Analysis
Prior to the pandemic, manufacturing plants were (usually) predictable. Employment, supply, production rates, and more were all measured and accounted for by historical data and tracked by organizations, companies, and federal boards. As the world transitions out of COVID-19 regulations we now face new challenges in international politics, materials, and workforce shortages. What has changed at the plant level and how has it altered the current state of plant management?
To no surprise, supply chain challenges concern 91% of plant managers. The U.S. supply strain index has fallen over late spring into summer months, but fluctuations in consumer spending in Q3 and mixed recession analyses could drive drastic change into 2023. Manufacturers have already seen an adjustment in inventory levels – whether a result of slowed spending or unfinished products – is up 18.2% in August 2022 from August 2021.
Carbon emissions also fluxed throughout 2020, but merely temporarily as emissions have resumed to regular levels. Manufacturing and production account for 1/5 of the world’s carbon emissions, but only 1% of surveyed plant managers found carbon reduction to be a challenge. The survey additionally found that small and mid-cap companies with revenues less than $2.9B, found a greater challenge dealing with footprint optimization (averaging 15% compared to 0% for companies with greater than $3B in revenue). With the rise in ESG strengthening the influence of consumers and shareholders, company-wide environmental strategies have not yet translated equally to activity at all plants. The EPA has measured a decrease in Scope 1 and 2 emissions over the last decade, but the data lacks specific tracking into solutions like process optimization or energy efficient improvements. Regardless, manufacturers will have to continue to make environmental and sustainability efforts at all levels of operations.
Unfortunately, for manufacturing companies large and small, the entire industry still faces a major setback after losing 1.4 million jobs from the pandemic. Hiring remains a challenge. There are not enough entry-level nor skilled workers choosing to enter manufacturing. Across all companies surveyed, hiring production workers ranked second on the list of challenges.
This does not mean manufacturers aren’t trying. In fact, the resurgence in manufacturing across the United States has added back around 1.43 million jobs, a net gain of 70,000 jobs across the industry since 2020. The advancements in automation and technology open opportunities for new hires as the types of positions and skills needed continue to diversify. Yet, the pipeline of potential workers gravitate toward positions with greater flexibility and a different working environment than manufacturing.
Employee retention is also part of the conversation, especially when looking at workforce generations. Pre-pandemic, Boomers had the highest annual rate to stay in the workforce. While retirements are headlining news articles, around 25% of Boomers remain in the workforce, and 65% plan to work past retirement age (65). Historically against job hopping, the working generation of Boomers may be sharing their knowledge to new employees. For the companies surveyed, training new employees is a lower concern, with only 32% reporting it as a challenge.
What are the needs for workforce education you have at your plant? Select all that apply.
The challenge with job knowledge and staffing falls into an education gap, as seen in the graph above. Apprenticeships can seem like an easy answer to get younger generations in the door and with training, but it will take time; programs often take one-to-four years to complete. The misperception of a job in manufacturing and access to the right opportunities could be pumping the breaks for new generations.
To recap, the current state of manufacturing is not static. External pressures continue to shape the direction of plant activities and show no significant sign of slowing down. Fluctuations in spending and demand have not transformed into measurable predictions on plant output and continue to blur when opening the equation to include operational effectiveness and staffing challenges. Plant managers need to stay vigilant to get through their day-to-day operations, but consider how these aforementioned challenges going to transform into new obstacles across product lifecycles, regulations, and skills gaps as each year passes.