Companies in this industry manufacture a wide variety of goods; major product groups include food and beverages, chemicals, machinery, transportation equipment, and computers and electronics. Major companies include Boeing, Caterpillar, DuPont, Ford, GE, GM, HP, IBM, Pfizer, Procter & Gamble, and Tyson Foods (all based in the US); Nestlé (Switzerland), Sanofi (France), Siemens (Germany), and Toyota Motor (Japan).
The global manufacturing sector generates about $12 trillion in annual revenue, according to the UN. Top manufacturing countries include China, the US, Japan, Germany, South Korea, India, Italy, France, and the UK. Leading exporting countries include China, the US, Germany, the UK, Japan, France, the Netherlands, and South Korea. Growth drivers include rapid industrialization in the developing world, along with the use of technology to improve products and supply chains.
The US manufacturing sector consists of about 256,000 companies with combined annual sales of about $5.4 trillion.
Globalization has opened new markets and opportunities for manufacturers but has also created new challenges, including how to manage far-flung supply chains and distribution channels. Manufacturers have turned to digitalization to improve efficiency across every area of operations, including product development, design, production, distribution, and marketing. However, implementing a successful digital transformation strategy -- including the leveraging of internet of things (IoT) technology and big data -- requires careful planning and significant investment.
Demand ultimately depends on consumer spending. The profitability of individual companies depends on efficient production and distribution. Large companies often have large economies of scale in purchasing, production, and marketing. Small companies can compete effectively by producing specialized products. The US manufacturing sector is fragmented: the largest 50 companies account for less than half of overall sales.
Many US exports are goods with high technology content: motor vehicles and parts, semiconductors, computers, drugs, and agricultural and construction equipment. Leading export markets include Canada, Mexico, and China. A large portion of exports are components shipped to Canadian and Mexican factories for eventual re-entry to the US as finished products. Imports of manufactured goods to the US come primarily from China, Mexico, Canada, Japan, and Germany.
Increasing Automation - Automating production is becoming the dominant means for reducing labor costs as wages in the developing world have increased, particularly in China. As low-wage production centers become rarer, companies that invest in automation can gain an edge over competitors.
Developing a Digital Transformation Strategy - Whether automating production, streamlining supply chains, developing marketing campaigns, or building connectivity into products, manufacturers must develop comprehensive strategies that leverage digital technology to increase competitiveness.
Focusing on Value-Added Products - Industry watchers expect many manufacturers to shift to a quality-over-quantity mindset in response to the rising numbers of middle-class consumers in the developing world. As consumers' incomes increase, they make up-market purchasing choices for everything from food to automobiles.
Products, Operations & Technology
Transportation equipment (automobiles, planes, and railroad equipment) accounts for about 18% of US manufacturing revenues; food, beverages, and tobacco
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms