The State of U.S. Manufacturing, Reshoring and Cautious Optimism Amid Shortages

In this post, we look at what manufacturing industry experts are saying about the state of U.S. manufacturing. Most convey a cautious optimism due to ongoing reshoring and new technologies, despite continuing shortages.

Reshoring

With trade and politics more linked today than ever before, industry watchers see a significant Interest in reshoring. Looking at Kearney’s Reshoring Index, 90% of manufacturing executives of mostly mid-market companies reported plans to reshore or nearshore soon.

The risk of relying on suppliers in countries that lack political stability, have been undependable, or may be subject to future sanctions appears to be driving the reshoring push. Indeed, localized and regionalized supply chains are better positioned to counter risks from broader conflicts. Thus, as U.S. companies move to reshore, others will likely follow.

Industry experts suggest that middle market companies that want to balance the risk of investing in China, should invest in the United States or its allies.

The overall economic effect of reshoring is significant. The latest Thomas State of North American Manufacturing Report ventures that manufacturers seeking to reshore their supply chains may contribute $443 billion to the U.S. economy.

Cautious Optimism

According to the WestMonroe 2022 Manufacturing Outlook Report, 87% of manufacturers remain optimistic this year. Yet, as supply chain challenges appear to be easing, uncertainty continues. Indeed, some doubt remains due to the resurging pandemic and lower than expected vaccination rates.

With container ships starting to move again, worker shortages persist. Resurging infection rates and employees looking for better working conditions and pay don’t help. As a result, companies struggle to attract and retain talent. Despite the challenges, cautious optimism prevails.

Another good sign for manufacturing, 75% of executives surveyed are bullish on the U.S. economy. Hence, 70% of manufacturing sector respondents expect to grow organically, while 51% plan to introduce new products or services. And 42% of those surveyed plan to enter new markets or segments.

The scarcity found in raw materials, labor, and finished goods stands to improve. As bottlenecks ease, the job market cools, and automation increases, supply and customer demand will find a healthier balance.

In addition, the continuing adoption of digital technologies should help to streamline production. Hence, we will see greater efficiency between producers, suppliers, and customers.

State of U.S. Manufacturing

Labor Shortages and Supply-Chain Woes

Manufacturers who struggled with a skilled and unskilled labor shortage before the pandemic, now face a full-blown crisis. To fill the labor gap, they must learn to tap nontraditional sources for talent.

Whether it’s grabbing workers from other industries that were hit hard by the pandemic or looking in unexpected places to find the right talent, those who expand their search and invest in the training to get them up to speed will have an edge.

The degree to which supply-chain disruptions expanded in 2021 surprised many in manufacturing. Unfortunately, they can expect higher costs and erratic material shortages through 2022. To offset inflation, improvements in operational efficiency will be necessary. However, many manufacturers will be forced to pass higher costs on to their customers.

Supply-chain disruptions increasingly influence purchasing decisions. Just-in-time inventory becomes just-in-case stockpiling as companies seek to fortify production schedules. Thus, hey must invest more into sourcing and stocking the required materials to minimize production delays.

Doing More with Less

While the manufacturing industry faces some significant challenges, mid-market and small manufacturers may have an even rougher go of it. They possess fewer resources for surviving increasing labor and material costs than their larger competitors.

Consequently, they must invest in enabling technologies and strategies to do more with less. Investing in shop floor automation and partnering with trade associations to expand their purchasing power come to mind. Look for innovative solutions in the coming year with the potential to power the industry into the future.

The State of U.S. Manufacturing Aided by Back to the USA

We learned in a previous post that the shift of manufacturing back to the USA began quietly before the pandemic. Changes have been building with the effect of removing some of the Chinese manufacturing luster. Now forces unleased by the Pandemic, such as reshoring and automation, provide reasons for cautious optimism.

As a strong supporter of U.S. manufacturing, Airbrasive stands ready to assist U.S. producers and others as the state of U.S. manufacturing improves. Look to Airbrasive for all your micro abrasive blasting equipment and blasting media requirements.