It’s a difficult time for the manufacturing industry, the new decade brings many challenges. Here are some ways to survive the hard times.
We live in interesting times…
Which is apparently a phrase from an ironic curse (“may you live in interesting times”) meaning “times are hard.”
And times are getting a bit hard for many in the manufacturing industry. According to a recent survey from Deloitte, 2020 is beginning as a tough year. Their report begins:
“2019 began with the US and global manufacturing sectors experiencing continued growth, though recently the manufacturing sector has slowed as the risk for a downturn in global manufacturing increases.”
Manufacturing growth is starting to reduce following several prosperous years. This year, the robotics industry also experienced its biggest significant dip ever since the RoboGlobal stock index started tracking the industry back in 2008.
How can manufacturing businesses survive in this time of uncertainty?
What can we personally do to avoid being hit hard?
Are there any good actions we can take?
Here’s a guide to surviving in these potentially hard times.
5 Challenges that the New Decade Has Brought
No single thing is causing the slowing down of manufacturing demand. However, various different forces are coming together to mean that this new decade will begin with some challenges.
1. Slowing Production in Some Industries
According to JP Morgan, the three most affected industries in 2019 were energy, automotive, and aerospace. This slowdown is the result of many factors, which vary depending on the specific industry. For example, falling oil prices are affecting the energy industry and a glut of inventory is affecting the automotive industry.
The slowdown is not a sudden effect. The Institute for Supply Management recently revealed that manufacturing has been shrinking in the USA for the past three years.
2. Growing Trade Tensions
Many of the commentaries on this current slowdown mention trade tensions. Tensions between the USA and China have caused a “tit-for-tat trade war” which is affecting the confidence of the manufacturing industry. According to analysts, the stock market is currently experiencing “higher lows and lower highs”
3. Limited Job Growth
The past year has seen a significantly lower rate of job growth than in previous years. Within the manufacturing sector, only 6,000 jobs per month were added in 2019 compared to 22,000 jobs per month in 2018.
4. Skills Shortages
A related challenge is the presence of skills shortages within the industry. This is when there are not enough skilled workers to fill particular important roles. Skills shortages are not just a problem in the manufacturing industry — we previously reported on one in the construction industry.
Historically, the “tight” labor market (where unemployment is low and demand is high) has hindered the growth of the industry so skills shortages can really restrict growth.
5. Supply Chain Volatility
Another challenge is that supply chains worldwide are currently volatile. The markets are changing and supply chains need to adapt quickly to keep up, which is hard. According to an MSG report, customers are now demanding more local production, lower environmental impact, more customization, and higher quality.
Forbes has even called 2020 “the most volatile year in history.”
How to Succeed in These Challenging Times
Clearly the manufacturing industry is not in the best position that it’s ever been… but there is a lot you can do to avoid being hit by the challenges. In fact, with the right actions, you can even turn this period of reduced growth to your advantage!
The recent Deloitte report identified several strategies that manufacturing businesses are already taking to help them “weather the storm.”
Here are five strategies you can use to give yourself a head start in this new decade:
1. Streamline Operations
One of the best actions a company can take in a downturn is to use the opportunity to streamline operations. When order numbers go down and production decreases, there is sometimes a tendency for businesses to go into “panic mode” and become reactionary instead of strategic. This is not a good use of anyone’s time or energy.
As the report described, a much better use of downtime is to “get your house in order.” Streamline your production processes, sell off any unnecessary investments, and realign with your key markets.
2. Invest in Robotics
One tried and tested way to tackle skills shortages is to invest in robotics. Robots can help to fill jobs that would otherwise be impossible to fill in the current climate, improving the situation both in the short term and in the long term.
2019 saw the introduction of a national approach to help companies use robots to fill jobs that are suffering from skills shortages.
3. Forge New Partnerships
The volatility of supply chains is causing many manufacturing businesses to make an important realization — we can’t work in isolation. The Deloitte report found that front-runner businesses are taking this opportunity to forge new partnerships five times more than other businesses are. This doubles the value that they give to customers and allows them to accelerate towards their business goals despite the challenging times.
4. Embrace Renewables and Sustainability
One of the changes in the wider market currently is the necessity for more sustainable businesses.
During times of difficulty, sustainability can seem like just another nuisance which places pressure on our business. However, moving to more sustainable processes could actually save a business. Some companies are finding that moving to renewable energy, for example, has opened up new revenue streams, reduced energy dependency, and cut costs.
5. Innovation and Invest in Your Business
Although it can seem counterintuitive to invest money when things aren’t going well, it is often the best strategy. Investing in the right new processes, expertise, or technology can be a way to set our business back on track despite challenging times.
The new decade is upon us and it’s up to us how we use our resources to look ahead. Instead of seeing this challenging time in manufacturing as a bad thing, we can see it as an opportunity!
What should you invest in that will really make a difference?
We’ve given you a few options here which manufacturing businesses are already using to overcome these interesting times. Now, the choice is up to you!