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2021 Industrial Market Outlook – Status and Trends

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Covid-19

“Adjusting to the new normal”

Manufacturers will spend much of 2021 reacting to conditions caused by COVID. The immediate impact among manufacturers is new safety measures ranging from temperature checks to re-arrangement of the factory floor to more flexibility for employees to work from home. COVID has also caused manufacturers to more aggressively pursue measures they had been evaluating before the pandemic. Expect manufacturers to increase their adoption of automation and digitalization initiatives and take a closer look at ways to make their supply chains more resilient.

78% of CEOs surveyed by MAPI say their factory floors will have permanent design changes for worker health/safety

Labor

“Finding qualified workers hasn’t gotten any easier”

Labor remains the major structural issue impacting manufacturing in 2021 and beyond. Despite the fact that the sector lost 1.2 million jobs in the spring and has gained only half of them back, 55% of manufacturers in NAM’s third-quarter Manufacturers’ Outlook Survey say that they are concerned about finding qualified workers. Much of this can be attributed to a skills mismatch; available workers don’t necessarily have the skills needed by manufacturers today. Compounding the issue is the retirement of Baby Boomers; most will retire in the next few years and take lots of institutional knowledge with them, making it harder to bring new workers up to speed.

Meanwhile, COVID has added another layer of concern to the workforce challenge. Manufacturers will likely deal with high rates of absenteeism in 2021 and need to accommodate a greater level of remote working. According to a recent MAPI study, 52% of manufacturers say that at least 1 in 4 of their salaried professionals will work remotely on a typical day.

Re-Shoring and Supply Chains

“Resilience is the new mandate”

Supply chain disruptions this year have amplified the conversation around re-shoring and supply chain management. According to NAM, more than 60% of respondents to a Manufacturing Leadership Council survey said they will increase their focus on supply chain resiliency in the future, with 43% suggesting that they will explore more local production or re-shoring.

Even before the pandemic, re-shoring and supply chain resiliency were hot topics due to the increased costs of working in China, advances in automation, and the rise in the number of trade disputes. The trend seems to point towards more regionalized production and redundancy in suppliers in order to withstand shocks, from pandemics to trade wars.

A McKinsey study finds 70% of manufacturers expect to change global sourcing strategies, with 32% planning to relocate

Industry 4.0

“Building the ‘factory of the future’ on the fly”

The COVID outbreak has led many manufacturers to speed up smart factory initiatives. According to Forrester Research, “The need for a rapid response to the pandemic removed obstacles to adoption” for technologies like 3D printing, augmented reality, and remote services. In addition, Forrester sees 2021 as a transitional year for smart manufacturing. Many manufacturers will look to recruit knowledge workers to operate the factory of the future and 20% of manufacturers will migrate their disaster recovery strategies to resiliency strategies for running the factory floor with minimal on-site personnel.

Diversity

“The Movement is Gaining Momentum”

Manufacturers will be more aggressive in efforts to expand diversity in their workforce, including efforts to fill roles with more black, Hispanic, and female applicants. They will follow the lead of groups like the Manufacturing Institute’s Task Force on Closing the Opportunity Gap, which seeks to have the manufacturing workforce reflect the diversity of America by 2030. Additionally, manufacturing CEOs have become more outspoken in terms of racial and social justice issues, which should increase the pressure on their companies to implement change.

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