Last year saw a historic drop in industrial profits, and this year started with the National Association of Manufacturers calling for a U.S. president’s removal from office. So, it feels a bit odd to suggest the U.S. manufacturing outlook for the year ahead appears, in fact, quite promising.
But that it does. Two recent surveys reveal increased investment and confidence. And Scott Davis, writing in the Wall Street Journal last month, makes a compelling case that “there is more reason to hope in manufacturing in 2021 than at any time since the 1990s” – with the potential for a quick recovery (in large part due to persistent demand, throughout the pandemic, for consumer goods), the reshoring of supply chains and technological advancements.
That doesn’t mean it’s all smooth sailing from here. Despite high rates of unemployment, U.S. manufacturers still struggle to find and retain qualified workers – especially diverse ones. Meanwhile, while technological advancements (i.e., Industry 4.0) present significant opportunities, many companies have yet to effectively embrace them.
Ohio, where my organization is based – and where manufacturing accounts for more of the state’s GDP than any other sector – is a useful microcosm of U.S. manufacturing writ large. That’s why I asked four of the state’s prominent manufacturing voices – from both the private and public sectors – to weigh in on these issues and provide their perspectives on the year ahead. Here’s what they had to say…
Kevin Lamarr Jones, President & CEO, ECM Performance Materials Corp.
Embracing Industry 4.0 is not merely an option, it is an absolute imperative for U.S. manufacturers who wish not only to remain competitive but to survive. If they don’t, they will be akin to cotton producers who continued to use manual labor against the adjacent plantation owners who used the cotton gin. The evolution of cotton gin technology not only improved productivity (output) but exponentially improved the quality of the harvested cotton.
The adaptation of Industry 4.0 technologies will also proffer the requisite productivity metamorphosis for U.S. companies to remain competitive on a global scale. At the same time, this evolving mindset will allow smaller and undercapitalized entrepreneurs to compete against larger and more established firms, which will aid in the battle for economic parity among disparate sectors in our economy – regardless of historical biases and limitations.
Industry 4.0 unleashes the battle for ideas like never before. This process will provide the most expeditious route to stabilization of the world’s global economy as we (hopefully) advance toward a post-pandemic era.
The fundamental question for U.S. manufacturers is therefore not, “Do I need to embrace and adopt Industry 4.0?”, but rather, “How do I pay for it?”
Lydia Mihalik, Director of The Ohio Development Services Agency
At the onset of the Covid-19 crisis, Ohio manufacturers quickly pivoted to producing personal protective equipment for local hospitals, nursing homes, and frontline workers. Partnerships were forged and a platform was created to share resources and technology to reduce costs, address supply chain disruptions, and quickly increase production. Ohio invested $20 million to help Ohio manufacturers purchase the necessary equipment and technology upgrades to manufacture PPE, and $125 million to support small businesses with fewer than 25 employees.
As we emerge from the pandemic, we will continue to identify ways to support reshoring and encourage small business growth.
A skilled workforce will be instrumental to our reshoring initiatives, and Ohio’s workforce development initiatives are gaining momentum. TechCred, which helps companies train their workforce for the advanced, tech-focused economy, funded more than 10,000 credentials in its first year. And Industry Sector Partnerships, which brings together local business leaders, education and training providers, and community leaders, developed regional workforce strategies to address the workforce needs of the local economy.
James T. Batchelder, President, The M.K. Morse Company
Manufacturers have struggled to find qualified workers for years. Unfortunately, a whole generation has been told they have to go to college to be successful, and now too many graduates are buried in debt with no meaningful careers. We need to demonstrate the opportunities in manufacturing to the younger generation. We should share what a manufacturing career is like at an early age through school plant tours, job shadowing, internships and summer work experiences and provide information on compensation and possible career paths. Policymakers can make it conducive for young people to get experience in manufacturing starting in middle school and continuing in high school, both in the classroom and on the job.
Meanwhile, as the labor pool tightens, retaining qualified workers has become more complicated. Data from the U.S. Bureau of Labor Statistics demonstrates how the labor force participation rate for people in their prime working age continues to fall. Turnover costs manufacturers in recruiting expenses and productivity losses. What’s more, in an increasing number of cases, we lose people due to insecurities in their lives: transportation, childcare, housing, and substance abuse.
Manufacturers can either establish their own capabilities or partner with community agencies that provide caseworker support to stay close to new workers and help them find the support they need. Policymakers should incent community agencies to provide these support services.
Sara Tracey, Managing Director, Ohio Manufacturers’ Association (OMA) Workforce Services
The pandemic has exacerbated the manufacturing workforce crisis as efforts to recruit talent have suffered setbacks, while some older workers have chosen to retire earlier than originally planned.
Even before Covid-19, it was estimated that nearly 2.4 million manufacturing jobs nationwide would be unfilled by 2028. Because manufacturing represents nearly one-fifth of the Buckeye State’s GDP – contributing more than $112 billion a year, more than any other sector – this workforce shortage is a direct threat to our economy.
At OMA, we’re working with the National Association of Manufacturers to bring more job opportunities to people of color through tangible actions like establishing diversity and inclusion metrics, creating scholarship programs, and instituting employee resource groups for underrepresented populations. Through our network of industry sector partnerships, the OMA will engage diversity and inclusion partners to develop earn-and-learn pathways and advancement opportunities so that Ohio’s manufacturing community reflects the diversity of the state’s overall workforce by 2030.
Written by: Ethan Karp, President and CEO of non-profit consulting group MAGNET, the Manufacturing Advocacy and Growth Network, for Forbes.