Manufacturing spotlight series: Preparing for the future

The manufacturing industry is undergoing radical change as business evolves from traditional operations to “smart,” interconnected, data-driven processes and facilities. As manufacturing evolves, so do risks.

In this special manufacturing series, Allianz reports on the top risk challenges faced by small-to medium sized (SME) manufacturers. Whether it is the ability to resume operations after a natural catastrophe, cyber event, or changing dynamics of the workplace, businesses that prepare will advance their opportunity for success.

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Nearly 300 years after the first industrial revolution, manufacturing is still a key sector in supporting a robust and sustainable economy, driven by the success of SME manufacturing companies. China leads the world as the largest manufacturing country, followed by the US, Japan, Germany and South Korea. According to the World Bank, cyclical recovery is being experienced by businesses around the world and it sees that recovery as promising for investment, manufacturing and trade1.
In the US, roughly 12.75 million people are employed in manufacturing and the sector contributes nearly 12% of GDP2. Globally, according to the United Nations, manufacturing contributed 17% of all economic value added in 2016 and has changed little since then. Manufacturing is more significant to the US GDP than in the UK, France, and Canada, but much less important than in Japan, Indonesia, Germany, China, and South Korea. For example, the share of total economic output in China declined from 32% in 2010 to 27% in 2016, while it remained relatively stable in the US3.

The majority of manufacturers are considered small (i.e., have fewer than 500 employees) and of those firms, over three-quarters have fewer than 20 employees4.

In a global survey by Leading Edge Alliance, 81% of manufacturing companies, including smaller companies, reported they expect revenues to grow in 20185. The survey also revealed there is “significant optimism” among manufacturers for their business, industry and economy. One reason for this success is the ever-evolving nature of manufacturing – old technologies fade and new ones emerge.

SOURCES

1. World Bank, Global Outlook, January, 2018

2. National Association of Manufacturers, Top 20 Facts About Manufacturing, 2018

3. Congressional Research Service, US Manufacturing in International Perspective, February 21, 2018

4. National Association of Manufacturers, Top 20 Facts About Manufacturing, 2018

5. Leading Edge Alliance, 2018 National Manufacturing Outlook and Insights, 2018

The AGCS “Manufacturing Spotlight” series presents topics of interest to SME manufacturers and includes trends, expert advice, risk mitigation and insurance solutions.
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