3 MIN. READ
Ever since the pandemic hit, businesses have feared a manufacturing recession. However, until recently, industrial demand remained at historic levels, often exceeding supply for items ranging from candy and cars to computers.
Now, conditions appear ripe for recession. According to a prediction from Fannie Mae, high inflation, tight money, and a cooling housing market will tip the economy into a recession in 2023. Fortunately, the outlook for manufacturing is much brighter.
Over the past year, factories added 467,000 jobs, while the most recent Labor Department report found manufacturing was one of the top three job-generating industries in October. According to the Federal Reserve, September's factory production was the highest in 14 years.
Still, manufacturers are keeping an eye on easing demand and looking for ways to bolster their business against a potential downturn.
Lessons from Past Recessions
Those trying to make sales forecasts may find it helpful to revisit the business history of past recessions. Manufacturers were hit harder than other sectors of the economy but also recovered faster. One method manufacturers used to cope with the downturn was shutting down unprofitable parts of their businesses. They also invested in areas that remain stable or grow during hard times. During a recession, winning companies tried to squeeze every bit of productivity out of equipment that might have previously been underused. When the economy picked up, they were lean, efficient, and poised to exploit expanding markets.
During the height of the pandemic, demand outstripped supply. Panicky consumers hoarded paper products. Stores couldn't keep sanitizers and disinfectants on the shelves. Technology that addressed new, pandemic-related needs found quick success as consumers stocked up on everything they could buy. Forecasts regarding supply and demand sorely missed the mark. Some companies grew, but many were not so fortunate.
Now that COVID cases have waned, and supply chain bottlenecks have loosened, demand has begun to soften. Manufacturers must suddenly pivot once again to ramp up advertising and outbound marketing.
How Manufacturers Can Keep Selling
To develop effective marketing strategies, manufacturers need data about every aspect of their supply and customer bases. With information developed by an army of 80 researchers, the industrial marketplace IndustryNet provides comprehensive information covering U.S. manufacturers across industry sectors. IndustryNet guides manufacturers to the suppliers they need and to opportunities in the marketplace to feature and promote their business.
With softening demand, staffing shortages, and a looming recession, industrial companies are setting their sights on new products and services to help them weather the storm. As such, more businesses are ramping up prosepecting efforts. However, successful prospecting hinges on making the right contacts.IndustrySelect data helps teams identify and contact the industrial companies most in need of what they make and the services they provide.
Businesses that Beat Past Recessions
Economic panics are nothing new to the manufacturing world. While many businesses look back on recessions as dark times, some companies pivoted and thrived during past downturns.
1. 3M At the end of the Panic of 1901, 3M started as a mining company. The mine failed. The company pivoted, turning to the manufacture of sandpaper and adhesives. 3M continued to flourish through innovation, developing a variety of consumer goods and industrial needs such as safety products.
2. General Motors (GM) After the Panic of 1907, when the stock market's value was cut in half, William Durant formed GM. The company borrowed too much money and experienced a rocky start. GM turned to a brand-based strategy instead of pumping out new yearly models. The idea worked! GM beat the sales of its competitor, Ford. But recession-proofing went further. Not only did the company produce different car brands, but it also jumped to aircraft, appliances, trains and construction equipment. The diversity of market segments allowed it to survive future downturns.
3. Warby Parker Rather than an existing company that pivoted, Warby Parker started from scratch. Warby Parker decided to offer a lower-cost product based on the idea that eyeglasses were too expensive. Consumers counting every recession dollar valued affordability above any other considerations and bought Warby Parker products. Though began in challenging times, Warby Parker succeeded.\
4. Microsoft Like Warby Parker, Microsoft was founded during a recession, the one that hit during the 1970s. Back then, computers were massive, and the idea that small companies and individuals could use the technology seemed like science fiction. However, Microsoft founders Bill Gates and Paul Allen didn't see it that way. They saw a world with affordable Microsoft microcomputers on every desk. That vision not only came to pass but was exceeded, with Microsoft products invading almost every aspect of life and industry. Microsoft rode the wave of innovation through the 1970s, the dot-com bubble and the Great Recession.
Beating Downturns Now
This article outlined several strategies companies used to flourish during downturns.
● Companies can make more efficient use of equipment and personnel.
● Manufacturers should pivot to products that customers can afford.
● Manufacturers can diversify and produce innovative products for new markets.
● Companies can improve prospecting.
Finding broad, reliable data plays a vital part in any of these strategies. IndustryNet and IndustrySelect give manufacturers the tools they need to grow and thrive. Learn more here.
Article Sources:
https://www.npr.org/2022/10/20/1130021630/factories-factory-industrial-production-employment-jobs-economy
https://www.macny.org/manufacturing-and-the-looming-recession-part-1/
https://www.fanniemae.com/newsroom/fannie-mae-news/economic-indicators-continue-point-likely-recession-2023#:~:text=WASHINGTON%2C%20DC%20%E2%80%93%20Economic%20growth%20is,from%20the%20Fannie%20Mae%20(FNMA%2F
https://www.strategyzer.com/blog/4-innovative-business-pivots-in-the-age-of-the-pandemic
https://startupsavant.com/startup-center/companies-that-thrived-during-recession
https://www.forbes.com/sites/stevebanker/2021/10/01/toilet-paper-shortages-empty-shelves-and-panic-buying-just-how-bad-was-grocery-service-in-2020/?sh=fceec3b7b1a9
https://industrynet.com/
https://www.industryselect.com/
https://industrynet.com/about/
https://klintmarketing.com/companies-started-in-a-recession/
