Last week, President Biden delivered his second annual State of the Union address to the nation. As the global economy continues to recover from the pandemic, one topic which was referenced early and often was that of revitalizing domestic manufacturing. But what does Biden’s speech mean for manufacturers, and how can they adapt to the changing landscape to seize the opportunities that lie ahead? Here are some key takeaways from his remarks, and what manufacturers can do to thrive in this new era of domestic manufacturing.
A New Era of Domestic Manufacturing
Among the key themes emphasized throughout the address were the vital role that manufacturing plays in our economy, how the administration has supported the industry, and Biden’s vision for the future of American manufacturing. His speech lauded the creation of over 800,000 new manufacturing jobs since the start of his term, a rate of growth that hasn’t been seen in decades. The CHIPS Act signed into law last year represents another major milestone for domestic manufacturing, with Biden crediting it for kickstarting reinvestment in the American semiconductor industry. This is just part of a larger $300 billion investment into expanding employment across a number of manufacturing sectors including semiconductor, green energy, and more.
But despite these accomplishments, his speech also recognized the continued need to reestablish a strong domestic manufacturing capacity. Biden lamented the many good-paying manufacturing jobs that have moved overseas in past decades, arguing that this caused factories to close, towns to be hollowed out, and pride in American manufacturing to be lost.
“For too many decades, we imported products and exported jobs,” he declared.
Describing his vision for how domestic manufacturing could be reignited, Biden called on legislators, urging them to do more to support the industry by passing his legislative proposals. Among these are laws to strengthen ‘Buy American’ regulations, provide tax benefits for domestic production, and reestablish fair competition between American manufacturers and foreign competitors. He also recognized the need to ensure the security and resilience of global supply chains and to promote fair and balanced trade policies.
He announced that “Now, thanks to all we’ve done, we’re exporting American products and creating American jobs.”
Of course, much still remains to be done in order to turn this vision into reality—and this dramatic shift does not come without challenges for manufacturers. As many begin to pivot towards domestic production, here’s what manufacturers need to keep in mind to succeed in this new environment.
The labor market remains tight going into 2023, with employers finding it difficult to hire enough skilled workers. This is particularly true of manufacturers, who have struggled to meet the demands of production due to a widening skill gap in the industry. There is expected to be a shortage of more than 2 million skilled workers in the coming years, and even with every manufacturing worker employed, there will still be 35% more job openings that go unfilled. As more and more businesses decide to reshore their operations, competition between employers over skilled workers will only continue to grow. Manufacturers will need to make the most of a limited workforce by freeing them from menial and repetitive tasks, allowing them to apply their expertise and provide the maximum value-added.
In addition, the manufacturing industry in particular suffers from a significant generational gap. As waves of older workers begin to retire, employers in the industry have increasingly found it difficult to attract talent among younger generations like millennials and Gen Z. Due in large part to misconceptions about the nature of working in a modern manufacturing environment, many young people now express having very little interest in pursuing a career in the industry. To stand out against their competitors and win over this pool of untapped workers, manufacturers must avoid the stereotypes of the industry by creating a work environment that empowers employees to put their skills and intellect to use.
After the massive disruptions to labor and supply chains caused by the pandemic, the need for manufacturers to build resilience and stay agile is also more apparent than ever before. Despite the pandemic seemingly being behind us, supply chain disruptions are projected to continue into the future. 48% of CFOs believe that supply chain volatility and shortages would last beyond 2022. While these external factors may be out of manufacturers’ control, they can still be proactive in their approach to dealing with these kinds of unpredictable disruptions. Manufacturers will need to stay agile, which means prioritizing flexibility, bottom-up innovation, and augmentation in order to adapt to changing conditions through an iterative process.
Addressing Problems with a New Approach
While these challenges are significant, they are by no means insurmountable. In order to tackle them, manufacturers will need to go on the offense instead of waiting for economic hardships to blow over.
To combat the labor shortage and widening skill gap in the industry, manufacturers are moving to help their workers transition away from menial, repetitive tasks and instead focus on problem-solving. By eliminating the need for repetitive activities like data entry or manually tracking work in progress, manufacturers can focus these valuable labor resources elsewhere where they can truly add value by applying their expertise.
Learn how DMG MORI empowers frontline workers to build highly efficient and resilient operations
A dwindling pool of skilled workers also means that manufacturers will need to prioritize training and upskilling employees to maximize their labor resources. By using technologies like Digital Work Instructions that fully integrate into their workflows, manufacturers can more quickly get workers up to speed and guide them through complex tasks such as kitting or changeovers. This can have a significant positive impact on productivity and reduce human error, resulting in improved process efficiency. Tools like these help build a connected infrastructure that rises to the complexity of operators’ work, with a familiar user interface that also appeals to a younger, tech-savvier workforce.
Learn how Dentsply Sirona cut training times by 75% while reducing errors in a complex kitting process
Ultimately, an unpredictable business environment requires flexibility, which means that manufacturers will need to remain agile by adopting a composable approach. With a composable enterprise, manufacturers are able to adapt as business operations change by replacing or reconfiguring various modules, each of which provide different functionality. This approach enables new capabilities to be added to the core of a solution not just from one primary vendor, but also from other external sources and even from in-house development through the use of no-code/low-code capabilities.
Learn how Mack Molding speeds up New Product Introduction using a composable solution
Once manufacturers implement best practices like these, Biden’s words can ring true: “Where is it written that America can’t lead the world in manufacturing again?”
If you’re interested in learning more about how Tulip can help you thrive in this new era of domestic manufacturing, reach out to a member of our team today!
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