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Key takeaways: What you need to know
Key takeaways: What you need to know
Key takeaways from KPMG International's Metals and Mining Outlook 2016.
Finding 1: Confidence in the global economy is low and metals organizations are ramping up their focus on cutting costs and performance improvements.
How are leading metals manufacturers responding?
- Working with national governments and regulators to advocate for greater consolidation across the sector and the reduction of structural capacity in key markets
- Focusing on products where they enjoy clear market or cost advantages in order to reduce the impact of commodity competition from lower-cost producers
- Reinvigorating their efforts to identify and leverage efficiencies across the entire product portfolio.
How are leading mining organizations responding?
- Maintaining a strong focus on capital and capital deployment to prioritize cash flow returns over increased production volumes
- Becoming more decisive about managing their balance sheets to focus on free cash flow generation
- Improving the discipline around the management and use of their resources and ore bodies to focus on higher-growth or higher-margin commodities.
Finding 2: Metals organizations want to expand market share and will adjust their investment strategies to achieve lower costs and improve access to customers.
How are leading metals manufacturers responding?
- Rethinking their global footprint to growth markets while taking advantage of opportunities for improved cost structures
- Aligning their growth investments with expected shifts in customer footprints as key sectors – such as auto-body manufacturing – move closer to customers in lower cost and growing destinations
- Understanding the impact of new and emerging trade tariffs, barriers and protections within key markets and reassessing the make versus import equation.
How are leading mining organizations responding?
- Exploring opportunities to purchase high value assets in new geographic markets to improve cost efficiencies or drive scale
- Rigorously assessing the potential risks involved in new acquisitions to improve project certainty and confidence around earnings and cash flow
- Continuing to reshape their portfolio of assets, products and markets to create the optimal footprint for sustainable growth.
Finding 3: Metals organizations expect to pour significant investment into R&D over the coming years in an effort to drive new growth and open new markets.
How are leading metals organizations responding?
- Investing into R&D to develop more sophisticated, value-added products to offset pricing pressures on commoditized products
- Partnering with customers – and even competitors – to share development costs and create new products that meet evolving customer needs
- Investing into new technologies that create opportunities for greater operational efficiency and business flexibility.
How are leading mining organizations responding?
- Investing into technologies that improve automation, enhance efficiency and improve safety across the mining operation
- Rethinking the technology investment roadmap to prioritize cash flow and margins while managing capital and costs.
Finding 4: Metals organizations are worried about the potential for supply chain failures but most lack complete visibility into their supply network.
How are leading metals manufacturers responding?
- Exploring opportunities to improve transparency across their supply chain, both upstream and downstream
- Implementing new technologies and applying Data and Analytics to identify opportunities to improve supply chain efficiency and flexibility
- Improving the sharing of data between metals customer, suppliers and operations through new IT platforms and tools.
How are leading mining organizations responding?
- Assessing the sustainability of price increases and demand rises to adjust production accordingly
- Learning how to improve supply chain efficiency and visibility from other manufacturing sectors such as automotive
- Shifting the supply chain focus from development to operations.
> Read full report (PDF 2.6 MB)
