Conclusions from the Data
Manufacturers face a tumultuous time. Most of them believe the economy is on the right track – though they believe it is worse than five years ago. Manufacturers face new challenges caused by COVID – workforce and supply issues – while they operate at full capacity and remain profitable. The problems will continue – as will the opportunities. Companies want to move their supply chains home and competitive companies will experience growth and profitability.
Manufacturers face a tumultuous time.
The pandemic knocked the supply chain out of whack. Increased demand for goods stressed extended supply lines, making it difficult for domestic manufacturers to secure supplies – creating operational disruptions and inefficiencies. These issues increased production costs putting pressure on prices. No relief is expected until late 2022.
Workforce shortages were an issue before COVID and the pandemic made them worse. Wisconsin needed more workers because its population was not growing and the people living here were aging. The pandemic caused retirements 11% above all expectations and many people have not returned to work. This tightening labor market puts pressure on wages and intensifies the need to proactively engage employees. Successful companies will adapt to these new realities.
The pandemic knocked the supply chain out of whack.
The pandemic also brought several “submarine issues” to the surface. The hidden risks and costs of extended supply chains became clearer. The importance of safety and flexibility in the workplace became critical as manufacturers struggled to remain open. Finally, workforce pressures and stresses accelerated and became exacerbated throughout the crisis. Manufacturers faced a new array of challenges to be overcome to take advantage of the opportunities presented by a growing manufacturing market.
Three Takeaways for Manufacturers
Supply chains join workforce as the top issues facing manufacturing.
Increasingly, these issues are becoming more intertwined. New demands on the supply chain require more workers and the shortage of workers impede supply chains’ ability to recover. Both issues restrict economic growth and company operations. Unfortunately, there are no simple actions to address either of these stresses until infrastructure and technology improvements open capacity, allowing supply to catch up with demand.
Manufacturers are very overconfident in their ability to handle cybersecurity attacks.
About one in six Wisconsin manufacturers know they have been breached and their experience taught them to be much more wary about future attacks. Only 61% of them feel confident about their cybersecurity, while 85% of the unbreached feel confident. The focus group results reinforce this hubris as many manufacturers cite hope as one of their key strategies. Manufacturing strength depends on our ability to keep operations secure.
The data also suggests manufacturers are bifurcating between those who are investing for the future and those who are not.
The companies embracing the future create detailed plans they execute with precision, develop a compelling employer brand, build resiliency into their operations, and focus on growing into new opportunities. Those new opportunities result from the trend to bring manufacturing back to the U.S. and a new competitiveness resulting from the effective implementation of new technologies. These leaders forge ahead while those clinging to the status quo fall behind. Many will never catch up.