MINI PROJECT

REPORT ON
“MANUFACTURING INDUSTRY”

Submitted in partial fulfillment of the award of the degree of

MASTERS OF BUSINESS ADMINISTRATION PROGRAME

Conducted by

Dr. A.P.J. ABDUL KALAM TECHNICAL UNIVERSITY, LUCKNOW

UNDER THE GUIDANCE OF SUBMITTED BY

Dr. Meenal Yadav Sunaina

Head of Department Roll No. 2000590700017
MBA 2nd Sem.

LAL BAHADUR SHASTRI INSTITUTE OF MANAGEMENT &

DEVELOPMENT STUDIES, LUCKNOW

2020-2022
i
 TABLE OF CONTENTS

CHAPTER 1 1-9

1.1 Introduction

1.2 Classification of industries

1.3 Industry Lifecycle

CHAPTER 2 2-34

2.1 Overview of Industry

2.2 Scenario of industry in India

2.3 Analysis of industry
2.4 Issue/ Challenges of industry
2.5 ,Opportunities in the sector in India
2.6 Comparison ofindustry with different Countries

CHAPTER 3 35-38

3.1 PESTEL analysis of industry

3.2 Political
3.3 Economical
3.4 Social

3.5 Technology
3.6 Overview of recent technology
3.7 List of emerging technology in industry
3.8 Ecological
3.9 Legal
CHAPTER 4 39-45

4.1 Future outlook of ndustry in India

CHAPTER 5 46-48

5.1 Findings
CHAPTER 6 49-51

6.1 Suggestions
CHAPTER 7 52-54

7.1 Conclusion
7.2 Bibliography
 ACKNOWLEDGEMENT

Every project no matter how big or small is successful because of the efforts of the wonderful
people who always render their precious time, valuable advice or always ready to lend a helping
hand. I, now, acquire this opportunity with much pleasure to express my gratitude to all those
who have helped me through the course of my journey towards this project. I sincerely thank
Dr. A.P.J. ABDUL KALAM TECHNICAL UNIVERSITY, LUCKNOW to have given me the
opportunity to take up the mini project.

I express my gratitude to my college LAL BAHADUR SHASTRI INSTITUTE OF

MANAGEMENT & DEVELOPMENT STUDIES, LUCKNOW for all the valuable learning and
guidance which has guided me throughout the project and helped me to perform my task in the
most incredible manner.

My deepest gratitude towards Dr. Tripti Barthwal, Director, LBSIMDS for arranging mini
project in good schedule, even in this difficult scenario of Covid-19. I am also very thankful to
Dr Meenal Yadav, HOD Department of Management, LBSIMDS for her constant support and
guidance throughout the mini project.

At this juncture, I feel deeply honoured in expressing my sincere thanks to Dr. Meenu Yadav
(Head od Department), my faculty guide for making resources available at the right time and
providing valuable insights leading to the successful completion of the project.

Last but not the least; I would like to thank each and everyone who were a part in contributing to
the progress of my project.

Sunaina
Roll No. 2000590700017
MBA 2nd Sem
CHAPTER-1

1
 1.1 INDUSTRY

Industry, group of productive enterprises or organizations that produce or supply goods, services,
or sources of income. In economics, industries are generally classified as primary, secondary,
tertiary, and quaternary; secondary industries are further classified as heavy and light.

Primary industry

This sector of a nation’s economy includes agriculture, forestry, fishing, mining, quarrying, and
the extraction of minerals. It may be divided into two categories: genetic industry, including the
production of raw materials that may be increased by human intervention in the production
process; and extractive industry, including the production of exhaustible raw materials that
cannot be augmented through cultivation.

The genetic industries include agriculture, forestry, and livestock management and fishing—all
of which are subject to scientific and technological improvement of renewable resources. The
extractive industries include the mining of mineral ores, the quarrying of stone, and the
extraction of mineral fuels.

1
 Primary industry tends to dominate the economies of undeveloped and developing nations,
but as secondary and tertiary industries are developed, its share of the economic output tends to
decrease.

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Now Secondary industry

This sector, also called manufacturing industry, (1) takes the raw materials supplied by primary
industries and processes them into consumer goods, or (2) further processes goods that other
secondary industries have transformed into products, or (3) builds capital goods used to
manufacture consumer and nonconsumer goods. Secondary industry also includes energy-
producing industries (e.g., hydroelectric industries) as well as the construction industry.

Secondary industry may be divided into heavy, or large-scale, and light, or small-scale,
industry. Large-scale industry generally requires heavy capital investment in plants
and machinery, serves a large and diverse market including other manufacturing industries, has a
complex industrial organization and frequently a skilled specialized labour force, and generates a
large volume of output. Examples would include petroleum refining, steel and iron
manufacturing (see metalwork), motor vehicle and heavy machinery
manufacture, cement production, nonferrous metal refining, meat-packing, and hydroelectric
power generation.
Light, or small-scale, industry may be characterized by the nondurability of manufactured
products and a smaller capital investment in plants and equipment, and it may involve
nonstandard products, such as customized or craft work. The labour force may be either low
skilled, as in textile work and clothing manufacture, food processing, and plastics manufacture,
or highly skilled, as in electronics and computer hardware manufacture, precision instrument
manufacture, gemstone cutting, and craft work.

Tertiary industry

This broad sector, also called the service industry, includes industries that, while producing
no tangible goods, provide services or intangible gains or generate wealth. This sector generally
includes both private and government enterprises.

The industries of this sector include, among others, banking, finance, insurance, investment, and
real estate services; wholesale, retail, and resale trade; transportation; professional, consulting,
legal, and personal services; tourism, hotels, restaurants, and entertainment; repair and
maintenance services; and health, social welfare, administrative, police, security, and defense
services.

Quaternary industry
An extension of tertiary industry that is often recognized as its own sector, quaternary industry,
is concerned with information-based or knowledge-oriented products and services. Like the
tertiary sector, it comprises a mixture of private and government endeavours. Industries and
activities in this sector include information systems and information technology (IT); research
and development, including technological development and scientific research; financial and
strategic analysis and consulting; media and communications technologies and services;
and education, including teaching and educational technologies and services.
Why Manufacturing Industries Matter

Manufacturing industries matter for several reasons. Historically, the United States has been one
of the world’s largest – if not the largest – manufacturer of goods. The manufacturing and
exporting of goods help keep money flowing into the U.S. economy. Economies thrive when
they have strong manufacturing industries. Further, when manufacturing is thriving, innovation
soars. Manufacturers produce roughly 75 percent of all privately funded research and
development in the country. Manufacturing is a huge propeller of innovation and forward
thinking. Today, the U.S. remains highly competitive in several manufacturing industries, chief
among them automobiles, aerospace and chemicals.

Another reason manufacturing industries matter is because factory jobs tend to be middle-class
jobs that pay above-average wages. Manufacturing is one of the few industries where a worker
without an advanced degree can earn a living wage. Because it is one of the country’s largest
employment sectors, a lot of families rely on manufacturing industries to put food on the table.
The industrial sector also supports many secondary industries. Manufacturing supports roughly
1-in-6 service jobs. Even manufacturing companies need lawyers, accountants, doctors, financial
advisors and other service professionals.

Manufacturing industries also spur investments and encourage the building of infrastructure.
There are few areas of the economy that manufacturing industries don’t touch. Many other
industries contribute directly and indirectly to manufacturing. A few examples are construction,
engineering, printing and transportation, which are all needed to help keep manufacturing afloat.
A new factory can’t be built without an engineer, an architect and a construction crew. Clothing
manufacturers can’t get their products to stores without shipping their products. New products
can’t be developed without research and development teams, engineers and product designers.
Countless companies would cease to exist without manufacturing, as they would have no
products to sell. Ultimately, manufacturing industries are deeply entangled in the world
economy.
 1.2 CLASSIFICATION OF INDUSTRIES

We can classify industries into various types depending on a number of factors. Raw materials,
ownership etc. are some of the factors upon which industries are classified. Let us look at them
in more detail.

On The Basis of Raw Materials

 Industries are divided into two types, on the basis of the raw materials used.
 Agro Based Industries: Cotton, wool, jute, silk textile, rubber, sugar, tea, coffee, etc.
 Mineral Based Industries: Iron and steel, cement, aluminum, petrochemicals, etc.

On The Basis Of Their Role

 Industries are classified into two types based on this distinction.

 Basic or Key Industries: These industries supply their products or raw materials to
manufacture other goods, e.g. iron and steel, copper smelting, aluminium smelting.
 Consumer Industries: These industries produce goods which are directly used by
consumers, e.g. sugar, paper, electronics, soap, etc.

On The Basis of Capital Investment

 Industries are of two types, based on the capital investment.

 Small Scale Industry: If the invested capital is up to Rs. one crore, then the industry is
called a small scale industry.
 Large Scale Industry: If the invested capital is more than Rs. one crore, then the industry
is called a large-scale industry.

On The Basis of Ownership

Based on the ownership, industries can be classified into the following four categories:

 Public Sector: Government agencies own and operate these industries, e.g. SAIL, BHEL,
ONGC, etc.
 Private Sector: Individuals or a group of individuals own and operate these industries,
e.g. TISCO, Reliance, Mahindra, etc.
  Joint Sector: Government and individuals jointly own these industries, e.g. Oil India
Limited.
 Cooperative Sector: Producers or suppliers of raw materials, workers or both own these
industries. The stakeholders pool the resources. They share the profit or loss
proportionately. AMUL which is milk cooperative is a good example. The sugar industry
in Maharashtra is another example.

1.3 Industry Life Cycle

What Is the Industry Life Cycle?

The industry life cycle refers to the evolution of an industry or business through four stages
based on the business characteristics commonly displayed in each phase. The four phases of an
industry life cycle are the introduction, growth, maturity, and decline stages. Industries are born
when new products are developed, with significant uncertainty regarding market size, product
specifications, and main competitors. Consolidation and failure whittle down an established
industry as it grows, and the remaining competitors minimize expenses as growth slows and
demand eventually wanes.

KEY TAKEAWAYS

 The industry life cycle refers to the evolution of an industry or business based on its
stages of growth and decline.

 The four phases of the industry life cycle are the introduction, growth, maturity, and
decline phases.

 The industry life cycle ends with the decline phase, a period when the industry or
business is unable to sustain growth.

Understanding the Industry Life Cycle

There is no universal definition for the various stages of the industry life cycle, but commonly, it
can be organized into introduction, growth, maturity, and decline. The relative length of each
phase can also vary substantially among industries. The standard model typically deals with
manufactured goods, but today's service economy can function somewhat differently, especially
in the realm of Internet communications technology.

Industry Life Cycle Phases

Introduction Phase

The introduction, or startup, phase involves the development and early marketing of a new
product or service. Innovators often create new businesses to enable the production and
proliferation of the new offering. Information on the products and industry participants are often
limited, so demand tends to be unclear. Consumers of the goods and services need to learn more
about them, while the new providers are still developing and honing the offering. The industry
tends to be highly fragmented in this stage. Participants tend to be unprofitable because expenses
are incurred to develop and market the offering while revenues are still low.

Growth Phase

Consumers in the new industry have come to understand the value of the new offering, and
demand grows rapidly. A handful of important players usually become apparent, and they
compete to establish a share of the new market. Immediate profits usually are not a top priority
as companies spend on research and development or marketing. Business processes are
improved, and geographical expansion is common. Once the new product has demonstrated
viability, larger companies in adjacent industries tend to enter the market through acquisitions or
internal development.

Maturity Phase

The maturity phase begins with a shakeout period, during which growth slows, focus shifts
toward expense reduction, and consolidation occurs. Some firms achieve economies of scale,
hampering the sustainability of smaller competitors. As maturity is achieved, barriers to entry
become higher, and the competitive landscape becomes more clear. Market share, cash flow, and
profitability become the primary goals of the remaining companies now that growth is relatively
less important. Price competition becomes much more relevant as product differentiation
declines with consolidation.
Decline Phase

The decline phase marks the end of an industry's ability to support growth. Obsolescence and
evolving end markets negatively impact demand, leading to declining revenues. This creates
margin pressure, forcing weaker competitors out of the industry. Further consolidation is
common as participants seek synergies and further gains from scale. Decline often signals the
end of viability for the incumbent business model, pushing industry participants into adjacent
markets. The decline phase can be delayed with large-scale product improvements or
repurposing, but these tend to prolong the same process.
CHAPTER-2
 2.1 OVERVIEW OF INDUSTRY

Manufacturing is the process of adding value to raw materials by turning them into products:
electrical goods, vehicles, aircraft, food, beverages, medical supplies, pharmaceuticals, and so
on.

Engineers working in the manufacturing business are responsible for the safe and efficient
planning, management and maintenance of production methods and processes. Typical areas of
work include:

 Research: this involves exploring new concepts or materials for products as well as
making incremental improvements to existing products. Research engineers also try
to find the next big thing that will give their organisation the edge in the market, by
introducing ideas for an improved product or innovating a new, advanced process.

 Design: engineers design products with consideration of what the customer wants and
the specialist processes needed to manufacture them. Increasingly designers must
consider the ‘whole life’ of the product and review how the product will be disposed of at
the end of its life.

 Development: the development process involves taking a product design or prototype

and making it into a manufacturable product. Development engineers consider the scale
of production (volume), availability of materials (and their cost), production safety,
lead times, quality and overall cost.

 Production: production engineers optimise manufacturing processes for safety and

efficiency. It involves managing production teams, maintaining schedules, dealing with
health, safety and environmental (SHE) hazards and troubleshooting production line
issues.

 Quality assurance: manufacturing organisations have strict quality controls and will
adhere to a system. Engineers working in this area design and review quality systems,
instruct and supervise staff and develop and carry out quality assurance tests on
products.

Engineers in manufacturing can also apply their skills in commercial roles such as marketing,
supply chain, operations management, logistics, and sales and after-sales service.

Trends and developments in the UK manufacturing industry

The UK manufacturing business is diverse but shows particular strength in aerospace, high tech
manufacturing, pharmaceuticals, and food and fast moving consumer goods production. Despite
the economic troubles, the UK still has a significant car manufacturing industry – BMW, Honda
and Toyota have high-class manufacturing facilities here. The industry also comprises many
smaller component producers and manufacturing technology organisations. The latter produce
processing equipment, machining technology and tooling for the sector.

UK manufacturing businesses have had to adapt significantly in recent years to compete in the
world market. ‘Low cost centres’ such as Eastern Europe and China, where labour rates are
much lower than in the UK, have challenged manufacturing businesses to improve productivity
and have sparked innovation within the sector. UK manufacturers have to be smart to keep a
competitive edge. On top of the challenges of low-cost competition, UK manufacturers also
contend with strict environmental targets set by the government in line with agreements such
as the Kyoto treaty.

Getting a graduate job in manufacturing engineering

The key engineering disciplines sought by manufacturing employers are mechanical,

manufacturing, electrical, chemical/process, materials, control and instrumentation, and
environmental. However, engineers from other backgrounds may well find good job
opportunities in this sector. In recent years, graduate engineering employers have lamented a
shortage of graduate engineers from manufacturing engineering degrees.

Employers look for graduates who have a strong grounding in their discipline and combine their
technical knowledge with core competences such as good communication skills, teamworking
and problem-solving ability, energy, commercial awareness and an ability to think on their feet.

What to expect from a graduate job in manufacturing

In larger organisations engineering graduates typically join a graduate programme. They may
work in one area, for example production, or, depending on the employer, they may complete
placements in different parts of the business. Some employers have specialist programmes
for functions such as supply chain or operations management.

However you start out, employers will most likely provide you with training and experience that
will help you achieve chartered or incorporated engineer status.

If you start out in a smaller manufacturing company your training may be less structured.
However, smaller organisations can provide fantastic opportunities to gain experience in a range
of manufacturing activities.

Progression will depend on your own ambitions. You may choose to progress on a
technical, management or commercial path.

The highlights of a career in manufacturing

 Manufacturing organisations produce tangible goods so you’ll see the results of

your work.
  This area of engineering presents problems that need practical solutions.

 The manufacturing business provides many opportunities to work in the

more commercial areas of an engineering organisation.

 It’s an increasingly global business and you may find yourself travelling to facilities
all around the world.

The manufacturing industry seeks graduates in...

 aerospace/aeronautical

 automotive

 chemical/process

 control

 electrical

 electronics

 environmental

 instruments

 manufacturing

 materials

 mechanical

 power systems
 2.1 SCENARIO OF INDUSTRY IN INDIA

Manufacturing has emerged as one of the high growth sectors in India. Prime Minister of India,
Mr. Narendra Modi, launched the ‘Make in India’ program to place India on the world map as a
manufacturing hub and give global recognition to the Indian economy. Government aims to
create 100 million new jobs in the sector by 2022.

Market Size

The sector’s Gross Value Added (GVA) at current prices was estimated at US$ 350.27 billion as
per the first advanced estimate of FY21. The IHS Markit India Manufacturing Purchasing
Managers Index (PMI) increased to 57.7 in January 2021 from 56.4 in December 2020. The
manufacturing GVA accounts for 19% of the country's real gross value added.

As per the latest survey, capacity utilisation in India’s manufacturing sector stood at 63.3% in the
second quarter of FY21.

According to the Ministry of Statistics & Programme Implementation, India’s industrial output,
measured by the Index of Industrial Production (IIP), stood at 135.2 in December 2021. In
January 2021, industrial output indices for the mining, manufacturing and electricity sectors
stood at 119.7, 135.1 and 164.2, respectively. Overall merchandise exports stood at US$ 200.80
billion between April 2020 and December 2020.

Investments

With the help of Make in India drive, India is on a path of becoming the hub for hi-tech
manufacturing as global giants such as GE, Siemens, HTC, Toshiba, and Boeing have either set
up or are in process of setting up manufacturing plants in India, attracted by India's market of
more than a billion consumers and an increasing purchasing power.

Cumulative Foreign Direct Investment (FDI) in India’s manufacturing sector reached US$ 91.28
billion between April 2000 and September 2020. In May 2020, the Government of India
increased FDI in defence manufacturing under the automatic route from 49% to 74%.

India has become one of the most attractive destinations for investment in the manufacturing
sector. Some of the major investments and developments in this sector in the recent past are:
  In the first half of FY21, India received funds worth ~US$ 30 billion through foreign
direct investment, a 15% increase over the same period last year.

 On February 16, 2021, Amazon India announced to start manufacturing electronic

products in India, starting first with Amazon Fire TV stick manufacturing. The company
plans to start manufacturing with contract manufacturer Cloud Network Technology, a
subsidiary of Foxconn in Chennai by end-2021.

 In January 2021, Toyota Kirloskar Motor (TKM) signed a Memorandum of

Understanding (MoU) with the Directorate General of Training (DGT), Ministry of Skill
Development and Entrepreneurship, to develop skills among the youth under the Flexi-
MoU Scheme of the government.

 On January 19, 2021, Amazon announced that it has partnered with Startup India,
Sequoia Capital India and Fireside Ventures to initiate an accelerator programme to
support entrepreneurs deliver products to audiences globally. Amazon Global Selling
programme is rapidly improving India's exports and helping create Indian global brands.
More than 800 Indian MSMEs exceeded USD 131,375 (Rs 1 crore) in e-commerce
export sales (under the programme) in 2019.

Government Initiatives

The Government of India has taken several initiatives to promote a healthy environment for the
growth of manufacturing sector in the country. Some of the notable initiatives and developments
are:

The Union Budget 2021-22 is expected to enhance India’s domestic growth in manufacturing,
trade and other sectors. Development of a robust infrastructure, logistics and utility environment
for the manufacturing sector is a primary focus field.

Some of these initiatives are as follows:

 The Mega Investment Textiles Parks (MITRA) scheme to build world-class infrastructure
will enable global industry champions to be created, benefiting from economies of scale
and agglomeration. Seven Textile Parks will be established over three years.
  The government proposed to make significant investments in the construction of modern
fishing harbours and fish landing centres, covering five major fishing harbours in Kochi,
Chennai, Visakhapatnam, Paradip, and Petuaghat, along with a multipurpose Seaweed
Park in Tamil Nadu. These initiatives are expected to improve exports from the textiles
and marine sectors.

 The 'Operation Green' scheme of the Ministry of the Food Processing Industry, which
was limited to onions, potatoes and tomatoes, has been expanded to 22 perishable
products to encourage exports from the agricultural sector. This will facilitate
infrastructure projects for horticulture products.

 The Union Budget 2021-22 allocated funds of Rs. 1,000 crore (US$ 137.16 million) for
the welfare of tea workers, especially women and their children. About 10.75 lakh tea
workers will benefit from this, including 6.23 lakh women workers involved in the large
tea estates of Assam and West Bengal.

2.3 Industry Analysis

Industry analysis is a tool that facilitates a company's understanding of its position relative to
other companies that produce similar products or services. Understanding the forces at work in
the overall industry is an important component of effective strategic planning. Industry analysis
enables small business owners to identify the threats and opportunities facing their businesses,
and to focus their resources on developing unique capabilities that could lead to a competitive
advantage.

"Many small business owners and executives consider themselves at worst victims, and at best
observers of what goes on in their industry. They sometimes fail to perceive that understanding
your industry directly impacts your ability to succeed. Understanding your industry and
anticipating its future trends and directions gives you the knowledge you need to react and
control your portion of that industry," Kenneth J. Cook wrote in his book The AMA Complete
Guide to Strategic Planning for Small Business. "However, your analysis of this is significant
only in a relative sense. Since both you and your competitors are in the same industry, the key is
in finding the differing abilities between you and the competition in dealing with the industry
forces that impact you. If you can identify abilities you have that are superior to competitors, you
can use that ability to establish a competitive advantage."

An industry analysis consists of three major elements: the underlying forces at work in the
industry; the overall attractiveness of the industry; and the critical factors that determine a
company's success within the industry.

Article continues after video.

FEATURED VIDEO

One way in which to compare a particular business with the average of all participants in the
industry is through the use of ratio analysis and comparisons. Ratios are calculated by dividing
one measurable business factor by another, total sales divided by number of employees, for
example. Many of these ratios may be calculated for an entire industry with data available from
many reports and papers published by the U.S. Departments of Commerce and Labor.

By comparing a particular ratio for one company with that of the industry as a whole, a business
owner can learn much about where her business stands in comparison with the industry average.
For example, a small nursing home business can compare its "payroll per employee" ratio with
the average for all residential care operators in the U.S. in order to determine if it is within a
competitive range. If her business's "payroll per employee" figure is higher than the industry
average, she may wish to investigate further. Checking the "employees per establishment" ratio
would be a logical place to look next. If this ratio is lower than the industry average it may
justifying the higher per-employee payroll figure. This sort of comparative analysis is one
important way in which to assess how one's business compares with all others involved in the
same line of work. There are various sources for the industry average ratios, among them is the
industry analysis series published by Thomson Gale as the USA series.

Another premier model for analyzing the structure of industries was developed by Michael E.
Porter in his classic 1980 book Competitive Strategy: Techniques for Analyzing Industries and
Competitors. Porter's model shows that rivalry among firms in industry depends upon five
forces: 1) the potential for new competitors to enter the market; 2) the bargaining power of
buyers; 3) the bargaining power of suppliers; 4) the availability of substitute goods; and 5) the
competitors and nature of competition. These factors are outlined below.

INDUSTRY FORCES

The first step in performing an industry analysis is to assess the impact of Porter's five forces.
"The collective strength of these forces determines the ultimate profit potential in the industry,
where profit potential is measured in terms of long term return on invested capital," Porter stated.
"The goal of competitive strategy for a business unit in an industry is to find a position in the
industry where the company can best defend itself against these competitive forces or can
influence them in its favor." Understanding the underlying forces determining the structure of the
industry can highlight the strengths and weaknesses of a small business, show where strategic
changes can make the greatest difference, and illuminate areas where industry trends may turn
into opportunities or threats.

Ease of Entry

Ease of entry refers to how easy or difficult it is for a new firm to begin competing in the
industry. The ease of entry into an industry is important because it determines the likelihood that
a company will face new competitors. In industries that are easy to enter, sources of competitive
advantage tend to wane quickly. On the other hand, in industries that are difficult to enter,
sources of competitive advantage last longer, and firms also tend to benefit from having a
constant set of competitors.

The ease of entry into an industry depends upon two factors: the reaction of existing competitors
to new entrants; and the barriers to market entry that prevail in the industry. Existing competitors
are most likely to react strongly against new entrants when there is a history of such behavior,
when the competitors have invested substantial resources in the industry, and when the industry
is characterized by slow growth. Some of the major barriers to market entry include economies
of scale, high capital requirements, switching costs for the customer, limited access to the
channels of distribution, a high degree of product differentiation, and restrictive government
policies.
Power of Suppliers

Suppliers can gain bargaining power within an industry through a number of different situations.
For example, suppliers gain power when an industry relies on just a few suppliers, when there
are no substitutes available for the suppliers' product, when there are switching costs associated
with changing suppliers, when each purchaser accounts for just a small portion of the suppliers'
business, and when suppliers have the resources to move forward in the chain of distribution and
take on the role of their customers. Supplier power can affect the relationship between a small
business and its customers by influencing the quality and price of the final product. "All of these
factors combined will affect your ability to compete," Cook noted. "They will impact your ability
to use your supplier relationship to establish competitive advantages with your customers."

Power of Buyers

The reverse situation occurs when bargaining power rests in the hands of buyers. Powerful
buyers can exert pressure on small businesses by demanding lower prices, higher quality, or
additional services, or by playing competitors off one another. The power of buyers tends to
increase when single customers account for large volumes of the business's product, when a
substitutes are available for the product, when the costs associated with switching suppliers are
low, and when buyers possess the resources to move backward in the chain of distribution.

Availability of Substitutes

"All firms in an industry are competing, in a broad sense, with industries producing substitute
products. Substitutes limit the potential returns of an industry by placing a ceiling on the prices
firms in the industry can profitably charge," Porter explained. Product substitution occurs when a
small business's customer comes to believe that a similar product can perform the same function
at a better price. Substitution can be subtle—for example, insurance agents have gradually
moved into the investment field formerly controlled by financial planners—or sudden—for
example, compact disc technology has taken the place of vinyl record albums. The main defense
available against substitution is product differentiation. By forming a deep understanding of the
customer, some companies are able to create demand specifically for their products.
Competitors

"The battle you wage against competitors is one of the strongest industry forces with which you
contend," according to Cook. Competitive battles can take the form of price wars, advertising
campaigns, new product introductions, or expanded service offerings—all of which can reduce
the profitability of firms within an industry. The intensity of competition tends to increase when
an industry is characterized by a number of well-balanced competitors, a slow rate of industry
growth, high fixed costs, or a lack of differentiation between products. Another factor increasing
the intensity of competition is high exit barriers—including specialized assets, emotional ties,
government or social restrictions, strategic interrelationships with other business units, labor
agreements, or other fixed costs—which make competitors stay and fight even when they find
the industry unprofitable.

INDUSTRY ATTRACTIVENESS AND INDUSTRY SUCCESS FACTORS

"Industry attractiveness is the presence or absence of threats exhibited by each of the industry
forces," Cook explained. "The greater the threat posed by an industry force, the less attractive the
industry becomes." Small businesses, in particular, should attempt to seek out markets in which
the threats are low and the attractiveness is high. Understanding what industry forces are at work
enables small business owners to develop strategies to deal with them. These strategies, in turn,
can help small businesses to find unique ways to satisfy their customers in order to develop a
competitive advantage over industry rivals.

Success factors are those elements that determine whether a company succeeds or fails in a given
industry. They vary greatly by industry. Some examples of possible success factors include quick
response to market changes, a complete product line, fair prices, excellent product quality or
performance, knowledgeable sales support, a good record for deliveries, solid financial standing,
or a strong management team. "The reason for identifying success factors is that it will help lead
you to areas where you can establish competitive advantages," Cook noted. The first step is to
determine whether or not the company possesses each success factor identified. Then the small
business owner can decide whether the company can and should develop additional success
factors.
THE IMPORTANCE OF INDUSTRY ANALYSIS

A comprehensive industry analysis requires a small business owner to take an objective view of
the underlying forces, attractiveness, and success factors that determine the structure of the
industry. Understanding the company's operating environment in this way can help the small
business owner to formulate an effective strategy, position the company for success, and make
the most efficient use of the limited resources of the small business. "Once the forces affecting
competition in an industry and their underlying causes have been diagnosed, the firm is in a
position to identify its strengths and weaknesses relative to the industry," Porter wrote. "An
effective competitive strategy takes offensive or defensive action in order to create
a defendable position against the five competitive forces." Some of the possible strategies
include positioning the firm to use its unique capabilities as defense, influencing the balance of
outside forces in the firm's favor, or anticipating shifts in the underlying industry factors and
adapting before competitors do in order to gain a competitive advantage.

2.4 ISSUE/ CHALLENGES OF INDUSTRY

Top 10 Issues Facing the Manufacturing Industry in 2020

Wow, we’re over halfway through 2020, and it couldn’t have been a stranger six months.
Presidential impeachment. Australian wildfires. Protests for racial justice. Murder hornets and
locust swarms. And the biggest of all, a global pandemic, rightfully continues to make headlines.
And while COVID-19 will no-doubt be mentioned here again, you’re really here to read about
the manufacturing landscape. Yes, some strange issues have caused problems in the
manufacturing industry and some others have been solved.
In this article, we’re sharing 10 challenges that manufacturers still face for the rest of 2020.
However, we’ll do more than just list them; we’ve asked our Vice President and Manufacturing
Practice Leader, John Madsen, to give his thoughts on how to handle these challenges.

John worked in the manufacturing industry for over 40 years before joining the Black Line
Group team. His first-hand knowledge of manufacturing makes him uniquely qualified to help
manufacturers, whether he’s solving industry challenges or finding qualified R&D Tax Credits in
their business.

1. Responding to COVID-19

According to a March Survey of the National Association of Manufacturers (NAM):

 78% of manufacturers expect that the pandemic will have a financial impact on their
business

 53% of manufacturers anticipate a change in operations

 35.5% of manufacturers are facing supply chain disruptions

No surprise, the effects of COVID-19 have impacted manufacturing, top to bottom. It’s hard,
even with a business plan, to adequately address the unpredictable and rapid variables of the
outbreak: quarantining, restricting travel options, closing schools, disrupting supply chains, etc.

John reminds us about two blog posts from earlier this year. First, we covered how the three
major concerns for manufacturers — financial impact, operational options, economic recession
— are even more important in the midst of this pandemic. Next, we shared a logical approach to
increasing manufacturing profit margins by focusing on individual customer margins.
2. Increasing Reshoring

More and more throughout 2020, businesses are rethinking their global manufacturing strategies.
The Reshoring Institute predicts that “companies will increasingly be motivated to participate in
reshoring efforts in the coming years due to rising foreign wages, rising tariffs on steel,
aluminum, and electric components, and reconsiderations of the total cost of ownership.”
How strong are reshoring efforts? As early as last fall (well before the coronavirus), 97% of
executives said they’d consider a domestic source for parts if the price and quality were
competitive to foreign suppliers, again according to the Reshoring Institute.
More than ever, automation is making U.S. manufacturers competitive enough to bring
manufacturing back and scale operations. For more on automation (and to get John’s opinion),
see #7 below!

3. Finding and Keeping Labor

Up until unemployment spikes due to COVID-19, numbers in the U.S. were low among skilled
workers. Today, even given the current situation, manufacturers still need to find motivated,
knowledgeable employees for the job.

If you’re trying to hire the best manufacturing employees, follow these tips:

 Determine Minimum Qualifications. Creating a job description that states the minimum
qualifications — and posting it early in the selection process — helps candidates
understand clear job expectations and allows you to use the criteria to quickly screen
candidates.
  Broaden Your Search. Today’s hybrid manufacturing jobs require a variety of skills, so
widen your focus to include more than manufacturing graduates or professionals. Look
for trainable candidates who can learn complex subject matter.

 Develop a Strategy. Business always runs smoother when you have a strategy, and that
includes your hiring process. Here are some considerations when creating a hiring
strategy.

 Focus on Retention. Hiring may be necessary, but it’s even more important to hold on to
the employees you already have. Consider profit sharing, employee referral programs,
and great benefits as retention tools.

Speaking of retention, retaining seasoned staff in an environment where employees consistently

make lateral moves to improve their salary and benefits can be challenging. You have to make
your business the best place to work to encourage good employees to stay. Creating a culture
where employees feel valued contributes to employees’ desire to stay.

John puts it this way: “Do not ask for anything you (the boss) are not willing to do yourself. If
you ask your team to work late or work on Saturday, be there yourself.” He goes on to list 6 tips
to retain manufacturing employees in this article.

4. Navigating Changing Laws

Every year, you have to make sure you’re on top of changing legislation because every year laws
change, are updated, or removed. John suggests that in order to maintain your sanity in an
industry rife with fluctuating legislation, focus on seven areas in 2020 for manufacturing industry
laws:

1. OSHA

2. Insurance

3. Right-to-Know

4. SDS
 5. ISO Procedures

6. State and Local Laws

7. CARES Act (see #6, Addressing Tax-Related Issues, below)

Find tips from John on what specifically to look for within the first six of these areas in our
article Navigating Changing Manufacturing Industry Laws.

One benefit that’s not going away is the R&D Tax Credit. Not only can you deduct qualified
expenses incurred during the sales process, but also throughout the entire manufacturing process.
Read our guide on 9 Hidden Qualifying R&D Expenses in a Manufacturing Company.

5. Growing With Increasing Demand

Again, even in the face of a global pandemic, some manufacturers are facing two demand-related
problems in 2020:

1. You have so much demand you need to increase capacity

2. Demand-driven manufacturing is impacting your most important company goals

Increasing Capacity

Having so much demand that you need to increase capacity can force choices, like moving to a
new facility or expanding your existing facility.
As a previous general manager of a mid-sized manufacturing business, John understands the
trials of trying to decide whether to move or expand. In his article, 7 Things to Consider When
Your Manufacturing Facility is at Capacity, he addresses how to manage that decision-making
process. Fortunately, those costs can be offset using the R&D Tax Credit.

Demand-Driven Manufacturing

Many manufacturers are just keeping up with work based on orders from existing customers,
leaving little time or money to invest in other critical initiatives.

John identifies four challenges that stand in the way of growth for demand-driven manufacturers:

1. New equipment costs

2. Cost of acquiring new customers
3. Need for a new facility
4. Complications of adding a second shift

6. Addressing Tax-Related Issues

First of all, it’s your CPA’s job to prepare you for tax-related issues. However, not every CPA is
completely prepared for the manufacturing industry and its specific issues. That’s why you’ll
want to be careful when choosing your manufacturing CPA. Specifically, you’ll want to confirm
that they have industry experience, offer a broad breadth of services, and have great references.
Once you’ve teamed up with the right CPA firm, it’s important that you have a certain level of
knowledge on tax-related issues so that you can work with your CPA to solve problems and
preemptively avoid others.

As we continue through 2020, it’s important to take a look at some year-end tax tips for
manufacturers. John recommends leveraging certain tax laws:

 The CARES Act’s tax provisions provide refunds from previously paid income taxes and
can help reduce future tax liability to sustain ongoing operations

 Tax Cuts and Job Act includes several new or revised deductions for businesses

 Changes to fringe benefits have occurred: bicycle commuting reimbursements, moving

expenses, achievement awards, etc.

 Changes to some of the laws regarding depreciation and expensing can affect your
business’ tax situation

 There are a few new and revised tax credits for businesses available

 The R&D Tax Credit has increased in significance due to this year’s CARES Act

7. Maximizing Automation

This is something everyone was talking about before 2020, and it’s become even more important
with many employees not being able to occupy each other’s space. COVID-19 has shown us all
that this is a critical time to explore the implementation of automation technologies (and all
things Industry 4.0, including collaborative robotics, autonomous material movement, internet of
things, and artificial intelligence).

However, these types of investments aren’t always easy to stomach. Often, the investment comes
down to a cost-benefit analysis. Estimate how much you’d benefit from increased automation
compared to how much it would cost to implement.
John sums it up like this, “If your company prides itself on innovation and cutting-edge
technology, it might make more sense to pursue automation. For smaller companies, it might be
wise to wait for the latest technology to come down in price before implementing it.”

If you need extra funding to afford new automation, look no further than the R&D Tax Credit.
You may be performing qualified activities on a regular basis that could provide the tax credits
you’ll need to afford the new technology.

8. Integrating Software

It’s clear how investing in people and machinery directly impacts the efficiency of your business.
However, don’t overlook the importance of software. Whether it’s payroll, project management,
or quoting software, the right solution enables your business to run smoothly and makes your
managers’ jobs easier.

John suggests the following action steps when looking into software investment for
manufacturers:

 Evaluate your current software vs. your business requirements

 Research the capabilities and cost of new software

 Confirm the software can be integrated with your current systems

John asks some probing questions: “Are you making Excel spreadsheets to track data outside of
the system? Are you handwriting notes from several screens to collect data? Are your customer
service people walking the shop floor gathering data to answer customer questions?”

9. Handling Global Competition

Whether your competitors are using cheaper offshore labor, or new technologies and techniques
are being used overseas, there’s always something happening that makes the world feel smaller
and smaller each year.

John pulls examples from his own experience to suggest three things to consider
concerning international business for manufacturers:

 Hidden Costs of Low Prices. Instead of competing on price, take a look at some of the
hidden costs of low prices, like language barrier issues, jeopardizing your own
intellectual property, or taking multiple trips overseas.
  Shipping and Returns. “Often the U.S. buyer is required to pay for the shipment in
advance of the product leaving the shipping port,” says Madsen. “If any product needs to
be expedited, the cost to fly products to the U.S. is very expensive.”

 International Supply Base.“COVID-19 greatly disrupted international supply chains,

and many manufacturers didn’t have contingency plans with U.S. suppliers. Reshoring
(see #2) may be the best and most affordable way to grow your business,” says John.

10. Making Margin

Just because you’ve been doing business with someone for a long time doesn’t mean they’re a
good customer. In fact, they may have been hurting your business longer than you think.

There are some areas to look for in your relationships with your customers to optimize your
margin: shipping costs, contract length, variability in production. For instance, do they always
have a steady requirement of product? Do they fluctuate from quarter to quarter?

Of course, customer margin isn’t the only place to look to optimize your profits. From channel
margins to material cost to supply chain management, John goes into deeper detail on where to
look to optimize your profit margin in this article.
 2.5 OPPORTUNITIES IN THE SECTOR IN

INDIA Covid Lead To Great Opportunities For Manufacturing

Companies

Share

Speculations over possible economic scenarios have taken center stage since the imposition of
lockdown in various parts of the world aiming at restricting the wide spread of coronavirus in the
last few months. On one hand there are news on emotional & economic backlash against China
over its perceived culpability for the COVID-19 pandemic, on the other hand there are news
about Chinese companies moving aggressively for complete buyout of European brands like
Volvo & Hasselblad, Chinese own major part of the global medical supply chain for products
that are critical for all nations at this point of time. China is back to business by containing the
virus through technology-powered, authoritarian surveillance. The fact is that the economies that
will manage the COVID 19 efficiently will have an edge over others in post COVID scenario.
All said and done, the economic situation post COVID 2019 is unpredictable and hazy.

A glimmer of hope is emerging from manufacturing companies in India as global businesses

seek to develop additional supply chains beyond China. One of the key area that looks interesting
a global customer base is electrical & electronics manufacturing. India exports electronic
products worth $9 billion each year, while its domestic market is estimated at $120 billion. This
vast field, includes electronic component manufacturing in multiple sectors like mobiles, auto,
medical, consumer appliances and aerospace & defence. Companies like Teledyne, Amphenol
and Johnson & Johnson have shown interest in India, also the Indian government announced in
March a production-linked incentive (PLI) scheme for the electronics sector with an outlay of
over □40,000 Cr to boost the sector.

While things look positive for Indian in this field, the situation is much more complex as it
appears at the outset. The present crisis has shown vulnerabilities of Indian manufacturing sector.
China is the biggest importer for India and accounts for 14%+ of total imports (approximately $
68 Bn in 2017-18). There is a need to develop complete ecosystem for manufacturing of these
components. The ecosystem should be able to offer complete solution to the customer from
support in design & development, raw materials, critical special processes and manufacturing.

Development of ecosystem and investments in Indian manufacturing sector is a time consuming

exercise. It takes multiple years to develop alternate supply chain and shift the production. The
success factors include ability of Indian suppliers to meet cost expectations & quality standards,
ramp up production, government policies & schemes and steepening of learning curve. While
India has better infrastructure and ecosystem in the field of mobile manufacturing and consumer
electronics, there is an opportunity to create a stronghold on medical, auto, aerospace & defence
sectors.

In addition to electronic manufacturing, there are some positive signs in Textiles and Chemical
sector also. The need of the hour is to look more aggressively at these business opportunities.
While centre & state are prioritizing on handling COVID 2019 situation for the time being, they
should also focus on economic agenda post COVID19 scenario and do their best to attract
foreign investments while working strategically to build an environment of collaboration & co-
operation between organizations.
 2.6 COMPARISON OF INDUSTRY WITH DIFFERENT COUNTRIES

Manufacturing is arguably the lifeblood of global business. UK manufacturing alone contributes

£6.7 trillion to the global economy — impressive stats for a country that is dwarfed in size by
other nations.

But just how does the UK’s manufacturing output compare to the rest of the world? In this
article, process manufacturing software provider, Datawright compares the UK’s productivity
against the world’s manufacturing heavyweights.

The UK

According to a House of Commons briefing paper, which looked at the most recent
manufacturing data, the UK had the 9th highest manufacturing output globally. While ranking
9th out of 237 countries is still a strong position to be in, it still shows a decrease from previous
years. Between 1970 and 2004, the UK’s rank generally stayed around 5th and 6th position.

The UK’s manufacturing output was worth $247 billion in 2014, which broken down, equates to
$3,800 on a head-by-head basis. However, the per-head figure does not provide an accurate point
of comparison due to populations varying between countries.

In total, manufacturing accounted for 11% the UK’s national economic output, and 3 percent of
global manufacturing.

China

In 2014, China had the highest manufacturing output of all countries, worth a total of $1.9
trillion. Eclipsing the UK’s humble 11 percent, manufacturing makes up 28 percent of the
country’s entire national output. On a global scale, this contributes 19 percent — almost one fifth
— to world manufacturing.

Naturally, given China’s large population — approximately 1.37 billion — the manufacturing
output per head is significantly lower than the UK, standing at $1,400.

United States
With the second highest manufacturing output ($1.8 trillion), the United States fell short of
China’s $1.9 trillion total. However, despite the similarities between these totals, the United
States output-per-head breakdown is significantly higher at $5,700 — a result of America’s
smaller population size.

Despite occupying the same percentage of world manufacturing as China (19 percent),
manufacturing makes up just 12 percent of the USA’s national output. Whereas China’s output
was more than double at 28 percent, this stark difference shows how manufacturing is less of a
priority to the United States’ economy.

Japan

In third place in the manufacturing output league table is Japan, with just over $1 trillion. Per
head, this equates to $7,900. In total, Japan’s manufacturing efforts make up 19 percent of the
country’s national output, and 10 percent of the worldwide output.

Germany

Germany occupies fourth place in terms of manufacturing output rankings. Despite being
significantly ahead of fifth place company South Korea, Germany is considerably behind Japan
in terms of manufacturing output. Compared to Japan’s $1 trillion, Germany’s manufacturing
output is more than $300 billion less, at $680 billion.

Per head, this works out at $8,400. Overall, manufacturing makes up 23 percent of Germany’s
national output and 7 percent of the global total.

Smaller countries, bigger output?

What’s interesting to note is that despite the top spots being occupied by some of the world’s
largest countries, smaller regions are often heavily reliant on manufacturing. For example,
Turkmenistan and Nauru national outputs stand at 38 percent and 37 percent respectively,
illustrating how dependent developing economies are on manufacturing.
CHAPTER-3
3.1 PESTEL ANALYSIS OF INDUSTRY

What is PESTLE Analysis? An Important Business Analysis Tool

What is PESTLE Analysis? PESTLE analysis, which is sometimes referred to as PEST analysis,
is a concept in marketing principles. Moreover, this concept is used as a tool by companies to
track the environment they’re operating in or are planning to launch a new
project/product/service, etc.

PESTLE is a mnemonic which in its expanded form denotes P for Political, E for Economic, S
for Social, T for Technological, L for Legal, and E for Environmental. It gives a bird’s eye view
of the whole environment from many different angles that one wants to check and keep a track of
while contemplating a certain idea/plan.

The framework has undergone certain alterations, as gurus of Marketing have added certain
things like an E for Ethics to instill the element of demographics while utilizing the framework
while researching the market.

What is Pestle Analysis?

It’s basically a framework used for scanning and analyzing an organization’s external macro
environment by considering factors which include political, economic, socio-cultural,
technological, legal and environmental. Read more about PESTLE analysis here.

Asking the Right Questions

There are certain questions that one needs to ask while conducting this analysis, which gives
them an idea of what things to keep in mind. They are:

What is the political situation of the country and how can it affect the industry?

What are the prevalent economic factors?

How much importance does culture have in the market and what are its determinants?

What technological innovations are likely to pop up and affect the market structure?
Are there any current legislations that regulate the industry or can there be any change in the
legislations for the industry?

What are the environmental concerns for the industry?

All the aspects of this technique are crucial for any industry a business might be in. More than
just understanding the market, this framework represents one of the vertebras of the backbone of
strategic management that not only defines what a company should do but also accounts for an
organization’s goals and the strategies stringed to them.

It may be so, that the importance of each of the factors may be different to different kinds of
industries, but it is imperative to any strategy a company wants to develop that they conduct the
PESTLE analysis as it forms a much more comprehensive version of the SWOT analysis. If you
don’t know what is a SWOT analysis, we have you covered.

3.2 Political factors in PESTLE Analysis

These factors determine the extent to which a government may influence the economy or a
certain industry. For example, a government may impose a new tax or duty due to which entire
revenue generating structures of organizations might change. Political factors include tax
policies, Fiscal policy, trade tariffs, etc. that a government may levy around the fiscal year and it
may affect the business environment (economic environment) to a great extent.

3.3 Economic factors in PESTLE Analysis

These factors are determinants of an economy’s performance that directly impacts a company
and have resonating long term effects. For example, a rise in the inflation rate of any economy
would affect the way companies price their products and services. Adding to that, it would affect
the purchasing power of a consumer and change demand/supply models for that economy.
Economic factors include inflation rate, interest rates, foreign exchange rates, economic growth
patterns, etc. It also accounts for the FDI (foreign direct investment) depending on certain
specific industries who’re undergoing this analysis.
3.3 Social factors in PESTLE Analysis

These factors scrutinize the social environment of the market, and gauge determinants like
cultural trends, demographics, population analytics, etc. An example of this can be buying trends
for Western countries like the US where there is high demand during the Holiday season.

3.4 Technological factors in PESTLE Analysis

These factors pertain to innovations in technology that may affect the operations of the industry
and the market favorably or unfavorably. This refers to automation, research and development,
and the amount of technological awareness that a market possesses.

3.5 Legal factors in PESTLE Analysis

These factors have both external and internal sides. There are certain laws that affect the
business environment in a certain country while there are certain policies that companies
maintain for themselves. Legal analysis takes into account both of these angles and then charts
out the strategies in light of these legislations. For example, consumer laws, safety standards,
labor laws, etc.

3.6 Environmental factors in PESTLE Analysis

These factors include all those that influence or are determined by the surrounding environment.
This aspect of the PESTLE is crucial for certain industries particularly for example tourism,
farming, agriculture, etc. Factors of a business environmental analysis include but are not limited
to climate, weather, geographical location, global changes in climate, environmental offsets, etc.

There are many templates available for companies to conduct PESTLE analysis. Many
organizations have provided information regarding their PESTLE analysis as case studies
available on the Internet.
CHAPTER-4
 4.1 FUTURE OUTLOOK OF INDUSTRY IN INDIA

Explore future trends in manufacturing

2020 has been a year like no other in recent history, and the manufacturing industry has felt the
impact. Along with declines in production, forced shutdowns in the early days of the pandemic
caused a significant dip in manufacturing employment levels. In our 2021 outlook, we look at the
future of manufacturing and outline four trends for the year ahead.

The manufacturing industry looks for ways to make itself disruption-proof

Before the pandemic hit, the manufacturing industry was working to regain the momentum it had
reached after the 2008 recession. However, after the first wave of pandemic-driven shutdowns,
segment recoveries for various manufacturers have been uneven. Looking ahead to 2021, the
recovery may take longer to reach pre-pandemic levels.

Explore our four manufacturing industry trends for 2021 and beyond to see how things are
shaping up.

Agility could be key to manufacturing industry resilience

The year ahead will vary for manufacturers depending on where they have felt the greatest
impact from the pandemic. For some, it will focus on rebuilding lost revenue streams; for others
it could require recalibrating supply networks to serve different market demands. But for all
manufacturers, it should include a commitment to increasing agility in operations. By continuing
to invest in digital initiatives across their production process and supply network, manufacturers
can respond to the disruptions caused by the pandemic and build resilience that can enable them
to thrive.

Manufacturing industry leaders can start by identifying use cases that solve for specific
challenges on which the pandemic has cast a spotlight, such as fluctuating end-market demand.
Manufacturers should set goals for data capture and analysis across the global manufacturing
footprint, as this step alone is a key to identifying breakpoints and opportunities for
improvement. And finally, manufacturers should consider how digital twins (of products,
processes, and/or production environments) may hold the key to ensuring that manufacturing
thrives through the next disruptive event. Even after a year like 2020, it could be right around the
corner

Undisputedly 2020 has not been a favourable year for the economy, jobs and industry as the
world dealt with the impact of COVID-19 on business and daily life. However, amid a lot of
negativity and slowdown in the market there's reason to be optimistic, especially in
manufacturing; in every crisis there is a hidden prospect to grow faster.

The last three decades of globalization has seen China becoming literally the ‘factory to the
world’. The COVID-19 outbreak and the commotion in supply of finished goods for global
markets, as well as raw materials for businesses and industries everywhere from China have led
to an unforeseen move around.

Befittingly, that could mean advantage India, as the nation’s industrial network, plenty of natural
resources and comparatively cheap workforce could magnetize many manufacturers to turn to
India as an alternative base. Post COVID-19, many economies are anticipated to implement de-
risking approach and move their manufacturing bases from China, which could create
opportunities for India.

India has the potential to become the next global manufacturing hub. Several industries have
realized the drawbacks of being disproportionately dependent on manufacturing on a single
country and are looking to expand the geographic spread of their facilities.

So economic uncertainty aside, the unique supply chain disruptions of the year have actually
given a push to the manufacturers, as they revived the often-stagnant industry to move faster and
become more resilient than ever before. Looking on the brighter side if there were a year to pin a
positive future for the manufacturing industry and move it towards progress, it surely has been
2020.

In 2021 imports will be substituted with Make in India. Indian businessmen will step up and
offer their products and services to global companies facing supply issues in China. Disrupted
imports will facilitate Indian firms become self-reliant while exporters will further expand into
markets that were earlier served by Chinese firms.
Furthermore, manufacturing business is undergoing paradigm shift and the industry is
approaching the next wave of technology transformation. Businesses are revving up as an
amalgamation of changes in technology and market conditions. Some of the biggest tech trends
are awaited in 2021 and there’s no doubt that the industry has to respond to them. Whether it is a
small business or a big corporate, everyone has to make the most of it. New strategies, new
approaches, new business structures, all of these would be the game-changers in this scenario.

But there are also a few challenges that our country is facing relating to infrastructure—physical
and digital, skill gaps, innovation ecosystem, public-private partnership, support for MSMEs,
data security and privacy, standards-based interoperability and a conducive regulatory
framework. Collaborative efforts by central and state governments, industry, academia, research
and financing institutions are the need of the hour to ensure leveraging of the digital
manufacturing revolution and reaping benefits of enhanced competitiveness. This will also help
India build sustainable breakthrough ecosystems for nurturing global businesses and achieving
manufacturing-driven growth.

India has the prospective to become the digital factory of the world by being at the forefront of
the digital revolution. But timely action is the key. The government is doing its bit by putting in
place an enabling policy framework. The burden is also on the manufacturers to put their act
together for adopting emerging digital technologies to boost their competitiveness.

To conclude in 2021, manufacturing will see a vital shift in how its front-runners view
progressive change: from underlying vision to practical realism. As an outcome of the current
slow-down an industry that's more agile and flexible will emerge. Industry will witness a shift to
localized production, digital transformation will fast-track; and manufacturers will be equipped
to churn out high-quality products quicker, more efficiently, and at a lower cost than ever before.
 Nearly a year ago, the
U.S. economy was turned on its head, as the arrival of the COVID-19 pandemic disrupted
everything from travel to education, from leisure to work. The manufacturing industry was not
spared disruption, but in many ways, it forged ahead through unprecedented obstacles. Even
though by year’s end, many industrial performance indicators still had not regained their pre-
pandemic highs, the industry overall showed remarkable resilience. The year ahead promises to
be one where manufacturing continues to push forward and optimism is up, with 63% of
executives in Deloitte’s postelection poll showing a somewhat or very positive outlook on
business. There are four areas for manufacturers to focus their attention in 2021 as they seek to
be disruption-proof.

1. Solving forecasting challenges could be critical to navigating future disruption.

One could argue that the disruption brought on by the pandemic is unprecedented, and in some
ways, it is unlike other past disruptions. However, it is possible that disruption could become a
“predictable” part of the business environment, even if the source of that disruption is
unpredictable.

For manufacturers, the events of 2020 may be a warning to develop better systems for navigating
disruptions like the one we are currently experiencing. Visibility is likely to become the most
critical capability for manufacturers in the coming months, and where to increase visibility
depends on how a company is experiencing the pandemic, as exemplified above. Furthermore,
digital technologies could be important enablers: 76% of manufacturing executives in Deloitte’s
postelection poll intend to increase their investments in digital initiatives and plan to pilot and
implement more Industry 4.0 technologies.
2. Digital investments in technologies like digital twin could support new levels of resilience.

The events of 2020 have cast a light on how quickly a manufacturing operation can come to a
complete standstill or, in some cases, can be revved up to unsustainable levels. In Deloitte’s
postelection poll, 24% of manufacturers cite coping with new requirements due to the pandemic
as their top challenge, and 20% of manufacturing executives found that managing productivity is
their top challenge of the current environment.

Digital investments can help to address the ongoing challenges of managing through unknown
disruptions. Areas of investment can include adding sensors and machine learning to production
lines to predict, prevent, and even prescriptively fix problems before they occur. Another
example is installing vision systems with data analytics to improve in-line quality of products or
parts. Digital twin technology can help prepare manufacturers for the next disruptive event.
Deloitte’s postelection poll of manufacturing executives identified that 24% executives who plan
to invest in digital technologies believe digital twin technology will be the most important
technology in which their company will invest in 2021 (tied for first with augmented workforce
efficiencies).

3. Manufacturers seek to expand options to drive supply chain resilience.

The global pandemic has forced manufacturers to critically evaluate their supply constraints and
build agility in their supply chains. In a recent survey, only 21% of respondents were confident
in their supply network’s visibility and ability to swiftly flex sourcing, manufacturing, and
distribution, if needed. Given the disruptions many manufacturers have faced this past year,
increasing flexibility in these global supply networks is generally a top business priority. There
are a number of ways to achieve this, but one in particular involves the use of digital capabilities
to increase visibility and flexibility across a global supply network.

As manufacturers evaluate whether and where to recalibrate their global production footprint,
they can turn to digital capabilities that can increase their supply network visibility.
Manufacturers can automate visibility with a digital supply network (DSN) to gain real-time
understanding of activity across a complex supply network. The DSN breaks down the silos of
data and includes adding connection points across the network that can sense and respond to
sudden supply or demand changes and optimize operations accordingly. This level of visibility
would enable manufacturers to reevaluate their extended supplier network and develop an
inventory strategy based on data and insights rather than on history and hunches.

4. Workforce agility could become a necessity as disruptions continue to unfold.

The pandemic has caused unprecedented changes to where work gets done, as many companies
moved all non-production operations to remote models in the spring of 2020. Since then, most
companies have not returned completely to their pre-pandemic models, instead opting for hybrid
working environments or continuing remote work. Through all this, the pace of change has taken
its toll on manufacturing workforce leaders. In fact, 28% of surveyed executives identified that
upskilling and building new skills to match evolving work environments (automation, digital,
and remote) is the top challenge they are facing today in managing work and workforce.

And, as robots, cobots, and other forms of automation multiply in the production environment,
the need for a workforce to manage and interact with these technologies also increases. These
“middle-skill” roles require technical expertise and regular upskilling. One way to incorporate
digital capabilities in the workforce is to develop a talent ecosystem, which is a deliberate
network of external partners that can help bolster the talent pipeline for manufacturing.

An example of a talent ecosystem activity includes a manufacturer partnering with a technical

school to create a specific train-to-hire program that provides role-specific training and results in
a job offer upon successful completion. The 2020 Deloitte and MAPI Ecosystem Study reveals
that more than 80% of surveyed manufacturers believe talent ecosystems are critical to their
competitiveness, and 41% have already started forming new relationships to develop robust
talent ecosystems. Talent ecosystems could be a game-changer in the year ahead for
manufacturers that engage with them.

The year ahead for manufacturers shows a continued effort toward recovery. By continuing to
invest in digital initiatives across production and the supply network and making strategic
investments in reskilling their workforce, manufacturers can respond to the disruptions caused by
the pandemic and build resilience that can enable them to thrive.
CHAPTER-5
 5.1 FINDINGS

1. A strong domestic manufacturing base is integral to sustaining innovation and

maintaining global competitiveness in advanced technologies.1

a. There is growing and authoritative concern that the erosion of America’s manufacturing and
high-technology base threatens to undermine U.S. leadership in next-generation technologies and
the high value-added employment gains that would follow expanded U.S. high-technology
production and exports.

b. Moreover, some analysts argue that maintaining a competitive onshore manufacturing sector
and the associated skilled labor and technical institutions are linked and essential for long-term
national competitiveness. They note that once manufacturing activity moves overseas, so do the
required skills, networks and supply chains; and once offshore they, and the learning they
engender, are difficult to recover. These analysts therefore argue that it is important for U.S.
policymakers to be concerned with the capabilities and composition of the economy, just as
policymakers are elsewhere.

c. The emergence of new technologies and other favorable developments, such as shifts in
energy costs, open fresh windows of opportunity for manufacturing in the United States that can
be exploited by new policies

Spread across 50 states and 60 centers, the Manufacturing Extension Partnership (MEP) is
the leading U.S. government program designed explicitly to provide support services to the
nation’s small and medium manufacturers.2

a. The target constituency: Small and medium manufacturers represent 98 percent of all
manufacturing enterprises in the United States. They account for two-thirds of all manufacturing
employment and contribute over half of the total value added by all U.S. manufacturers.

b. Limited market alternatives: Given their small scale, limited resources, and scattered
locations, many small and medium manufacturers report that private-sector alternatives to MEP
are limited at best. While there are now more consulting services in most states than there were
when MEP was originally established, small firms report that they cannot afford the fees of
private consultancies and, in many cases, find that they do not adequately provide the type of
services extended by the MEP system.3 In addition, other government programs do not focus as
directly on providing technical and management advice to these small firms.

c. Reach of MEP: Since its establishment in 1989, the MEP system has continued to grow to
serve U.S. small and medium manufacturers. It now reaches out to some 7,000 manufacturers a
year, providing a variety of services, from short-term cost reduction through lean manufacturing
to longer-term growth initiatives.

d. Diversity of the program: Given the engagement of a large number of state partners and the
varying conditions in different parts of the country, there is considerable diversity in methods of
operation and delivery of MEP services.

e. Focus of MEP services: MEP is focused on providing services with proven technologies and
methods to existing manufacturing firms. By contrast, many of the large-scale programs to
support manufacturing around the world (described in Appendix A of this report) are designed to
move new technologies forward from concept to prototype to commercial production.

f. Net impact: Multiple assessments of MEP find that the program has a positive net impact,
although it is important to note that not all MEP projects generate measurable returns.4
CHAPTER-6
 6.1 RECOMMENDATIONS

While the committee finds that the MEP program provides valuable help to small manufacturers,
with the enhancements recommended here, the program will be an increasingly important
element in the nation’s portfolio of programs to support manufacturing and the jobs it brings.

1. NIST MEP should focus more on driving the overall improvement of MEP centers
rather than focusing on the outcomes of individual projects.

a. Develop performance incentives: To improve overall center performance, NIST MEP

management should be tasked with developing incentives to drive center performance.

b. Promulgate best practices. NIST MEP should identify and help promulgate best practices
among centers. The need for much better communication of best practices is strongly underlined
by the need to share tools and techniques that work in implementing the Next Generation
Strategy. Many centers have limited resources, which constrains their ability to undertake new
and higher-risk strategies. They need access to relevant experience and best practices to help
ensure success.

i. Peer-to-peer communication: NIST MEP should encourage centers to provide help and
support to each other: A peer-to-peer model may work better than standard vertical
communication between individual centers and NIST MEP in this regard.

ii. Pilot programs: NIST should provide additional funding for pilot programs that assess the
performance of MEP centers against relevant comparison groups.

iii. Centers of excellence. NIST MEP should consider fostering centers of excellence amongst
the centers. This may be challenging in such a distributed environment, but fostering these
centers of excellence can have important systemwide impacts.

iv. Annual conference. NIST MEP should consider reinstating the MEP annual conference as
soon as possible.
v. Center directors’ forum. NIST MEP should consider providing—or encouraging the
independent development of— an online forum in which center directors and other staff can
exchange information, focused on the transfer of best practices among them and the efficient
solution of operational problems and questions.

he Manufacturing Extension Partnership should use its resources to leverage maximum

beneficial outcomes for the U.S. manufacturing sector rather than focus on reaching the
maximum number of manufacturers.

a. With its current resources, MEP should focus its analysis on identifying and supporting
manufacturing firms that are most able to benefit from MEP services. As with any service
provider, spreading MEP services too thinly may well result in suboptimal results overall.

b. MEP should identify those markets and clients where the impact of program resources would
be greatest—particularly in terms of long-term productivity, sustainability and innovation
performance—that will in turn, anchor good-quality jobs. This strongly suggests that MEP
centers should focus on selective client acquisition. Market penetration metrics should focus on
generating a sustainable client base.

c. In addition, MEP should consider metrics that measure market penetration and innovation over
time rather than a single year, as manufacturers may not need MEP services every year.
Adopting a longer, multiyear time frame for analyzing center and program performance would
provide a better assessment.

3. MEP should continue to encourage lean manufacturing.

a. Given that lean manufacturing remains at the core of a successful manufacturing support
program, MEP should encourage centers to maintain the current capacity in this area and
integrate lean manufacturing into new initiatives including those related to innovation.

b. NIST MEP should adjust its CORE metrics to better reflect the continuing importance of lean
manufacturing for the centers.
CHAPTER-7
 7.1 CONCLUSION
As we finish the strangest year ever, 2020, there are likely a few key challenges you need to
review. It’s important to closely analyze these aspects of your business, from customer
relationships to hiring employees to reshoring options and likely much more.

Depending on your level of qualifying activities, you might be eligible for tens of thousands (or
even millions) of dollars in tax relief through the R&D Tax Credit. Ready to learn about
qualifying? Our Get Started form is quick and easy.

The majority of the committee concludes that, viewed in their totality, existing sources of
industrial assistance provide a portfolio of services to help improve the competitiveness of
smaller manufacturers. However, this existing set of programs, institutions, and businesses is
organizationally fragmented and limited in scope of services and reach of clientele. Within this
fragmented network of assistance sources, the MTCs have begun to carve a niche that, at least
within their geographic regions, has brought some degree of order to the community and has
raised the awareness of smaller companies that useful help is available. The MTCs are still
experimenting with different mechanisms for marketing, ensuring responsiveness to the local
customer base, working with other sources of assistance, and building the intercompany
networks and information resources that many smaller firms need. This process of
experimentation and learning should be encouraged, and the lessons broadly disseminated. This
is the only way to increase effectiveness in a necessarily diverse environment, and to keep
expectations realistic, as the MTC program is expanded and other initiatives begin in the context
of a national manufacturing assistance system.
 7.2 BIBLIOGRAPHY

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