America is the world’s second-leading manufacturing country, bested only by China. According to IBISWorld data, there are 638,583 manufacturing businesses in America as of 2022. The manufacturing industry is essential in America because it provides jobs, supports trade, and makes goods needed by the services industry. However, businesses in this sector face multiple threats that can affect their reputation and bottom line. Therefore, all manufacturers must be aware of industry-wide threats to safeguard their operations. Below are some of the biggest problems facing America’s manufacturing industry.
Sustainability
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There are many growing concerns about how the manufacturing industry impacts the environment. This reality is because the sector’s operations involve a lot of material input, output, and waste creation. Therefore, it is becoming more important for manufacturers to adopt new practices that will improve their operations’ sustainability. For various reasons, manufacturing businesses can no longer ignore their impact on environmental issues like deforestation and air pollution. For starters, improper handling of toxic chemicals can lead to regulatory fines and lawsuits, ultimately affecting reputation.
Additionally, today’s consumers increasingly pay attention to brands’ environmental footprints and want to see their favorite businesses taking sustainability concerns seriously. Indeed, a OnePoll survey commissioned by The Recycling Partnership discovered that nearly half of Americans would cease patronizing a company if they discovered it wasn’t as sustainable as possible. Therefore, manufacturing companies must manage their sustainability risks well and maybe even publish regular reports on their corporate sustainability initiatives to demonstrate seriousness.
Worker safety
The Bureau of Labor Statistics ranks manufacturing as the third deadliest occupation with regard to work-related illnesses and injuries. Indeed, with the exception of fatal injuries, this sector had 395,300 workplace injuries and 35,000 illnesses in 2019 alone. Workplace injuries in the manufacturing industry can be due to overexertion, falling objects, and chemical exposure. Workers are also at risk of repetitive stress injuries, vehicle accidents, and machine-related injuries. Manufacturing facilities with too much-confined space and poor aeration can also harm workers’ health. As an employer, you must be aware of all these hazards and regularly communicate your safety policies. In addition, take practical steps to make your workers safer, like providing personal protective equipment, offering the right workplace ergonomics, and installing industrial baghouse dust collectors to filter dusty air. Finally, remember that safety procedures and equipment are only effective if employees know the best way to use them. As such, provide regular safety training to help to ensure that your workers can use the equipment correctly and apply effective safety practices.
Talent succession
The average age of workers in America is reportedly rising, thanks to the proliferation of the Baby Boomer generation and the updated Age Discrimination in Employment Act of 1967. These two factors have significantly affected the manufacturing sector, given that nearly 25% of its workforce is at least 55 years old. As such, nearly a quarter of all manufacturing workers will retire in the next decade, and up to 700,000 more employees will be needed. The imminent retirements within the industry mean that manufacturers must prepare to recruit fresh new talent eager to learn about and capable of using new technologies.
This concern is not pressing, so manufacturing businesses are currently focusing more on simply accommodating their aging employees. For instance, older workers are often the most resistant to working with new technologies. These workers are also likely to get injured and miss more work days. Still, manufacturers cannot escape the need to prepare for seamless talent succession. Many experts suggest that they should anticipate staffing changes and dedicate resources to hiring and training fresh talent. Also, manufacturing companies should prioritize preventing worker injury and modernizing processes as they digitize
Cybersecurity risks
Cybersecurity plays an increasingly essential role in manufacturing, as companies within this sector are deploying many new technologies. These technologies are helping to optimize operations, but they also put manufacturers at risk of losing their intellectual property and nonpublic information like client details. A data breach in today’s world is quite expensive; the average cost of a data breach in America is $188 for every lost or stolen record or roughly $5.4 million per organization breached. As such, manufacturers must take essential steps like regularly informing staff about possible cyber risks and the correct way to report and respond to possible threats. In addition, manufacturers should limit access to systems and documents within their respective organizations. It would also help to add multiple layers of protection in addition to passwords, like two-factor authentication and single sign-on.
Raw material prices
Global markets’ volatility affects every sector, including manufacturing. Such surprises can disrupt markets and supply chains, from rising energy costs to unpredictable raw material price fluctuations. As such, many manufacturers struggle to keep delivering positive financial results. COVID-19 has been a clear example of this phenomenon. Lockdowns caused ports to be closed, disrupted transport, led to raw materials not being processed, and destabilized many other essential processes. All of this led to higher commodity prices and rising production costs which many manufacturers are still struggling to get under control.
Regulation adherence
Many manufacturing companies and supply chains struggle to comply with various legal, corporate, and technical requirements. These requirements include all the regulations local and state regulatory bodies impose. It also includes regulations imposed by the Environmental Protection Agency (EPA), Food and Drugs Administration (FDA), and the Securities and Exchange Commission (SEC). Violating regulations from any of these regulations can result in huge fines and litigation. For instance, American manufacturing companies have paid more than $2.95 million and $20 million in civil penalties for their Clean Air Act and Clean Water Act violations.
Occupational Safety and Health Administration violations are also a huge area of concern. Hazard communication and machine guarding are some of the manufacturing sector’s most common OSHA violations. Companies must report any compliance breaches to prospective customers, which can lead to many lost business opportunities and dollars. Therefore, experts advise manufacturers to take their regulatory adherence more seriously.
Product liability
Many manufacturers strive to ensure quality in all their products, but consumers can still be harmed by their items. Therefore, no manufacturer is ever truly safe from product liability, the area of law in which everyone involved in the production, distribution, and retail of goods made available to the general public is held responsible for any damages those products cause. Product liability can arise due to negligence in your manufacturing operations. Clients can accuse you of failing to eliminate flaws in your manufacturing processes and distributing defective products. Negligence in design, which results in inherently dangerous goods, is another type of product liability to consider. You will also be liable if you identify possible danger in your product and fail to warn consumers or the general public about this. Fortunately, product liability insurance comes in handy for all of these scenarios, so it is best to invest in it to protect your manufacturing company.
Capacity constraints
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COVID-19 and its accompanying supply chain disruption problem brought to light the true nature of America’s over-reliance on foreign manufacturing. This reality has prompted a call for more “Made in America” goods, with research revealing that over 83% of Americans are willing to pay up to 20% more for locally-manufactured products. As such, American manufacturers are more pressured to increase production capacity to satisfy rising demand. One of the best ways to achieve this is to add more space to manufacturing floors. Therefore, manufacturing companies can invest funds in converting a portion of their office spaces into production spaces. These companies can also expand or construct new facilities in their long-term planning.
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