North American and APAC manufacturers have significantly increased IT budget
September 16, 2021
North American manufacturers have cited the highest increase in IT budget followed by APAC respondents. Interestingly, APAC manufacturers are contracting their IT budget compared to their other global peers. As APAC countries act as contract manufacturing hub for many of the global industrial manufacturers, the overall slowdown in demand has likely forced APAC manufacturers to cut operating budgets, resulting into less IT budget allocation.
North American enterprises have begun to prepare themselves to deal with a black swan event like COVID-19 in the future. For example, to increase supply chain resilience, several North American manufacturers are ramping up their Mexico footprint to reduce the geographical distance from the existing APAC base.
The outlook varies sector-wise. For example, automotive and aerospace are the two hardest-hit sectors due to COVID-19. As the pandemic restrictions are relaxing and demand increases, commercial aviation will be in a better both should rebound. However, semiconductor shortages have put the automotive industry in a tight spot regarding the number of vehicles manufactured in the near term with some manufactures expecting delays into 2023.
The Bottom Line: The world is slowly recovering from COVID-19. In the US manufacturing output is increasing (highest in four months) along with capacity utilization in July 2021. As the recovery is in progress, with increased cash-flow, manufacturers are expected to retain or increase their IT budget in the future.
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