May 16, 2020

Why the US manufacturing industry is seeing a recession

2 min
Why the US manufacturing industry is seeing a recession
All industries progress through boom and bust cycles, and the manufacturing industry in the United States is currently shifting downward. According to n...

All industries progress through boom and bust cycles, and the manufacturing industry in the United States is currently shifting downward. According to new regional index reports this week, manufacturing is down across the board in the US—all seven regional manufacturing purchasing manager’s indexes reported contraction. In other words, the industry is in a recession.

As Business Insider reports, this can be attributed to three key factors: a weakened energy sector, a decrease in investments from the mining sector, and a decreased demand from China that has lessened revenue from international trade. This decrease in demand in part has led to manufacturing outpacing sales.

RELATED CONTENT: Could automation be the key to job creation in manufacturing?

The report consults with expert analysts who note that this contraction is not a fluke and is likely to continue in the near future:

[Pantheon Macroeconomics’ Ian] Shepherdson thinks these conditions will persist, writing on Thursday that, "No one should be surprised from soft numbers in the industrial economy, regional or national. Just as the downshift in capex in the oil sector began to ease, the strong dollar and the slowdown in China's industrial economy have bitten, hard, and likely will inflict more pain over the next few months."


RELATED CONTENT: The Reshoring Initiative and Walmart launch effort to help suppliers reshore

But due to the industry’s cyclical nature, while the recession may be drawn out it will not last forever. Renaissance Macro analyst Neil Dutta told Business Insider that the industry will strengthen once again with time and with the upswing of trade:

"Trade is an important driver of manufacturing activity since trade is dominated by manufactured goods. Part of the weakness in trade is cyclical, given the slump in the global economy. Monetary policy has eased globally in response to soft growth and with a lag, this should boost activity."


[SOURCE: Business Insider]

Share article

May 12, 2021

Gartner: Leaders Lack Skilled Smart Manufacturing Workers

2 min
57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support smart manufacturing digitalisation

With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.

While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.

“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.

“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”

Change Management

Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.

“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.

Technology and People

While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.

“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.

Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.

Discover Gartner's Five Best Practices for Post COVID-19 Innovation' in manufacturing.

Image source

Share article