Whether you’re thinking of investing in the manufacturing market or you’re a current business owner looking to sell, understanding industry trends is important. Here’s a look at four global trends in manufacturing that you need to know.
Overall, Manufacturing Executives Aren’t Happy With Global Economies
The PricewaterhouseCoopers Manufacturing Barometer for January 2017 notes that around 20% of executives in the manufacturing sector worldwide are worried about the global economy. Around half of executives are uncertain about how they feel and only a quarter or so are optimistic about the nature of the today’s market.
What does that mean for those buying and selling manufacturing businesses in New Zealand? Firstly, it means you have to perform extra due diligence to ensure the viability of any organisation you purchase. Executive discouragement in the market doesn’t mean every business is in trouble, but it is a potential warning sign that not every company is seeing great profits. For those selling manufacturing businesses, it means partnering with professional brokers that can help you display your business in a positive light and overcome any worries potential buyers have about the market.
Almost Everything Is Going Digital
Digital isn’t a new trend top companies are trying out; it’s a required component of any successful company. That’s possibly true for manufacturing more than many other niches. When buying a manufacturing company, find out how old equipment is, what manual processes could be converted to automation and whether the previous owner has updated obsolete equipment. If you’re buying into an older factory or plant, then expect a large spend related to upgrading if you want to be competitive with your products. The one exception to this truth involves traditional products, which are marketed primarily based on the fact that they are handmade or made using pre-digital processes.
Skills Shortage Isn’t Just a Kiwi Problem
New Zealand business owners hear a lot about skills shortages, and the Government even has visa programmes in place to help you locate appropriate staff for some positions. The skills shortage isn’t unique to our nation, though, especially in the manufacturing field. STEM (Science, Technology, Engineering and Mathematics) jobs are hard to fill in many countries, and businesses in locations such as the United States are spending time and money importing STEM talent while they work to try to develop more skills within the country. That means New Zealand businesses are competing globally for the best talent in these sectors.
When you’re buying a manufacturing business, take employment needs into consideration. Are you going to be able to hire the right people to make your company a success and what has the previous owner done to attract and develop talent? Sellers can leverage the success they’ve had with hiring and training to make their company more attractive to potential buyers.
Careful Strategic Partnerships Are Critical
It’s not enough to succeed at production and efficiency. Manufacturing companies must be able to achieve cost-effective supply chain management, market in viable ways and mitigate risks throughout the process. That requires strategic partnerships, which means aligning with other companies from New Zealand and across the globe via collaborative efforts that create transparency and increase brand visibility. At the same time, you do have to be careful about aligning with companies that don’t have the same type of mission or values, and if you rely on another entity to provide technical, public relations, legal or other services, trust is critical. Take time to vet partnerships and never just take up the mantle of agreements made by previous ownership without research.
Taking time for due diligence and understanding how manufacturing trends impact buying and selling a business is important. This is true for buyer and seller and working with experienced brokers helps you vet details and learn about important factors faster.
New Zealand business owners hear a lot about skills shortages, and the Government even has visa programmes in place to help you locate appropriate staff for some positions. The skills shortage isn’t unique to our nation, though, especially in the manufacturing field. STEM (Science, Technology, Engineering and Mathematics) jobs are hard to fill in many countries, and businesses in location such as the United States are spending time and money importing STEM talent while they work to try to develop more skills within the country. That means New Zealand businesses are competing globally for the best talent in these sectors.
When you’re buying a manufacturing business, take employment needs into consideration. Are you going to be able to hire the right people to make your company a success and what has the previous owner done to attract and develop talent? Sellers can leverage the success they’ve had with hiring and training to make their company more attractive to potential buyers.
Careful Strategic Partnerships Are Critical
It’s not enough to succeed at production and efficiency. Manufacturing companies must be able to achieve cost-effective supply chain management, market in viable ways and mitigate risks throughout the process. That requires strategic partnerships, which means aligning with other companies from New Zealand and across the globe via collaborative efforts that create transparency and increase brand visibility. At the same time, you do have to be careful about aligning with companies that don’t have the same type of mission or values, and if you rely on another entity to provide technical, public relations, legal or other services, trust is critical. Take time to vet partnerships and never just take up the mantle of agreements made by previous ownership without research.
Taking time for due diligence and understanding how manufacturing trends impact buying and selling a business is important. This is true for buyer and seller and working with experienced brokers helps you vet details and learn about important factors faster.
For further information about this article, contact your nearest LINK Business Broking office
