Manufacturers, energy companies, and other asset-intensive industries generated more headlines than usual in 2021: ships stuck in a canal or queueing for days off Long Beach, Rotterdam, and Shenzhen; shortages of everything from carbon dioxide and magnesium to semiconductors; challenges recruiting and retaining workers; and spiking energy prices that hit power-hungry industries hard. 

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The Financial Times reported survey data showing that almost 40% of EU manufacturers cite a "lack of material and equipment as a factor limiting production." That's by far the highest proportion since the survey began in 1985, yet over 60% of respondents don't highlight the problem. Manufacturers face real challenges as they look to 2022, but we shouldn't exaggerate. 

Most of them are finding ways to cope, most of the time. 

But merely coping isn't enough. To thrive and grow, companies must do more than cope. Their investors, employees, partners, and suppliers expect more and -- far more importantly -- so do their customers. In our predictions for 2022, we make some bold calls on how manufacturers will respond (or not respond) to the challenges ahead: 

• Only 10% of manufacturers will successfully operationalize COVID-era creativity.Our first observation isn't particularly positive. Unfortunately, we saw too many manufacturers beginning to fall back into old habits in 2021. The creative thinking that saw them through the early days of the COVID-19 pandemic requires effort and leadership if it's to become sustained adaptive innovation into 2022 and beyond. We predict that only around 10% of manufacturers will maintain the focus, will, and confidence to continue permitting, facilitating, and encouraging creativity across their business. It's just easier to slip back into old ways of working, siloed thinking, and a command-and-control culture -- easier but not better. Rigid hierarchies, ossified processes, and an iron grip are the antithesis of the flexible and adaptive organizations that will successfully navigate tomorrow's challenges. 

• Global R&D investment for high-value manufacturing will grow 15%.Shortages of critical components and raw materials have forced supply chain sovereignty and self-sufficiency back onto the agenda for governments and boardrooms around the world. In a positive move for manufacturers with the option to relocate, the US, EU, UK, China, and other nations will offer incentives to attract key manufacturing capabilities. Investment in R&D for high-value manufacturing will rise, and so will investment in stockpiling or locating local sources for critical commodities. 

• Ten big global manufacturers will reduce spending on carbon offsets and emit less.Manufacturing is a major contributor to the damage we're causing to our planet. The things that manufacturers make consume finite resources, and the process of making them contributes greenhouse gas emissions and more. The steel industry alone is responsible for 7% to 9% of global CO2 emissions. Something has to change. Looking into 2022, we see asset-intensive industries taking real steps toward reducing (not just offsetting) their impact with electrification, better energy and resource management, and some early attempts to start changing customer behavior and expectations. 

Learn more about what's coming in 2022 here.

This post was written by Principal Analyst Paul Miller and it originally appeared here.

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