As these industries navigate complexities and embrace opportunities, the focus on innovation, sustainability, and workforce resilience will shape their trajectories in 2024 and beyond.Industrial manufacturing and automotive sector CEOs are steering through a volatile business environment with cautious optimism, according to the KPMG 2024 Industrial Manufacturing and Automotive CEO Outlook. The report, based on insights from 240 industry leaders, highlights confidence in global economic growth, workforce dynamics, and the transformative impact of generative AI.
An impressive 74% of respondents expressed confidence in global economic growth prospects. However, geopolitical tensions, including conflicts in the Middle East, remain a critical concern.
Jonathon Gill, Global Head of Industrial Manufacturing at KPMG International, stated, “Economic conditions have stabilized, and costs have reduced. Sustained earnings growth is in CEOs’ sights, but geopolitical uncertainties could significantly impact future trading conditions.”
Workforce challenges and upskilling
CEOs are keenly aware of workforce dynamics. Automotive leaders identified employee retirements and a lack of skilled replacements as the top concern (30%). Meanwhile, 33% of industrial manufacturing CEOs pointed to the challenges of knowledge transfer within organizations.
Generative AI is seen as a transformative force, with over 70% of respondents asserting it will necessitate upskilling and resource redeployment rather than lead to widespread job losses.
Consolidation and partnerships to drive the future
A striking 95% of CEOs predict a full return to office within three years, reflecting a renewed focus on collaboration and productivity. On sustainability, 74% of industrial manufacturing CEOs cited the complexity of decarbonising supply chains as a major barrier to achieving net zero, compared to only 38% of automotive CEOs.
The automotive sector is poised for consolidation and strategic acquisitions. Rohan Rao, Partner, Automotive and Lead – Electric Mobility, KPMG in India, said, “A good amount of consolidation and deals are expected in the automotive industry over the coming years.”
“This is not only because of some overcapacity that we are witnessing in the market but it’s also a result of original equipment manufacturers (OEMs) feeling the need to acquire new capabilities in areas such as microchips and batteries for EVs. This could spawn growing numbers. of partnerships and JVs as well as outright acquisitions.”
Dr. Andreas Ries, Global Head of Automotive, KPMG International, said, “I expect to see consolidation and deals in the automotive industry over the coming years, because of some overcapacity in the market but also because OEMs need to acquire new capabilities in areas such as micro chips and batteries. This is likely to spawn growing numbers of partnerships and JVs as well as outright acquisitions.
Optimism with caution
Jeffry Jacob, Partner, and Head (automotive), KPMG in India, said, “A sense of optimism laced with a bit of caution is how I would sum up the mood amongst industrial manufacturing and automotive CEOs. That said, economic conditions have stabilized with costs having reduced which means sustained earnings growth is something we could see.”
“Geopolitical Uncertainties are a key concern. How that plays out — including impacts on oil prices — could have a significant impact on future trading scenarios,” he added.
As these industries navigate complexities and embrace opportunities, the focus on innovation, sustainability, and workforce resilience will shape their trajectories in 2024 and beyond.
Leave a Reply