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Manufacturers Try to Keep up with Surging Demand

Manufacturers Try to Keep up with Surging Demand

Two months ago President Biden signed an executive order implementing a 100-day review of supply chains for critical goods. 

President Biden has continued expressing that it’s time for a “once in a generation investment” in infrastructure and manufacturing jobs.  “China and the rest of the world is not waiting, and there’s no reason why Americans should wait,” explained the president at a meeting with business executives from major companies. 

As America steps up its game, manufacturing could drive economic recovery in the U.S. But growing revenues don’t always translate to bigger ad spend. Which brands are currently the biggest opportunities?

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Manufacturing is coming out from the pandemic stronger

Many things changed in the manufacturing industry due to the pandemic: a push for new digital investments, new visions for how factories and back-offices could work, and perhaps more importantly, a realization of how important and vulnerable supply chains are in crises. 

“We are going to survive this pandemic. Manufacturing is going to come out of it stronger,” said Adam Aguzzi, vice president of manufacturing at consulting company Ceridian. “But it’s kind of opened our eyes that there could be a future crisis that affects the supply chain, how people work, how we communicate together, and how we spend time together.”

According to the 2021 State of Manufacturing Report from Fictiv, 94% of respondents said they were concerned about their current supply chains and 92% expressed that their supply chains behaved as barriers to new product innovation.

In response, manufacturing companies are investing in long-term digital solutions. “Looking ahead, industry leaders are nearly unanimous in their expectations that those digital investments will help them build faster, greener, and more resilient supply chains,” said Fictiv CEO Dave Evans.

Recovery’s already on its way

In Europe, the push for more localized supply chains, with stronger and denser networks, has already begun. 

French company ALL Circuits and German company Katek Group are doing their part in expanding Europe’s manufacturing strength through new contracts and strategic acquisitions. ALL Circuits’ President and CEO Bruno Racault said that the two main goals of localizing manufacturing in Europe are to decrease risk of disruption and to increase the speed to market.

U.S. production is also on the rise. After facing setbacks in February due to severe winter weather, March saw better figures. U.S. industrial production rose 1.4%.

Growth is distributed unevenly across sectors. The cars and electronics industry is stunted by the shortage of chips. But other companies—like precision metal part maker MRS Machining— say they can’t find enough employees to keep up with the demand. 

“I’ve turned down a million dollars’ worth of work in the last two week,” the owner Matt Guse, told The New York Times. “Doing that, it’s hard to go to bed at night… I have open capacity, but I need more people.”

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For many manufacturing companies, halting production last year was easier (though not more enjoyable) than meeting the current increase in demand. Ramping up production takes sturdy supply chains, employees, and ability to handle complicated logistics quickly. 

With their attention focused on responding to surging demand, manufacturers aren’t heavily focused on advertising. Some are struggling to keep up with the business they already have and aren’t in a place to attract more. 

Manufacturing spend in the B2B space is down 28% in the first quarter of 2021 YoY. There were 794 brands spending $6mm in 2021 compared to 943 advertisers spending $8.4mm in 2020. This means that 16% fewer advertisers are marketing their business in the B2B manufacturing space.

With the manufacturing industry doing so well, this low spend may be a case where supply cannot keep up with demand. Companies have likely reduced their advertising spend in order to keep up with projects they currently have.

Not all brands are holding back though. 

Brands who spent over $100k in the first quarter of 2021 include: 

  • CW Brabender Instruments
  • Physik Instrumente
  • PBC Linear
  • Greenheck Fan Corporation
  • Champion Fiberglass
  • Mana Products.

But they represent a small part of the pie. Spend from these brands account for 10% of all B2B manufacturing spend in Q1 2021.

As companies find new employees, receive necessary supplies, and enjoy better weather, they will be able to meet surging demand. And when this happens, we predict we’ll see these advertising numbers increase. We’ll keep you updated when new opportunities make themselves clear in the data.

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