4 Challenges Your Manufacturing Business May Face in 2021
The manufacturing industry has historically reflected the whims of both the global economy and the ever-changing tide of world events—and 2020 has been no different. The global COVID-19 pandemic has caused upheaval in manufacturing practices worldwide, not least, the small manufacturers we value so much here in our region. Of course, the U.S. presidential election creates another element of uncertainty, as the economy responds to the election results in the months ahead.
With the current situation & uncertainty in mind, we are looking ahead to 2021 and identifying some potential challenges and trends that could shape the manufacturing industry in the upcoming year. How will these trends affect your manufacturing business?
Challenge #1—Lingering Effects of COVID-19
Currently, as COVID-19 hotspots crop up, wane, and shift from place to place, every area is affected differently. At times, the U.S. has been the primary hub for the manufacturing, shipping, warehousing, and more, as the pandemic impacted other parts of the world. At other times, local small manufacturers have experienced serious impact due to staffing issues, shutdowns, supply shortages, and more. A recent survey from the National Association of Manufacturers shows, while serious challenges remain, manufacturers are feeling more optimistic about the months ahead.
Gilmore Jasion Mahler (GJM) partner Wes Beham, CPA leads the firm’s Manufacturing Specialist Team. Wes and other GJM professionals have guided many manufacturing businesses through the initial COVID-19 shutdown, the Paycheck Protection Program loan process and many other pandemic-related uncertainties.
“While there’s still a good deal of uncertainty in the market, I do believe that many of our manufacturing clients feel more optimistic now, compared to early on in the pandemic,” says Beham. “Changes have come so quickly during COVID, whether weekly, or sometimes even daily. Its so critical to have a go-to advisor you truly trust to guide you through. It’s very rewarding to be there for our clients in this critical role when they need us the most.”
As 2021 begins, some industry watchers anticipate the beginning of a return to normal, but only time will tell how those events take shape.
Challenge #2—Widening Skilled Labor Gap
Manufacturers stand to lose as much as 4.6 million of the workforce as the skilled population ages. Unfortunately, experts predict that 2.6 million of those jobs will remain unfilled by 2025 as the younger portion of the workforce focuses on building technological prowess and other skills. Adding insult to injury, what was already a difficult situation has now been made worse by the pandemic.
Kip Winzeler, Chief Operating Officer at Altenloh, Brinck & Co US Inc., knows all too well about the workforce challenge in manufacturing. His company, located in Bryan, Ohio is a founding member of the newly formed Northwest Ohio Manufacturing Alliance (NOMA). NOMA’s goal is to bring manufacturers together to lead efforts to solve the skilled labor shortage in the region.
“The pandemic has certainly put further strain on an already difficult situation,” says Winzeler. “Across manufacturing, due to COVID-19, we’ve seen some earlier than expected retirements. That has added more open positions to those that were already unfilled. In my mind, COVID has further proven why it’s so important to have an organization like NOMA for manufacturers to work together to solve this.”
Another consideration: small manufacturers that wish to remain productive well into the 2020s will need to approach 2021 with a focus on training existing workers, becoming more attractive to potential hires, and adapting technology to focus on valuable skill sets. You can read more on the skilled labor shortage, and Ohio impact here.
Challenge #3—Lack of Data Regarding Machine Intelligence
As the Internet of Things (IoT) continues to grow, even the smallest manufacturers see the value in the enhanced internet connectivity available for smart machinery and other smart devices. While the communications and data provided by these devices streamline the production process and provide much valuable data, industry watchers say relatively few manufacturers can analyze the data produced. In 2021 and beyond, it is expected that small competitive manufacturers will need to begin managing these analytics to truly reap the predictive benefits of IoT devices and machinery.
Challenge #4—Shifting Consumer & Industry Demands
In this day and age, some consumers want a more connected, personalized experience with the manufacturers charged with producing their products. Small manufacturers stand to benefit from this industry-wide shift from mass production to smaller, more niche-focused systems. In 2021, it appears the trend toward solutions like additive manufacturing will continue, allowing smaller manufacturers to adapt to consumer needs.
Manufacturers who don’t sell direct to the consumer are part of a bigger picture, of course, as they often rely on materials from another manufacturer to produce their product and then perhaps ship it on to yet another manufacturer for final assembly. Many automotive suppliers, and other manufacturing businesses in Northwest Ohio and Southeastern Michigan are part of this supply chain, their success effectively linked to their fellow suppliers.
Your organization is unique and will undoubtedly adapt to these challenges in the way that best suits your business. If you have any questions or concerns regarding how these challenges could affect you, reach out to your GJM advisor for assistance.
Mark your calendar:
GJM Manufacturing Financial Executive Roundtable
Kip Winzeler presents on NOMA apprenticeship grants available to area manufacturers at an upcoming GJM Manufacturing Financial Executive Roundtable. The virtual roundtable is Thursday, November 19 from 10-11 am EST. RSM Deputy Chief Economist Kevin Depew also presents. He will examine presidential election results and the potential impact on manufacturing and the U.S. economy in general. Manufacturing financial executives can register for the virtual roundtable here.
Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities. Learn more at GJMLTD.com, on LinkedIn, Twitter, Facebook and Instagram.