In 2020, component manufacturers and metal processing companies that found themselves overexposed to pandemic-affected end markets struggled. In 2021, many end markets recovered, but rising raw materials, energy, labor, and transportation costs created new challenges. Manufacturing companies with sufficient access to capital are now pursuing M&A in order to diversify their customer bases and pivot toward resilient, high-margin end markets such as healthcare and defense.

The manufacturing industry is building back fast, undeterred by significant labor and supply chain challenges. To maintain this momentum, manufacturers should navigate elevated risks while advancing sustainability priorities. As industrial production and capacity utilization surpassed pre-pandemic levels midyear, strong increases in new orders for all major subsectors signal growth continuing in 2022.

However, optimism around revenue growth is held in check by caution from ongoing risks. Workforce shortages and supply chain instability are reducing operational efficiency and margins. Business agility can be critical for organizations seeking to operate through the turbulence from an unusually quick economic rebound—and to compete in the next growth period.

* According to Deloitte’s 2022 Manufacturing Industry Outlook and Pitchbook’s 2021 Annual Global M&A Report