What factors are driving end market recovery for manufacturers

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In this episode, EY global analysts Julia Rosenthal and Mohit Ahuja share their insights on the top themes discussed by leaders during the 2Q21 public earnings calls.

2020 was a tumultuous year for all sectors globally, including the advanced manufacturing sector. Supply chain disruptions, raw material shortages and forced shutdowns caused a significant dip in production levels. However, it seems that one of the hardest-hit sectors, advanced manufacturing, is on the road to recovery, though the pace of recovery is likely to be uneven.

Most manufacturers are confident of the recovery in end markets and are providing positive outlooks for the remainder of 2021. The recovery will be primarily driven by the mass-scale vaccination programs, higher uptake of services, and partnerships and acquisitions. However, manufacturers will need to work on future-proofing their businesses by strengthening supply chains and reviewing risk mitigation strategies.

Key takeaways:

  • As disruptions are likely to endure through 2021, manufacturers are automating production to increase utilization, contracting alternative suppliers, implementing price hedging and signing long-term contracts to mitigate disruptions in production schedules and minimize financial losses.
  • Despite supply chain disruptions and the resulting revenue impacts, most manufacturers are confident of recovery in end markets and are providing positive outlooks for the remainder of 2021.
  • The global vaccine rollout is a boost for manufacturers. While supply chain disruptions and raw material cost increases are still a challenge, many manufacturers are experiencing increased demand as end markets pick up again.

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