments to suppliers

Cancel/ Freezing Reducing Currently considering action Not considering at this time N/A

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83%40%

37%34%34%

26%20%

18%17%

14%6%

14%31%

49%32%

40%40%

43%44%

29%40%

31%

3%29%

14%34%

26%34%

31%35%

51%46%

63%

6%3%3%

Freeze any hiringRequire use of vacation during shutdown

FurloughsSalary cuts for senior executives

Reduce work hoursLayoffs

Offer voluntary flex-time to reduce working hoursReduction in force (RIF)

Rescind new hire/intern offersSalary cuts for all employees

Voluntary separation agreements

Implementing Considering Not considering at this time N/A

MANAGING EMPLOYMENT COSTQ: For each of the following employment tactics, what action is your company taking or considering at this time?

7n=35 finance executives responding to an online survey in April.


LIQUIDITY CONCERNS ECLIPSE OUTLOOKQ: What information did your company provide as part of its most recent earnings call? (Q1)

93%79%

72%72%

69%45%

34%34%34%

31%28%

17%10%

3%

COVID-specific management actions (e.g., workforce safety)Detailed liquidity update

Qualitative guidance on next quarter performancePress release(s)

Business resilienceAdapting the business model for changing business conditions

Pre-announced results (e.g., sent slides prior call)Assumptions on different outlooks (e.g., conservative alternatives)

Investment thesisQuantitative guidance on next quarter performance

Qualitative guidance on your company's fiscal yearBusiness strategy for 2+ years out

Environmental, social and governance (ESG) factorsDetailed quantitative full year guidance

8n=29 finance executives responding to an online survey in April.


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2020 Hindsight

Industry Resilience Outlook

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PRODUCING ESSENTIAL MEDICAL EQUIPMENT

• Masks• Face shields• Respirators (including pumps,

metals)• Sanitizers• Gloves

Q: What critical equipment or components is your company producing for the medical industry to respond to the COVID-19 pandemic?

• HVAC systems for hospitals• Semiconductor components to aid in virus

detection• Coils for equipment to produce COVID-19 test kits• Cooling modules for medical transportation.• Generators, power equipment, electrical

components.

Sample Response

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MANAGING SUPPLY CHAIN UNDER PRESSURE

n=45 purchasing and logistics executives participating in an online survey in late-April

Q: What are the most significant challenges your company is facing with its supply chain right now?

62%51%

44%42%

36%36%

33%29%

22%20%

11%7%

9%

Single-source supplier for key commodity or componentIdentifying stressed suppliers (e.g., locked-down/closed)

Slump in demandLogistics backlog/capacity

Identifying alternative suppliersProtocols for extended shut down

Force majeure declarationsOn-time delivery

Tracking parts, components, and productsSurge in demand

Price surgesSurcharges for supplies

Other

• International air freight Backlog

• Second and third tier suppliers• Surge in US demand with

aggressive marketing• Employee attendance

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MAY: “REOPENING”Q: What is your best estimate for the earliest date by which all of your company’s U.S. facilities will be fully reopened or restored to new “normal” operations? Please consider both corporate offices and factories.

9%12%

28%

20%

5% 5%1% 1%

5%1%

13%

Alreadyfully

operational

May June July August September October December 1H 2021 Untilvaccine isavailable

Too hard tosay

n=75 manufacturing executives responding to an online survey in late-April 12


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3%7%25%

4%

3%2%4%9%

13%

21%

19%31%28%39%

48%44%41%

25% 81%69%66%59%

48%47%39%25%

Business travelrestrictions

Safetycommunications

to employees

Telework policyCleaning anddisinfectingprotocols

Use of personalprotective

equipment andface coverings

Social distancingScreeningprotocols (e.g.,temperature

checks)

Testingrequirements for

COVID-19

Not applicable Not at all confident Not very confident Confident Very confident

CONFIDENT, BUT NOT ON TESTINGQ: With current policies and resourcing in place at your company right now, how confident are you that all of your company’s U.S. facilities are prepared to execute effectively on the following upon reopening?

n=75 manufacturing executives participating in an online survey in late-April. 13


44%39%

37%33%

28%27%

19%19%19%

9%3%

1%1%

8%

Uncertainty of COVID-19 spread (e.g., second wave)

Financial stability of end customers

Employee willingness to return to work (e.g., safety concerns)

Ability to source PPE and other medical supplies (e.g., masks, thermometers)

Employee ability to return to work (e.g., illness, child care, public transportation)

Supplier capacity (e.g., disruption, financial instability)

Coordination of workforce reentry (e.g., cadence and phases)

Compliance with all local and federal regulations

Ability to source materials to run facilities and offices (e.g., hand sanitizer, paper products)

Implementations of employee safety standards (e.g., screening)

Consistency in internal guidelines across regions and localities

Union concerns

Leadership consensus on policy or procedures for reopening

Other

COVID-19

TOP CHALLENGESQ: What are your company’s top three challenges to reopening or fully restoring operations?

n=75 manufacturing executives responding to an online survey in late-April.

Demand or SupplyWorkforce

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AND SURGING CYBER THREATSQ: Overall, how has the number of cybersecurity threats at your company changed in the last quarter?

Q: What has been the change in threats in the last quarter?

n=35 information systems management executives responding to an online poll April 22 - May 6.

Increased71%

Decreased3%

No change26%

8%

13%

17%

8%

17%

4%

4%

4%

4%

17%

42%

58%

54%

50%

75%

56%

53%

33%

21%

25%

42%

8%

40%

26%

13%

8%

Phishing

Spear Phishing

Malware

Ransomware

Spyware

IP Spoofing

Denial-of-Service

NA Decrease No change Increase Significant increase

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2020 Hindsight

Industry Resiliency Outlook

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MANUFACTURING OUTPUT AT STAKE IN ELECTIONQ: To what extent do you agree/disagree with the following about the manufacturing industry in June 2021?

8%

3%

3%

18%

8%

20%

53%

54%

28%

5%

The result of the U.S. presidential election will affectmanufacturing output

M&A activity will accelerate consolidation in industrialmanufacturing

Strongly disagree Disagree somewhat Neither agree nor disagree Agree somewhat Strongly agree

n = 40 CEOs of global manufacturing companies participating in an online survey, June 18 – June 30. 17


3%

33%

10%

29%

44%

25%

8%

5%

13%

32%

18%

47%

28%

5%

Aggregate demand will return to pre-recession levels ifand only if a vaccine for COVID-19 is readily available

U.S. GDP will be near its pre-recession level fromJanuary 2020

U.S. unemployment will be below 9%


DEMAND ONLY RECOVERS WITH VACCINE

n = 40 CEOs of global manufacturing companies participating in an online survey, June 18 – June 30.

Q: To what extent do you agree/disagree with the following about the state of the economy by June 2021?

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13%

5%

32%

25%

10%

25%

27%

50%

30%

20%

35%

13%

15%

Overall, annualized investment in smart factoryinitiatives will be rising

Scarcity of digital skills in our existing workforce willslow our digital transformation

Services will comprise a larger share of our totalannual revenue


SMART MANUFACTURING MOMENTUMQ: To what extent do you agree or disagree with your company’s business model by June 2021?



DIGITAL INNOVATION TO DRIVE SALESQ: To what extent do you agree or disagree with your company’s business model by June 2021?

8%

20%

20%

35%

8%

25%

44%

20%

20%Digital innovation in distribution will drive a larger shareof our total sales

Inside sales staff headcount will increase by at least 25%




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10%

10%

18%

36%

20%

25%

8%

18%

15%

43%

34%

34%

3%

18%

8%

Air travel for business will return to at least 75% ofpre-pandemic levels

At least 25% of salaried professionals will workremote on a typical day

Our corporate real estate footprint will shrinkdramatically


WORK ENVIRONMENT STILL IN FLUXQ: To what extent do you agree/disagree with the following about your company’s workforce in June 2021?

n=40 CEOs of global manufacturing companies participating in an online survey, June 18 – June 30. 21


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Q&A23

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Thank you!

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from hindsight to foresight: reorienting manufacturing to ...€¦ · from hindsight to foresight...

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