Introduction

Despite major labor and supply chain issues, the manufacturing sector is quickly recovering. Manufacturers must manage increased risks while achieving sustainability goals if they want to keep this momentum going. Our 2022 perspective looks at five themes in the manufacturing sector that can help businesses capitalize on growth and turn risks into benefits.

Business agility is necessary to compete in the modern market.

Positive economic indicators rarely coexist with long-standing labor and supply chain issues. However, this is the course that the US industrial sector will take when it recovers from the pandemic in 2022. Following the introduction of vaccines and an increase in demand, the restoration gained a foothold in 2021. Strong growth in new orders for all key subsectors indicates growth will continue in 2022 as industrial output and capacity utilization approach pre-pandemic levels in the middle of the year.

However, realism about persistent hazards restrains confidence about revenue growth. Operational effectiveness and profit margins are declining as a result of labor shortages and supply chain instability.

Analysis of Five Key Indicators 

Businesses that want to survive the uncertainty caused by an abnormally rapid economic recovery—and compete in the following growth period—might need to be agile in their operations. Our 2022 manufacturing industry overview covers five key themes to take into account for manufacturing playbooks in the upcoming year as leaders seek to both boost their attack and protect against disruption.

One way to address the current talent shortage is by preparing for the future of work.

Lack of workers

Increased productivity and growth in 2022 are likely to be constrained by record-high unemployment rates, and last year we predicted a shortage of 2.1 million skilled jobs by 2030. Companies should combine reskilling programs with a remaking of their employment brand in order to draw and keep talent. Making manufacturing occupations a more attractive entry point could be crucial to closing the industry's public perception gap and filling open positions in 2022. The current wave of retirements and voluntary exits can be somewhat countered by engagement with a larger talent ecosystem of partners to reach varied, competent personnel pools.

Beyond the next catastrophe, manufacturers are redesigning their supply chains to gain an edge.

Severe supply chain problems are still developing. There is no denying that manufacturers experience almost constant interruptions on a worldwide scale, which raises costs and puts their adaptability to the test. Reports from purchasing managers continue to highlight systemic issues caused by excessive demand, rising transportation, and raw material costs, and sluggish shipments in the United States. Truck driver shortfalls and traffic at US container ports are among the transportation issues that are projected to persist in 2022. Higher expenses are more able to be passed on to customers if demand exceeds supply.

Increased use of digital technology may result in greater operational efficiencies.

Companies should adopt digital capabilities across all corporate operations and the production floor if they want to drive growth and safeguard long-term sustainability. Another key to boosting competitiveness is the use of industrial automation, which for many industries may include greenfield and brownfield investments. More linked, dependable, efficient, and predictive operations at the plant are leading to advancements and results for more firms. Given the correct combination of vision and implementation, emerging and changing use applications can continue to grow from solitary internal technology initiatives to complete production lines or factories.

The industry is becoming more prepared as a result of emerging dangers.

Recent high-profile cyberattacks on corporations and governments have made cybersecurity a risk management requirement for the majority of executives and boards. The pandemic's rising hazards increased the market risks for manufacturers targeted by ransomware. More controls are needed because the linkage of external networks, operational technology (OT), and information technology (IT) increases the threat surface. The complex network difficulties of today weren't designed for legacy systems and technologies. Manufacturers are becoming even more vulnerable to breaches due to remote work risks.

Manufacturers should consider their businesses' resilience in the case of a cyberattack in addition to their cyber security.

The advancement of sustainability is anticipated to receive greater resources and rigor from manufacturers.

The rapid emergence of environmental, social, and governance (ESG) concerns is giving sustainability in designing and producing a whole new level. ESG is important for the financial health and competitiveness of organizations because the cost of capital can be correlated with ESG ratings. In manufacturing, there will certainly be an increase in demand for reporting on measures related to diversity, equity, and inclusion. Although it moves slowly, board diversity is also gaining ground. Most manufacturers are increasing the visibility of their ESG activities in order to recruit talent and meet employee expectations.

Conclusion

The increased use of digital opportunities, sustainability, and labor shortages can be battled by undertaking effective steps to redesign the structure of the entire organization. The manufacturing industries should look upon these avenues for increasing growth rates and cause economic development.