2023 manufacturing
industry outlook Contents
Manufacturing growth amid uncertainty3
Trends to watch
1. Technology
Investing in advanced technologies to help mitigate risk 4
2. Talent
Implementing a broad range of talent management
strategies to reduce voluntary exits 5
3. Supply chain
Relying on time-tested mitigation strategies with
enhanced tactics to achieve supply assurance 6
4. Smart factory
Taking a holistic approach to smart factory
initiatives to unlock new horizons 7
5. Sustainability
Focusing on corporate social responsibility 8
The road ahead: Industry poised for growth despite anticipated challenges9
Let’s talk 10
About the Deloitte survey
To understand the outlook and perspectives of organizations across the manufacturing industry, Deloitte fielded a survey of
over 100 US executives and other senior leaders in August 2022. The survey captured insights from respondents in nine specific
industry segments: industrial and commercial equipment and machinery; electrical equipment, appliance, and component
manufacturing; construction products and equipment; aerospace and defense manufacturing; automotive and transportation
equipment; food and beverage manufacturing; heavy equipment; consumer and electronic product manufacturing; and chemicals
and specialty materials manufacturing.
2023 manufacturing industry outlook 2Manufacturing growth amid uncertainty
US manufacturing has demonstrated continued strength in 2022, building on the momentum it
gained emerging from the pandemic, and surpassing expectations from the prior two years.1 Policy
initiatives such as the Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS
Act) and Inflation Reduction Act (IRA) have the potential to help sustain recovery in the manufacturing
industry. Looking ahead to 2023, Deloitte projections based on Oxford Economics’ Global Economic
Model anticipate 2.5% growth in GDP in manufacturing.2
While overall demand and production capacity have hit recent highs, there are indications that the
near-term outlook may not be as bright. The industry is currently experiencing concerns related
to inflation and economic uncertainty. In addition, manufacturers continue to grapple with talent
challenges that may limit the industry’s growth momentum. Even though employment levels now
stand higher than in 2008,3 the industry remains significantly short of skilled workers.4 Moreover,
supply chain issues, including sourcing bottlenecks, global logistics backlogs, cost pressures, and
cyberattacks, will likely remain critical challenges in 2023. As highlighted in the recent National
Association of Manufacturers (NAM) survey, these disrupters have affected manufacturers’ optimism
and business confidence, pulling the second-quarter Manufacturing Outlook Index to 55, down by 4.2
points since first-quarter 2022.5
Going forward, as leaders look beyond disruption and revamping their approach, they should consider
five important trends for manufacturing playbooks in the year ahead: managing uncertainty; tackling
workforce shortages; driving supply chain resiliency; scaling smart factory initiatives to the metaverse;
and developing sustainability.
2023 manufacturing industry outlook 3 1
Technology
Investing in advanced technologies to help mitigate risk
Manufacturers have increased their digital investment over the past few years and accelerated the adoption of emerging technologies.6
Companies with higher digital maturity have shown greater resilience, as did those that accelerated digitalization during the pandemic.7
For example, they were able to pivot faster than manufacturers with limited digital capabilities.8 Similarly, companies with higher digital
implementation tend to have increased supply chain visibility and are better able to adapt to supply chain challenges.9 Continued
investments in advanced manufacturing technologies can help develop the required agility.
The high level of uncertainty is expected to continue over the next 12 to 18 months, and manufacturers’ digital strategies over this period
are likely to be based on many of the following dynamics (figure 1):
o Maintain momentum: Investments in the right technologies can help manufacturers pivot quickly. For example, enhanced data and
analytics capabilities can improve forecasting. Additionally, it could also accelerate the value mapping of suppliers and raw materials
along with the impact of a shortage. This advanced analysis can expedite the implementation of preventive measures during uncertain
periods.
o Protect long-term profitability: Implementing digital capabilities across the value chain can help secure profitability, and
manufacturers have multiple levers to engage when it comes to digital sophistication. The right mix of technology adoption that
strengthens the core (process automation, data analytics) while also pushing the edges can improve efficiency.
o Broaden advanced manufacturing capabilities: Robotics and automation can enhance efficiency, whereas artificial intelligence
and machine learning capabilities can provide the required edge. Increased automation is likely to drive productivity but also lead to
changes in the workforce composition in the industry. For example, some manufacturers have accelerated warehouse automation in
response to pandemic-related labor shortages.10
Figure 1. Surveyed manufacturers plan to focus on a range of technologies to increase operational efficiencies over next 12
months
Robotics and automation62%
Data analytics 60%
Internet of Things (loT) platform 39%
Additive manufacturing33%
Cloud computing32%
Artificial intelligence/machine learning/cognitive computing 26%
Advanced materials 23%
Digital twin16%
5G connectivity 15%
Augmented/virtual reality12%
High-performance computing 11%
Edge computing 9%
Quantum technology 5%
Blockchain 4%
Source: 2023 Deloitte manufacturing outlook survey.
2023 manufacturing industry outlook 4 2
Talent
Implementing a broad range of talent management strategies to reduce
voluntary exits
Addressing the tight labor market and workforce churn amid shifting talent models is expected to remain a top priority for most
manufacturers in 2023. Despite a record level of new hires, job openings in the industry are still hovering near all-time highs at 800,000.11
Additionally, voluntary separations continue to outnumber layoffs and discharges, indicating substantial workforce churn. 12 This prevailing
workforce shortage, elevated by supply chain limitations, is reducing operational efficiency and margins. 13 Manufacturers are pursuing
several approaches to strengthen their talent retention strategy (figure 2):
o Pay increases: Talent scarcity is compelling more manufacturers to consider raising wages. Although the industry has historically had
a higher baseline wage for production workers, competing industries such as warehousing and retail are increasing wages more quickly
than manufacturers.14
o Upskilling and reskilling: As the use of digital technologies proliferates across the manufacturing sector, the workforce increasingly
needs advanced technical and digital skills. However, skilled workers are in short supply in the manufacturing industry. Manufacturers
are likely to emphasize reskilling strategies, including continuous training to upskill the workforce, investment in startups to access new
technology and talent, and collaboration with academic ecosystems to access digital skills.
o DEI strategy: The industry is focusing on diversity, equity, and inclusion (DEI) to attract more women and racially and ethnically diverse
groups to the workforce. Women currently account for less than one-third of the total manufacturing workforce,