Despite the many challenges brought on by the pandemic, political reforms, tariffs, climate shifts, and more, the manufacturing sector is optimistic about its future with expected growth of 7.2% through 2021.
That’s definitely a positive forecast, but even those enjoying growth will continue to face manufacturing challenges in the years ahead. Read on to learn about the greatest challenges facing manufacturers and insights into potential solutions, including the role that the construction industry will play.
1. Supply Chain Disruption
For the foreseeable future, supply chain disruptions are among the biggest challenges impacting the manufacturing sector. Inventories are currently at their lowest levels in decades, meaning some products simply can’t be produced. The shortage of semiconductors from Taiwan, China, and other offshore producers has even forced the shutdown of some automaker facilities.
Domestic production has also struggled. Some examples include bottlenecks in food production, electrical equipment, and construction supplies. The lumber shortage and demands for steel have impacted the construction industry, and rising construction material costs have caused some organizations to consider waiting to start their expansion projects. Manufacturers contemplating this situation also need to keep other factors in mind, however, such as interest rates, potential lost revenue, and more.
The “real time” manufacturing mindset and limited inventories exposed vulnerabilities in manufacturing supply chains. Companies with the financial means are considering returning to the days of stocking up on inventories, increasing a demand for more warehouse space.
Even if manufacturers have the raw materials for their products, they likely don’t have enough people to build them. The competition for skilled workers is fierce. Since the pandemic began, shift-work activity dropped more than 13%, and more than half of U.S. manufacturers say they’re having trouble finding qualified candidates.
Providing competitive pay and benefits and a positive culture is a given. One of the top reasons impacting the ability to recruit younger workers to manufacturing is the negative industry perception. Administrative positions may not suffer the same stigma as those in the production facility. That’s because office workers typically benefit from a clean, climate-controlled working environment. For the production floor, however, potential recruits have visions of dirty, hot, and laborious working conditions.
Seeing the need to change perceptions and attract workers, many manufacturers with aging facilities are looking to update them or construct new ones. A clean, state-of-the-art working environment with climate control, pleasing aesthetics, comfortable break rooms and amenities, and technological capabilities to reduce physical strain is critical for attracting and retaining good workers.
3. Worker Safety
Manufacturers have a heightened awareness of protecting their workforces from potential health risks. Ensuring physical safety from trip and fall hazards and other OSHA requirements continues to be a priority. But, realizing that an outbreak of illness could threaten their already limited workforces and stop production, employers are equally concerned with minimizing risks of infection.
Improving air quality within manufacturing facilities by upgrading HVAC systems, air flow, and filters is one way to support a healthy work environment on the production floor and in offices. Manufacturers may also need to increase storage capacity for additional PPE equipment, and may want to consider reconfiguring or adding on to their facilities to support social distancing initiatives and future growth.
Changes to corporate office design also needs to be a consideration, including reconfiguring workstations to maintain social distancing, adding touch-free features, and upgrading surfaces to those made from antimicrobial finishes. Improving floor plans, HVAC systems, and features can be accomplished by working with a qualified construction manager that provides all-in-one holistic solutions.
4. Emerging Technologies & Cybersecurity
One way that manufacturers are attempting to overcome the labor shortage is through technology. While robotics have long been used to perform some human functions in manufacturing, there is renewed interest in investing in more of these types of technologies.
COVID-19 has heightened the need for IoT technology and innovation, enabling manufacturers to compete in a digital-first business environment. With a growing number of connected devices and technological advances comes the need for greater cybersecurity.
Many manufacturers still operate using legacy systems, while others have fully adopted new technologies. Both pose risks, and maintaining multiple layers of security, including firewalls, multi-factor authentication, facial recognition software, 24/7 monitoring, and more are critical in today’s highly digital landscape. Updating secure, climate-controlled server rooms is also a critical step in protecting sensitive equipment and ensuring security.
The greatest measure against cyberattacks, however, remains educating employees on how to recognize phishing scams and avoid them.
5. Capacity Constraints
The pandemic and related supply chain disruption exposed an overdependence on foreign manufacturing, prompting a call for more “Made in America” products. The demand is leading to an expected 6.6% increase in production capacity. In stride, capital expenditures are expected to increase by nearly 9% in 2021, with some of those funds going to alleviate capacity constraints.
The need for more space on the manufacturing floor is being offset by a reduced demand for office space, as some administrative personnel continue to work from home. Many organizations are getting creative by reorganizing floor plans, remodeling, and investing in more tech-friendly furnishings that accommodate video conferencing and emerging technologies.
Some of those afore-mentioned capital expenditures are being spent on consolidating office space and converting a portion of it into production space. Expecting continued growth, others are looking to expand or build new facilities as part of their long-range planning. In either scenario, it’s critically important to work with a qualified construction manager and a commercial furniture consultant to strategize the best steps moving forward. They can also help an organization maximize existing space until it’s time to build.
Some manufacturing organizations are concerned that there is a shortage of construction firms with the capacity to do special or small projects. But if you’re considering building, expanding, or remodeling, know that The Samuels Group is ready to serve you, with a tight-knit team that treats each project with care. We’ll develop a strategic plan that works with your budget to help you face today’s challenges and reach your long-term growth goals.