Top 5 Manufacturing Trends to Watch in 2024
November 27, 2023
Take a look into the manufacturing trends that will shape continued industry growth in 2024.
Take a look into the manufacturing trends that will shape continued industry growth in 2024.
The manufacturing industry plays a vital role in driving our economy forward. In recent years, the industry has seen strong growth, fueled by the soaring demand for a wide range of products amidst the challenging times of the COVID-19 pandemic.
Certain factors indicate the industry is poised for continued growth in 2024 and have direct impact on manufacturing trends. Since 2021, construction spending on manufacturing facilities has doubled. This increase is connected to federal initiatives, namely the Infrastructure Investment & Jobs Act (IIJA), CHIPS and Science Act, and the Inflation Reduction Act. These have the potential to help keep costs under control and boost resiliency across the manufacturing sector, therefore fueling long-term industry growth.
Yet, some sector developments could pose challenges in the short and long term, including labor shortages, supply chain struggles, economic issues, technology shifts and environmental concerns.
Below are manufacturing trends The Miller Group is keeping an eye on for clients:
The past few years have been met with labor shortages across industry lines. Furthermore, the pandemic motivated many employees to reevaluate their job expectations and priorities, thus prompting additional workforce shifts and compounding such shortages.
The manufacturing sector is no exception to this trend. According to a study by the Manufacturing Institute, the industry could be faced with 2.1 million unfulfilled jobs by 2030 due to a lack of skilled labor.
Considering these labor shortages, businesses within the manufacturing sector have implemented various strategies to help retain and attract talent:
By upskilling, you motivate employees to improve and enhance their abilities both now and in the future through ongoing education, training and professional development. It’s particularly important for manufacturing businesses that hire new or inexperienced workers to fill labor gaps.
Employees are expecting more from their employer than ever before. Some manufacturing companies have embraced more competitive workplace offerings by offering:
Four-day workweeks also appearing to be gaining traction, although it presents unique challenges for manufacturers.
Data from the United States Census Bureau shows women make up less than one-third of the manufacturing workforce, whereas Black, Asian and Latinx employees account for an even smaller proportion.
In response, proactive manufacturing businesses are tapping into these underrepresented demographics to broaden their talent pools. This is accomplished by strengthening commitment to diversity, equity, and inclusion (DEI) initiatives. Notable DEI measures include fostering an inclusive workplace culture through well-defined policies and providing mentorship and career advancement programs tailored to support diverse employees.
Supply chain struggles continue to linger but are showing signs of improvement. Still, this manufacturing trend has presented a growing challenge for businesses to obtain essential raw materials, often leading to frustrating production delays.
To overcome these obstacles and strengthen supply chain resilience, manufacturing businesses have implemented a range of strategic tactics:
By building strong connections with their suppliers, manufacturers can be more efficient and quickly troubleshoot supply chain challenges by using their networks.
Instead of relying on a small selection of primary suppliers, some manufacturing businesses have added redundancies to their supply chains by investing in multiple suppliers for the same materials. Businesses can enhance their ability to access essential production materials, even when their primary suppliers face disruptions.
In addition to diversifying their supply chains, many manufacturing businesses have adopted the practice of nearshoring (selecting local or domestic suppliers instead of international options). This helps businesses reduce the risk of global shipment delays and other supply chain disruptions, ensuring smoother operations and greater reliability.
By adopting new technology, manufacturers can take advantage of work instruction software and digital ecosystems. This technology can streamline supply chain workflows, ensure regular communication with suppliers, provide updates on material shipment processes and send notifications about potential disruptions. These advancements contribute to a more efficient and effective supply chain management system.
Labor shortages and supply chain struggles have led to increased costs of goods and services, causing inflation issues across all sectors of the economy. In the manufacturing industry, rising costs of raw materials and associated shipment expenses resulted in price hikes throughout supply chains. This, in turn, caused manufacturers businesses to raise the costs of finished products to maintain profitability.
It’s important for manufacturing businesses to curb consumer frustration over rising product costs by being transparent about why prices have risen. Open communication about inflation’s impact on production expenses and frequent updates on how their prices will continue to fluctuate can help maintain customer trust and loyalty during these difficult times.
In 2023, many feared an impending recession. Thankfully, inflation rates have slowly cooled, but as of November, were still above the Fed’s goal of two percent. Still, Goldman Sachs feels 2024 is looking more stable for the global economy. The investment firm believes the odds of a recession over the next 12 months at just 15 percent. This is thanks in part to an anticipated manufacturing boost and the Federal Reserve’s successful efforts in gradually reducing inflation without causing a significant economic downturn.
To address rising expenses and enhance productivity amidst current sector trends, an increasing number of manufacturing businesses are adopting smart factory initiatives (sometimes referred to as Industry 4.0). They focus on improving operational efficiencies and reducing costs by implementing various technological solutions.
Smart factory initiatives incorporate various technology solutions, such as 5G, cloud computing and edge computing systems. These solutions aim to enhance network capacity, streamline network communication and enable faster processing of large volumes of data. By using these solutions, manufacturers can minimize production floor downtime and improve operational performance effectively.
Additionally, some manufacturers have also started leveraging disruptive technology offerings, such as AI, augmented reality (AR), the Internet of Things (IoT) and blockchain.
In any case, both smart factory initiatives and disruptive technology can pose additional cybersecurity risks. With this in mind, manufacturing businesses that leverage these technology trends should review their digital exposures with their broker and make adjustments as needed to mitigate possible cyber losses.
The environmental, social and governance (ESG) landscape continues to evolve. Both consumers and regulators have placed pressure on manufacturing businesses to ensure eco-friendly and sustainable practices.
Current ESG trends in the manufacturing industry center around:
Recent industry research found that the manufacturing industry is responsible for nearly one-third of the total greenhouse gas emissions. Consequently, it has become increasingly crucial for manufacturing businesses to strive for carbon neutrality.
Some government agencies have initiated a requirement for businesses to disclose information regarding their carbon emissions. Implementing emission-reducing measures such as electrifying fleets, utilizing clean power sources like wind and solar, and incorporating energy-efficient smart devices on the production floor have become common practices.
Many manufacturing processes generate substantial waste that is damaging to the environment. Fortunately, proper waste management practices and certain types of production technology can help mitigate these concerns by promoting eco-friendly operations. Businesses are adopting advanced waste management technology, such as zero-waste production processes and circular economy practices to reduce landfill and incorporate sustainability.
The industry has seen scrutiny over the years regarding ethics in sourcing certain materials, child and forced labor in production processes and providing fair wages to resource growers to ensure a sustainable livelihood. To address these concerns, businesses are increasingly adopting environmentally and socially responsible sourcing strategies to promote sustainable operations.
In the manufacturing industry, there are several noteworthy trends to watch in 2024. By keeping up with these advancements and partnering with an insurance broker who comprehends the distinctive challenges faced by manufacturers, you can effectively position yourself for sustained long-term growth and operational success. Feel free to reach out for more information or help.
