A survey released by the Illinois Manufacturing Extension Center and its trade association, the American Small Manufacturers Coalition, finds that most of today’s manufacturers are profitable, but significant challenges may lie ahead. These challenges include aging executives and low investment in capital equipment and information technologies, which could leave manufacturers behind in the race to innovate.
More than two-thirds of manufacturers surveyed are led by chief executives over 50 and 27% are led by an executive over 60. As executives prepare to retire, it is important that they create a planned succession so the business can continue to operate smoothly. Some of the consequences of ill-planned successions can be the forced sale of the business, often for a low price, or chaos when the current leader retires. A properly planned succession, however, can allow the current leader to retire knowing the company will be left in qualified hands.
Many manufacturers have recognized the importance of having a plan for succession. The study found that overall, 60% of firms anticipate or see as possible a planned leadership succession in the next five years, an increase of more than 5 percentage points from 2009. In organizations where the chief executive is more than 60 years old, 55% of firms anticipate succession, with 31% reporting that a succession is possible. For companies looking to create a succession plan, an article on the IMEC Website takes a closer look and an IMEC representative can help you create a customized plan.
Another potential challenge for the next generation of manufacturers, is aging capital equipment and out-of-date information technologies. The NGM survey found a large majority of manufacturers spend less than 5% of sales (for a three year average) on capital equipment or information technologies. In the competitive environment facing manufacturers, the right technology and equipment can be the difference between struggling to keep up and winning new contracts. Manufacturers may not have to spend a lot, but they do have to spend smart. For those companies looking to invest in the most impactful way, an IMEC specialist can work with your company to identify those investments that will produce the best results at the lowest cost.
IMEC IT Services: http://www.imec.org
Business Strategy Services (for more information on leadership and business growth strategies): http://www.imec.org