- Manufacturing is facing challenges and changes: from labor shortages, supply chain disruptions and the environmental crisis. However, in some areas investments are increasing significantly.
- Technology can help to address manufacturing challenges – from digital transformation to Smart Factories, the Metaverse to AI and Robotics.
- Manufacturing is on the cusp of exciting times for 2024 and beyond
The last few years have been a rollercoaster for the manufacturing sector. With many highs and lows, the sector overall saw a downturn that was mainly driven by the shrinking workforce. While technologies and processes provide new improvements, without the workforce to implement these new technologies, the new advancements don’t seem to make much of a difference. In addition, the open roles within the sector tend to look for skills that few workers possess.
So, if we look ahead, what does the landscape look like for the manufacturing sector? What are the trends and challenges shaping the industry and what are the approaches that companies are taking to address them?
Labor Shortages Make Business Agility and Innovation a Challenge to Overcome
The aftermath of the pandemic has left the sector with an ongoing shortage of skilled labor, and manufacturing is still suffering from the repercussions of ‘The Great Resignation’ in 2021. Manufacturing was the worst-hit sector when it came to pandemic-driven workplace attrition, with 58% leaving their jobs in 2021 – a situation from which the industry is still reeling. With 2.6 million jobs lost over the next few years due to attrition and retirement, the workforce continues to decline as the number of open roles increases thus creating a larger gap. In addition, another factor that contributes to the labor shortage is the skill shortage as employers are looking for specific technical skill sets with new technologies.
Uncertainty with Economic Situations
The supply chain disruptions which were one of the defining features of the COVID-19 years are still lingering and making it difficult to create production schedules with complete certainty. Global economic upheaval and rising prices have hit manufacturing, as raw materials and component prices increase. Consumers with less disposable income have tightened their belts, leading to a downturn in demand for many products. This makes planning and forecasting a challenge, with many manufacturers probably wishing above all for a crystal ball to foresee the future. In this environment, resilience to get through uncertain and challenging times ahead is likely to be a key differentiating factor between the leaders of the pack and those who follow from behind.
Net Zero Emissions Goals
Of course, it’s not just the economic outlook that is causing alarm – from an environmental perspective, manufacturers know that they must play their part in slowing down the spiraling climate crisis. Ever more stringent regulatory demands and looming net zero targets are a challenge, and the investment market is shying away from companies that are (or are perceived to be) less than committed to environmental change.
Increased investment
Yet there are some positives in amongst the challenges. In the US, legislative changes enacted in 2021 and 2022 have brought about a significant increase in investment in the sector. The Infrastructure Investment and Jobs Act (IIJA), the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, and the Inflation Reduction Act (IRA) have between them seen an increase of 70% in spending on construction for manufacturing, with further growth predicted for 2024. Investments in clean technology and semiconductor manufacturing in 2024 are expected to be double those of 2021.
