Page 40 - BusinessWest February 7, 2022

Bither and Foster were joined last week by Chad Moutray, chief economist for the National Assoc. of Manufacturers (NAM), at a Machine- Metrics-hosted webinar on the state of the manufacturing industry and the challenges that will continue to impact companies in 2022 and beyond.
To be sure, the past year was nothing like 2020 for many manufacturers. Foster estimates that Plex lost 26% of its normal year’s business during a deep trough in the spring of 2020. “Manufactur- ing really took it on the chin,” he said. “So 2021 had a lot of ground to catch up.”
It has done so — to a point. NAM has conduct- ed a member outlook survey quarterly since 1997, and the sector has certainly rebounded since the recession of 2020, “but we have seen more recent- ly that data pull back a little from where it was last summer,” Moutray said. Specifically, last June, 90.1% of members felt positive about their com- pany’s outlook, but that crept down to 87.5% at the start of fall and 86.8% toward the end of 2021.
Manufacturing demand is really not the prob- lem, he explained, despite a slight dip in produc- tion recently due to the surging Omicron vari- ant. “In general, employment is the issue; it’s the ability to meet that demand that has been the larger issue we’ve continued to hear from our members.”
The survey revealed that members’ top four business challeges in the fourth quarter of 2021 — by far — were rising raw-material costs, supply- chain challenges, attracting and retaining a qual- ity workforce, and transportation and logistics costs. Moutray noted that these are all issues that have arisen amid the global economic impact of the pandemic.
“They are intertwined,” he said. “Each of those issues, in my mind, are wrapped up and one and the same.”
They have also lent momentum to wage pres- sure on companies, the NAM survey suggests, with wages at an all-time high and expected to inch higher as manufacturers try to stay competi- tive for a shrinking pool of talent.
Add it up, and it all poses an interconnected, global series of manufacturing challenges that may not have an immediate end in sight — but could also bring about more innovation down the line.
Frustrating Shortages
The past year has not treated all manufactur- ers equally. According to NAM survey data, aero- space, computers and electronic products, chem- icals, and machinery bounced back the most in 2021, while motor vehicles and automotive parts, printing, furniture, and petroleum and coal prod- ucts lagged the most.
Bither noted the struggles of the automotive space in the second half of 2021. “That’s where those supply-chain issues with the chip shortage seemed to have the biggest impact.”
Moutray noted that just 1.9% of NAM survey respondents feel the supply-chain issues have already cleared up for them. Of the rest, 53.4% believe they will improve this year, 27.6% say the situation will stabilize in 2023 or beyond, and 17% are uncertain.
“It’s important to note some of these issues will take longer than that; the chip shortage could take a lot longer than 2022. The workforce issues are structural issues and are going to take a little bit longer.”
That said, Moutray is pleased that the major- ity of NAM members are optimistic about seeing supply-chain improvements between now and the end of 2022.
Even with that cautious optimism, however, “manufacturers still need to be smart about how they navigate the supply-chain challenges and workforce challenges,” he added. “Right now, obviously, Omicron is hitting manufacturers pret-
“2022 is shaping up to be much like the last couple of years — another year of uncertainty, which we’ve kind of gotten used to of late.
ty hard; we’ve seen a number of stories that it’s affected overall production. So 2022 is shaping up to be much like the last couple of years — anoth- er year of uncertainty, which we’ve kind of gotten used to of late.”
Foster and Bither both said companies need to think about how employees are treated in terms of both wages and culture.
”
“We need to treat employees better because it is an employees’ market,” Bither said. “Part of that is having systems and technology that the young- er generation of workers are used to and expect. If you’re an old-school manufacturer and you’re not leveraging these technologies, you’re going to have more difficul-
ty bringing on this
newer workforce.
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