Podcast: Modular manufacturing, energy resilience, and the future of flexible production lines

In this episode of Great Question: A Manufacturing Podcast, Ryan Hawk of PwC US talks with Robert Brooks and Ryan Hawk about survey insights from more than 500 U.S. industry leaders. Hawk surveyed hundreds of C-suite executives across the manufacturing and energy sectors to determine what is influencing their thoughts and guiding their decision-making. He found five “unstoppable forces” reshaping how America builds, moves, and competes, and offers practical insights into how these trends are driving strategic decisions across manufacturing and energy.

Below is an excerpt from the podcast:

RB: You have written an important new study about the future of energy and manufacturing, which is a pressing subject, I know, for many manufacturers and will be for our listeners. They worry about energy costs, availability, and regulation. But your report, which I’ll link for our listeners, takes a more strategic look at the issues. It has an intriguing subtitle: Is America Ready for the Next Industrial Revolution? And this is all based on a fairly extensive survey of industry leaders. Would you start by telling me what was the impetus for this report?

RH: Yeah, so the impetus for the report was part of the launch of our Industry Edge program, which is our renewed focus on industries to deliver sharper insights, faster solutions, and deeper collaboration. The survey itself reached over 500 U.S. C-suite leaders in industrials and energy, all over the $500 million mark in revenues. The report outlook was focused on the next 5 to 10 years, with priorities leading up to 2030. And I would just say that across all of the different subsectors within energy and industrials, the respondents were very evenly balanced—across oil and gas, power and utilities, aerospace and defense, automotive, industrial manufacturing, engineering, construction, chemicals, and so on.

RB: You’ve got all the verticals that matter to our listeners. So is this an update or a review of a previous or recurring survey?

RH: No, this was a new study that we commissioned. But I do think that a couple of things are going to happen with it. One is that I think it’s going to be a recurring annual one. And two, while it’s great to do it at the energy and industrials level overall, I think there are deeper insights to be had within each one of the subsectors. So my ambition is to replicate this in a deeper, more substantive way within each one of them.

RB: Let me ask you about these two parallels you set up in the title: energy and manufacturing. Do these sectors have common priorities, or do they have priorities in opposition to each other?

RH: I think they absolutely have some common ground. One area, from a common ground perspective, was around the themes of resilience, sovereignty, and innovation. And maybe on that last one, the statistic was something like 93% of executives believe we’re on the brink of the next industrial revolution. And while I wasn’t surprised it was a majority, I was surprised that it was such an overwhelming majority—93% across all of those subsectors is a pretty substantive number.

That sense of optimism, though, and the innovation—that’s what I thought was pretty interesting. I think this is an industry that historically has been a bit on the defensive, right? Razor-thin margins, jobs going offshore—just a lot of defensive elements to the outlook. What I saw in the survey was a tremendous sense of optimism, and maybe the industry’s going on the offensive, rather than the historical defensive posturing.

The other part I’d say is this: that would be the common ground. There’s obviously some interdependence here between energy and industrials. Manufacturers need energy in order to scale, and energy providers need manufacturing innovation in order to modernize.
And you asked about divergent priorities. I think there are tensions, but I wouldn’t call them divergent priorities, because more and more energy and industrials are seeing the need to work together, collaborate, and be part of one another’s ecosystems. That’s why PwC, from a firm perspective, has put the two verticals together into one overall industry.

RB: I think your subtitle—that the next industrial revolution is very prescient. Manufacturers—just allow me to interject here—manufacturers raised this phrasing a couple of years back, mainly around the subject of digitalization and the ability to track goods and information simultaneously, extensively. But I think the introduction of artificial intelligence into the discussion has really redirected their anticipation, or their expectations, and brought in the energy people because energy is so consequential and fundamental to that AI component. But anyway, that was just me in the side notes here, so don’t worry about it too much.

RH: I think you’re hitting on a very important point here. A lot was made of Industry 4.0 and the potential of digitization, digital twins, and all of those things. And quite honestly, it hasn’t necessarily, in my opinion, lived up to its original billing. To your point about AI—energy, et cetera—now becoming much more a part of that agenda, it’s actually making those promises that were made 10 or 12 years ago a reality. And I think it’s going to be an acceleration. So I think it’s great.

RB: I’ll quote you here from what you wrote there, and I’m going to link this LinkedIn post for listeners too. "What we’re seeing across industries from aerospace and manufacturing to energy and automotive is the emergence of a new landscape driven by five unstoppable forces that are already reshaping how America builds, moves, and competes." Where do we see reshaping taking place now?

RH: I think the big reshaping is happening around capital investment and where to deploy that capital, workforce and the way workforces are transforming, and then overall energy strategies. I think those are the big reshaping areas.

RB: Are there some sectors that are seeing more reshaping than others, or are under more significant pressure than others to address or accomplish some reshaping?

RH: I think all of them are under their own specific priorities, their own specific reshaping needs. So if you look at, say, manufacturing, the statistic was something like 40%–41% are reshoring or near-shoring supply chains, and that was the highest among the sectors. So clearly, the priority in manufacturing is around reshoring.

On energy, it was about leading in digital integration, data transformation, and supply chain practices. Automotive is seeing the pressures from EV—modular EV transition, modular manufacturing, more flexibility with respect to lines. Aerospace and defense is all about digital integration plus energy resilience.

And then overall, I think higher-growth firms are seeing faster adoption of AI, robotics, and energy—and there may even be a widening of the gap between higher-growth firms and others because of those things. But I think each individual sector or sub-sector within energy and industrials has its own reshaping needs and priorities.

RB: Let’s discuss those five unstoppable forces that you highlighted in your LinkedIn post. The first one—the first unstoppable force—is supply chain resiliency. And your quote there is: Reshoring is essential for building resilient supply chains and ensuring economic sovereignty. What did the respondents tell you that brought forth this evaluation for you?

RH: The overall takeaway was that supply chain resiliency means people have to be more predictable, more adaptable, more focused on sovereignty, and not just efficiency alone. What was important to me on that one, just being an old manufacturing type, is that the emphasis on supply chain for the longest time was really focused on cost, and not focused on both cost and capability. And I think that is a great turnaround from my perspective. I actually think it’s a great turnaround for the supply chain profession, right? Instead of just trying to find the lowest, we’re trying to find the lowest and the most capable. Which makes it very interesting and probably in some cases causes the necessity to reshore or nearshore.

The other thing that was interesting, just in the supply chain portion of this, is that 90%—or 9 out of 10 respondents—felt that offshore-reliant firms, those still offshore-reliant by 2030, were going to basically be extinct by 2035. I’m not surprised at the sentiment, but I am surprised at how overwhelming that number was. You know, if somebody would have told me it was 6 out of 10, 7 out of 10, I would have said, “Okay, that’s interesting.” Nine out of 10? That says this is something that is going to happen, and there’s probably no turning back at this point.

RB: Is there a clear understanding of the meaning of resiliency? You… you… you almost offered a couple of definitions there, but it seems to me that resiliency has become a very easy word for people to adopt. And I wonder if everyone agrees on what exactly they mean by it.

RH: So I don’t know that everybody does. I agree with you—I think resiliency is a term everybody’s adopted, but maybe not defined in exactly the same way. We would define it as predictability, adaptability, and then sovereignty is a good word to use, but really at the end of the day, it’s control, right? Those that are closer, you have more control over. And then, obviously, they are more predictable as well. So those would be the three terms I’d use to define resiliency.

RB: This question comes from within my most basic interests in this subject matter. Is current capital investment in manufacturing corresponding to the need for resiliency?

RH: I’m not sure I know the definitive answer on that. I did hear something a couple of weeks ago as we were debriefing on this study. And the quote was, “The winners are going to balance capital and risk.” I thought about that for a while, and I think it comes to the answer to your question in a way. Which is: Do I have good data on where the capital flows are going in order to achieve this resilience? I do not. Do I think that capital is being appropriately deployed to react to or mitigate the risks in the supply chain? I do. And I think those who have the better visibility into the supply chain—the more control over their supply chains—are able to deploy that capital better. To reshore, nearshore, shore up the supply chains—whatever the case may be. So I don’t know about the actual capital flows, but I do know that those who have that risk-based view of where to apply their capital with respect to supply chains are probably going to be the winners.