Supply chain interruptions have occurred both domestically and internationally as a result of operational and financial challenges caused by the pandemic. Manufacturers must conduct due diligence to identify potential supplier difficulties and implement timely fixes in order to ensure future economic success. These solutions vary based on the firm and industry it serves, but for some, finding alternative, local suppliers is one of them. Prior to the pandemic, global supply chains built on just-in-time concepts mostly failed to respond to the early shockwaves caused by Covid-19. Manufacturers will create economic growth in their communities while reducing the danger of worldwide disruptions by investing new resources and attention to creating regional supply networks.
Manufacturers must adopt automations to further boost production capacity during periods of fluctuating demand, in addition to fortifying local supply networks. Manufacturers who engaged in technology after the early 2000s recession saw much stronger revenue growth than those that did not. Technology has become even more important in establishing operational excellence amid economic downturns two decades later. Automations will not only improve the efficiency of manufacturing environments, but they will also save money, improve safety, and increase production, resulting in the revenue growth needed to keep the country growing.
Even with supply chain optimizations and technology enhancements, the manufacturing sector still faces challenges before attaining pre-pandemic production and employment levels. April 2020 will see the lowest levels of manufacturing employment since 2010, as well as a drop in annual manufacturing GDP growth and industrial production. To match economic demand, hiring should be a primary goal as the manufacturing sector begins an uncertain recovery period.
Job opportunities across all industries increased by 268K in February 2021, bringing the total to 7.4 million countrywide, and both the durable and nondurable products manufacturing sectors are critical to maintaining this rising trend and alleviating the overall labor crisis.
According to Deloitte’s research, talent and the future of work is a high-impact disruptive element for manufacturing’s future, but most companies say they aren’t ready to deal with it. In the wake of the Covid-19 outbreak and the recession, this long-dormant issue has become more obvious and urgent. As the epidemic fades, strategic initiatives for talent acquisition must be implemented to ensure that capacity can be reached.
It is critical for the industrial industry to commit to rapid hiring for quality personnel acquisition in order to successfully emerge from the Covid slump. This is due in part to the slow-growth nature of manufacturing companies, but it is also attributable to public opinion of the industry. Manufacturing is sometimes referred to as the “ugly stepsister” of the job market, as high-demand industries such as technology have a certain level of sex appeal and gravitas that appeal to job seekers. To avoid attrition to these more desirable roles during the time it takes to perform the interview and recruiting process, manufacturing companies must establish and capitalize on talent pipelines of qualified people in a time-sensitive way.
One thing is certain at this time of uncertainty: complacency is not an option. To recover after a disaster, the manufacturing industry must redouble its efforts to solve supply chain disruptions and workforce shortages. Manufacturing’s supply chain reorganization, process automation, and continued hiring are critical to the sector’s future performance and, ultimately, the national and global economy.
Is manufacturing experiencing a downturn?
According to data issued by the Federal Reserve on Friday, manufacturing in the United States was in a moderate recession for the entire year of 2019. Despite consistent expansion in the overall economy, factory production in the United States fell by 1.3 percent last year, according to the Federal Reserve.
Is manufacturing in the United States increasing or decreasing?
I’ve been perplexed recently by inconsistent messages from people and news sources I follow. On the one hand, I’ve heard and read (from reliable sources) that manufacturing in the United States is “hollowed out.” Factories are closing or relocating to nations with lower labor costs. Employees are being let go. Manufacturing in the United States is no longer what it once was.
On the other side, there appears to be a deep well of empty manufacturing positions in my reporting and other obligations for SME. According to Labor Insight (Burning Glass Technologies) as of October 13, 2020, the nationwide demand for manufacturing jobs was over 2.1 million, with an average unemployment rate of 5.7 percent.
In October, I moderated a panel discussion with employers attempting to attract, if not beg, people to apply for jobs in their stores. This, in the midst of a pandemic-induced economic downturn. People still recall the acre-sized parking lots outside enormous manufacturing companies loaded with workers’ automobiles. They’re now completely empty. So, is manufacturing on the rise or decline? Are you on the fall or are you on the rise?
Allow me to explain. The Federal Reserve provided me with a gauge of industrial production across decades. The Index of Industrial Production is what it’s named. This is a rosy view of manufacturing. Industrial production increased on average from 1980 to 2019, notwithstanding significant dips due to recessions. What about the work force? I dug a little more into employment data from the Bureau of Labor Statistics. This image is very mixed, and it isn’t good in the long runbut it has recently improved. In the graph below, the graphs are stacked over the same years.
This picture can be used to draw a variety of conclusions. I encourage you to create your own.
What are mine, you might wonder? From 2000 to 2010, there was an upward trend in productivity. More production was produced with fewer personnel, resulting in a significant increase in productivity. After then, the Great Recession struck. After that, labor keeps track of overall productivity. So, from 2010 to present, there has been an increase in output and a decrease in population, implying that productivity has remained constant. Something happened between 2000 and 2010 that resulted in all those employment losses. China? Automation? Is there a different product mix? There is still more excavating to be done. However, if current trends continue, a career in manufacturing will be a safe bet.
(Note that I conveniently ignored the pandemic’s downward spike.) Only time will tell if the pre-pandemic trends will continue. I have a feeling they will.)
Why is manufacturing in the United States declining?
Manufacturing jobs are on the wane as the industry becomes increasingly automated. Manufacturing has become much more efficient as a result of technological advancements. However, as technology has improved efficiency, fewer jobs are available in the field. With the use of technology, a single individual may now perform tasks that previously required numerous personnel.
Since the 1960s, industrial robots have been utilized in mass production. Companies have saved significant amounts of money and increased productivity as a result of automation. Robots, after all, do not require breaks, allowing them to operate 24 hours a day, seven days a week. Automation is also predicted to develop in the future.
What is causing the slowdown in manufacturing?
(Reuters) WASHINGTON, Sept 15 (Reuters) As the COVID-19 epidemic continues on, manufacturing in the United States slowed more than predicted in August due to Hurricane Ida’s interruptions and continuing shortages of raw materials and personnel. The Federal Reserve said on Wednesday that manufacturing production climbed by 0.2 percent last month.
When did manufacturing start to fall out of favour?
Manufacturing in the United States had a nightmare between 2000 and 2010. Manufacturing jobs in the United States, which had been largely steady at 17 million since 1965, fell by one-third during that decade, from 5.8 million in 1965 to less than 12 million in 2010. (returning to just 12.3 million in 2016). Certainly, the financial crisis of 200708 intensified the disruption, but the causes were structural as well as financial. Capital investment, output, productivity, and trade imbalances all have issues. Contrary to popular belief, productivity gains attributable to robots or automation have not been the cause of manufacturing job losses; the industry has been shrinking.
This economic upheaval has led in escalating social unrest. During the 2016 US presidential election, a working class facing diminishing salaries came into vivid, angry view, while most people in the US felt the country was becoming one huge middle class. Men without a secondary school diploma saw their median income drop by 20% between 1990 and 2013, while men with a secondary school diploma or some college saw their median income drop by 13%. The fall of US manufacturing, which was formerly a stepping stone to the middle class, affected these populations especially hard. There is now a significant concern with income disparity.
The question is whether the US industrial sector can recover. The idea that new manufacturing paradigms could alter the sector is now being researched in the United States. We’ve seen these new paradigms before: steam power in the United Kingdom, interchangeable machine-made parts in the United States, mass production in the United Kingdom, and quality manufacturing in Japan. Low-wage, low-cost producers, mainly in Asia, are now competing with the United States. Could the economy take advantage of its still-strong innovation system to develop new production paradigms that would increase production efficiency and lower prices, allowing it to compete more effectively?
Production innovation can enable more innovativeand competitiveproducts, which has its own set of benefits. Scientists and engineers are increasingly claiming that there may be breakthroughsnew paradigmsavailable in a number of sectors that might drastically alter the way we manufacture complicated, high-value technology and goods, allowing for tremendous production efficiency. Advanced materials, digital manufacturing, photonics, lightweight composites, 3D printing, assistive robotics, revolutionary fibers, nano and biofabrication are all examples of new manufacturing paradigms. To put these new technology advancements into practice, new processes and business models are required. While new jobs may not be produced at the point of production, given manufacturing’s function as a significant job multiplier in connected value chains, job growth upstream and downstream of production is likely.
The primary goal behind advanced manufacturing in the United States is to create such new paradigms. 14 new advanced manufacturing institutes, each organized around a prospective paradigm, are now being investigated in depth as a means of nurturing such paradigms. They are doing joint research on breakthrough technologies, shared test beds and demonstration facilities, and novel ways in workforce training. They were created through cooperation between industry, universities, state and federal governmentsand all costs are shared by all. They are an attempt to adapt Germany’s Fraunhofer Institute model for use in the United States, as well as a nod to the older US Sematech collaborative approach, which used innovative manufacturing methods to reclaim semiconductor leadership in the 1980s and 1990s.
This is a complicated model: each institute often brings together over a hundred small and big businesses, regional universities and community colleges, state and regional agencies, and government research and development organizations. These R&D agencies pay single scientists as primary investigators, rather than a swarm of different collaborators. Creating a manufacturing institute, according to one federal official, is akin to founding a new country. Because manufacturing enterprises are anchored in regional ecosystems, the institutes must work at a regional level, but they must also execute their new production methods at a national level, a difficult regional-national balancing act.
The institutes have also become a new delivery method for workforce education, which is becoming an increasingly difficult task for US industries. If modern manufacturing is to be adopted, the workforce and engineering communities must be prepared. The US labor market is likely the most decentralized of any modern country, making such a large-scale “up-skilling” effort impossible. The institutes are already pursuing this goal, thanks to their ability to bring together manufacturers, community colleges, state programs, university curricula, and online resources, as well as new technology development and testbed facilities.
The wide range of technologies targeted by various institutes is perhaps the most intriguing aspect of the US advanced manufacturing endeavor. While other countries are focusing on single-shot efforts to integrate the internet of things into manufacturing, the United States is taking a shotgun strategy, targeting a wide range of technologies ranging from materials to digital, bio, and nanotechnology. Pulling the many institute strands together into a new system will be a major challenge in this diverse approach. The future factory will be organized around a range of technologies rather than a single one. ManufacturingUSA is a network of institutes that are starting to come together. The transformation of the institutions’ sophisticated technology strands into an altogether new manufacturing system will be a major undertaking for this new network. Hopefully, this new innovation model’s potential will be further explored.
Advanced Manufacturing: The New American Innovation Policies, MIT Press, Boston (forthcoming). Bonvillian, William, and Singer, Peter (forthcoming).
OECD Publishing, Paris, 2016. OECD Science, Technology and Innovation Outlook 2016.
Is it possible for the US economy to thrive without a strong industrial base?
In economics, Kaldor was a divisive figure. He chastised mainstream economics for their over-emphasis on “equilibrium” ideas, calling them “barren and irrelevant.” Instead of focusing on markets’ ability to merely allocate existing resources, he wanted to concentrate on their creative role. His analysis of the demise of the UK manufacturing sector urged for greater economies of scale and expansionary fiscal stimulus from national governments, supplemented by import prohibitions where appropriate.
Monetarists and neoliberal economists, predictably, were outraged by this “supply-side Keynesian” approach. Poor industrial relations, insufficient investment in R&D, insufficient investment in technical education and training, and poor management have all been blamed for manufacturing issues in developed countries like the UK.
As a result, Kaldor’s beliefs on economic growth and the significance of manufacturing have been criticized. They do, however, raise some intriguing concerns about manufacturing’s overall contribution to a country’s long-term economic growth and overall productivity. They also draw attention to the long-running, and often acrimonious, debates among economists on how a country’s economy should be managed.
These theoretical issues remain as fierce today as they were for Kaldor in the 1960s, based on the nature of the recent debate over whether or not Australia should have a car manufacturing sector. Such theoretical arguments are meaningless to workers who have lost their employment.
Since at least the 1980s, academics and policymakers have been concerned about what has been dubbed “deindustrialization” of the industrialized countries. The bulk of industrial economies have shifted due to low productivity growth and the rise of new challenger nations such as Japan and Taiwan.
There was a substantial level of structural unemployment as industrial jobs were shifted abroad. By the end of the 1980s, the services sector accounted for the bulk of jobs, and there was talk of a “post-industrial society.” The rise of China as a global manufacturing superpower over the last two decades has posed a new challenge to other countries’ manufacturing bases. This raises more questions about whether or not it matters whether or not a country’s economy has a manufacturing sector.
Manufacturing, according to some observers, is important, and the loss of manufacturing jobs is bad for the economy. Professors Gary Pisano and Willy Shih of Harvard University’s Business School recently expressed this viewpoint on manufacturing’s relevance. They claimed in an interview conducted in March 2011 that manufacturing is critical to the long-term viability of the US economy.
According to Pisano and Shih, the US economy will struggle to sustain innovation if it does not have a manufacturing sector. They say that off-shoring, or “exporting” manufacturing work to other countries, risks eroding America’s industrial commons.
They cite examples of American companies exporting semiconductor manufacture in the past. As a result, the personnel competencies and production methods needed to produce such technology were virtually lost to American business. Taiwanese, South Koreans, and, increasingly, Chinese manufacturers were able to expand their manufacturing base as a result of this. There was a move from semiconductors to the fabrication of flat screens. This tendency is now shifting to LED technology, and they predict that high-efficiency lighting will be purchased primarily from Asian manufacturers in the near future.
This viewpoint is similar to that of the US Council on Competitiveness, which launched the “Make: An American Manufacturing Movement” project in late 2011.
The belief that manufacturing is important lies at the heart of this program. Manufacturing must be viewed as a tool for promoting innovation, not as a “stupid, nasty, dangerous, and dying” business. It’s an industry that should be thought of as “smart, safe, sustainable, and growing.”
Manufacturing in the United States directly employs over 11 million people and contributed roughly US$1.7 trillion to the national economy in 2010, according to the US Council on Competitiveness. It also has one of the strongest multiplier effects of any industry area and provides skilled and well-paid employment.
The Global Manufacturing Competitiveness Index, a joint endeavor with Deloitte, is highlighted in the report. The ability to bring together a variety of macro and micro level elements, as represented in the diagram below, is critical to a competitive manufacturing industry. The role of government policy is critical. However, too do labor costs, energy costs, infrastructural quality, and legal and regulatory systems.
The long list of suggestions that emerge from this comprehensive research is lengthy, but they all demand for action on the part of both industry and government. Fiscal reform is being advocated in order to restructure the tax system and minimize regulatory and structural expenses that stifle innovation and new enterprise creation. To improve exports, the paper also recommends improvements to intellectual property (IP) legislation, international standards for interoperability, and export control regimes. Working more closely with trading partners to implement anti-counterfeiting systems is a significant component of this.
The report also recommends a significant investment in education and training to encourage more students to pursue engineering and related technology and production industries. In terms of human capital development, it aims to leverage the mechanism of international education to recruit more competent and bright students to the United States with the goal of keeping them in the workforce.
Small and medium-sized businesses (SMEs) are also emphasized. This includes improved managerial development support and apprenticeship programs to help small businesses grow. It also aims to raise the degree of innovation through forming advanced manufacturing clusters, networks, and collaborations. This entails updating factories to incorporate more technologically advanced smart manufacturing processes. Finally, the paper calls for smart, sustainable, and resilient investments in transportation, manufacturing, and telecommunications infrastructure.
The manufacturing industry in Australia is far smaller than in the United States. It does, however, employ 945,600 people, or about 8.5 percent of the total. This is roughly five times the amount spent in the mining industry. Despite recent declines in capital equipment and research and development spending, the manufacturing sector contributes much more to innovation than other industries.
Although the economic prosperity generated by Australia’s mining and energy sectors cannot be overlooked, such resource booms must inevitably come to an end. This peak is expected to occur in 2014-2015, according to the current outlook for resource sector investment. This has been predicted for some time, but it has only lately gained news as a result of Deloitte Access Economics’ reporting.
It is critical that Australia prepares for the inevitable slowdown in the expansion of our mining and energy sectors. Manufacturing plays a significant part in a more diversified economy, which is necessary in the long run.
As the United States has demonstrated, the key to improving our manufacturing industries is to simultaneously address a number of macro and micro challenges. Fiscal policy, especially taxation regulations, must be changed to encourage industries to invest in capital equipment and R&D in order to transition to a more competitive future.
Local manufacturers, particularly SMEs, want more assistance to link with global supply chains. Education and training of the Australian workforce is also an important area in which future investment is needed. Our universities and technical schools must be funded in order to deliver best-practice programs that can meet industry’s future needs. Manufacturers must also be able to link with such institutions for research, teaching, and training.
Finally, continuous investment in our national infrastructure, particularly programs like the National Broadband Network and the use of environmentally sustainable technologies, is required.
Will the United States reclaim manufacturing from China?
The United States has acquired a considerable quantity of masks from China since the onset of the COVID-19 pandemic. Between March 1, 2020, and February 28, 2021, China exported nearly 43.85 billion masks to the United States, according to Chinese statistics. As a result, the announcement is interpreted as a strong signal that manufacturing will return to the United States.
Is American manufacturing expanding?
Even as spending shifts back to services, manufacturing, which accounts for 12% of the US economy, is being bolstered by strong demand for goods. Businesses’ inventories are likewise exceedingly low. However, the Covid-19 epidemic has stressed supply systems, which is a constraint.
During the Covid-19 epidemic, spending moved from services to products, putting a pressure on global supply lines.
After increasing by 10.1 percent in October, auto plant output increased by 2.2 percent last month. However, due to a global scarcity of semiconductors, vehicle production is still 5.4 percent lower than a year ago. Manufacturing output increased by 0.6 percent in November, excluding vehicles.
Manufacturing output increased by 0.5 percent last month, while mining output increased by 0.7 percent, bringing industrial production to its highest level since September 2019. This came after a 1.7 percent increase in October. The production of utilities declined by 0.8 percent.
Capacity utilization in the manufacturing sector jumped 0.5 percentage point to 77.3 percent in November, the highest level since December 2018. Last month, overall capacity utilization in the industrial sector increased by 0.3 percentage point to 76.8%. It is 2.8 percentage points lower than the average from 1972 to 2020.
Capacity utilization indicators are often used by Fed officials to determine how much “slack” remains in the economy, or how far expansion can go before it becomes inflationary.
When did manufacturing in China begin?
In the 1980s, Hong Kong’s labor-intensive businesses, which relied on the city’s low prices to be competitive, were confronted with rising land rents and labor expenses. Furthermore, when the demand for products expanded, the rise in population was insufficient. Hong Kong’s capital-intensive and technology-intensive industries were underdeveloped in comparison to the other three Asian Tigers, while some less developed countries, such as Thailand, Malaysia, and Indonesia, outperformed Hong Kong in the labor-intensive industry. Another issue was Western countries’ increasing protectionism, which resulted in the removal of some privileges and the imposition of additional limitations on Hong Kong exports.
Meanwhile, economic reforms in Mainland China created favorable conditions for the construction of factories. Mainland China has more labor and land, as well as less stringent pollution regulations than Hong Kong. In 1981, Hong Kong’s average daily wage was HK$65, compared to HK$2 in Guangdong in 1980. Infrastructure and amenities in mainland China were less developed than in Hong Kong, significantly reducing expenses. It also boasts a huge local market and plenty of flat space for industrial development. As a result, Hong Kong industrialists took advantage of the pull factors in Mainland China and relocated their factories there.
The Pearl River Delta became home to the majority of the manufacturers. The Pearl River Delta’s highways, ports, and communication networks were efficient, and cities like Guangzhou and Foshan had strong light industry bases. According to government estimates, 94 percent of the relocated enterprises moved to Guangdong between 1989 and 1992. 43 percent moved to Shenzhen, and 17 percent moved to Dongguan. Industrial relocation, on the other hand, was not restricted to Mainland China. Some manufacturers moved their operations to neighboring nations like Thailand, India, the Philippines, Myanmar, Bangladesh, Vietnam, Indonesia, and Malaysia.
Two distinct words have been coined. The first,’made in Hong Kong,’ refers to a process in which all power, resources (excluding raw materials imported from other countries), labor, capital, design, and management are all done in Hong Kong, and the goods are either sold locally or exported internationally. This system is a manufacturing pre-relocation system. The second,’made in Hong Kong,’ relates to the capital, design, management, and office processes that take place in Hong Kong. Power and labor, on the other hand, come from mainland China, where the industries are located. Hong Kong is used to deliver raw resources to mainland China. The products are subsequently transported to places all around the world. This system explains the procedures followed by the relocated factories.
In the late 1970s, the first plants were shifted to mainland China. The trend of relocation peaked in the mid-1980s. Over 80% of the factories had been transferred to Mainland China by the 1990s. Domestic exports continued to fall in value, while re-exports from Mainland China surged dramatically. Domestic exports accounted for only 7% of the value of toy exports in the toy sector, while Mainland China accounted for 93%. Between 1989 and 1994, the value of re-exportation from Mainland China climbed by an average of 25.6 percent every year. With the exception of the most valuable jewelry manufacture, the jewellery sector shifted most of its manufacturing process to the Mainland in the 1990s.
Nonetheless, several factories stayed in Hong Kong, either due to import quotas or restrictions on place of origin, or because Hong Kong was the only place with the necessary technology. It is not necessary to move industries that produce a modest number of high-quality goods. Some factories persisted because they have branches in other countries. Workshops for families have also remained.
Expansion Capabilities
To produce any product in the United States, a corporation must complete numerous processes, including:
These procedures are skipped by using Chinese facilities, and the company’s product is brought to market considerably more cheaply and quickly.
Chinese Manufacturing: Disadvantages
Using Chinese manufacturing has a number of drawbacks. Please keep in mind that these difficulties do not affect all Chinese manufacturing plants.
However, there are several drawbacks to Chinese manufacture that have been associated with it in the past:
Quality Control
Some Chinese factories are still using obsolete machinery, procedures, and workflows. As a result, quality control is not on par with that of more developed countries.
When there is a quality problem in production, Chinese producers don’t always go for the root of the problem.
The factory simply replaces the fuse if an appliance product stops working owing to a fuse melting due to a power surge. It seldom looks into why a surge occurred in the first place, in order to prevent it from happening again.
Chinese factories are unable to solve problems due to tight production schedules. It takes a lot of time and effort to come up with solutions.