There’s no doubt about it. The U.S. manufacturing sector has faced and overcome huge challenges over the past few years and 2024 is holding true to the trend with its own set of headaches for your prospects in manufacturing. So what challenges and pain points are manufacturers facing right now and how might that impact your strategy? Explore the these ten major manufacturing pain points for 2024 to help you cement your relationship with your current clients and find new clients most in need of your products and services.
Industries have been experiencing more attacks through operational technology (OT) and the Internet of Things (IoT). While manufacturing relies on these networks to automate production, businesses often have few safeguards in place to protect them from sabotage. In 2024, U.S. manufacturers are facing an unprecedented surge in cybersecurity threats. As the industry increasingly adopts digital technologies and automation, it has become a prime target for cybercriminals. The threats range from data breaches and intellectual property theft to ransomware attacks that can halt production lines, causing significant financial and reputational damage. The interconnected nature of modern manufacturing processes also means that a single breach can have far-reaching impacts, affecting suppliers, customers, and even entire supply chains.
The FBI's Internet Crime Complaint Center (IC3) latest report provides a stunning overview of general cybercrime growth.
• Total Complaints: The IC3 received 800,944 complaints in 2022, a 5% decrease from 2021. However, this decrease is misleading as the report notes a significant underreporting of cybercrime.
• Total Losses: Despite fewer reported incidents, potential total losses increased dramatically from $6.9 billion in 2021 to over $10.2 billion in 2022, highlighting the severity of attacks.
Specific Threats with Business Impact:
• Ransomware: Ransomware attacks remained a major concern, with reported complaints increasing 48% year-over-year, causing significant financial losses and operational disruptions.
• Business Email Compromise (BEC): BEC scams targeting businesses saw a 13% increase in complaints, resulting in losses exceeding $8.4 billion in 2022.
• Phishing: Phishing attempts continue to be a widespread threat, often used as an entry point for more sophisticated attacks like ransomware. While specific statistics aren't provided for businesses, the report underscores its prevalence.
• Increased Sophistication: The report highlights attackers employing more sophisticated techniques, making detection and prevention more challenging.
• Supply Chain Risks: The interconnectedness of supply chains presents vulnerabilities that attackers exploit, creating ripple effects across businesses.
• Cryptocurrency Usage: Cybercriminals increasingly rely on cryptocurrency for ransom payments and transactions, making tracing and recovery difficult.
These rising threats demand immediate action from manufacturers to protect their operations and ensure business continuity.
If your company provides IT services, consider an email outreach campaign educating manufacturers on this growing threat and on the services you have to offer.
The Federal Reserve's decision to maintain current interest rates may offer temporary relief, but for manufacturers, the economic landscape remains challenging. While higher rates were avoided, existing levels continue to impact key areas of their operations and future plans.
Increased Borrowing Costs: Manufacturers already grappling with inflationary pressures and potential demand softening now face higher loan payments. This squeezes cash flow, limiting their ability to invest in modernization, expansion, or weather unexpected revenue dips.
Investment Delays: Tightened budgets due to higher interest rates often lead to delayed or cancelled investments in new equipment, technology, or infrastructure. This hinders long-term competitiveness and agility, potentially leaving manufacturers ill-equipped to adapt to evolving market dynamics.
Slower Hiring & Growth: The combination of inflation and high interest rates creates a cautious outlook, prompting manufacturers to hold off on hiring or expansion plans. This impacts job creation and potentially slows the overall growth of the sector.
While the Fed's decision buys some time, the continued high interest environment presents significant challenges. Adapting requires careful financial planning, exploring alternative financing options, and prioritizing investments that deliver immediate operational efficiency gains. By proactively navigating these headwinds, manufacturers can emerge stronger and more resilient in the long run.
If you provide financial services, you may find heightened demand in the U.S. manufacturing sector. Now's the time to reach out to CFO's and business owners in industries most affected by high prices. IndustrySelect can help you do just that. Additionally, you can help you clients by referring them to an industrial marketplace like IndustryNet, where they can source and quote multiple companies for the best price.
The manufacturing sector's resurgence faces a crucial hurdle – a tight labor market and widening skills gap. Attracting and retaining skilled workers remains a top challenge, impacting production, growth, and competitiveness.
While the number of unfilled positions continues to shrink from the historic post-pandemic highs, finding qualified candidates continues to be a challenge for manufacturers. Baby boomer retirements and a shift in younger generations' career preferences have shrunk the available workforce. This, coupled with the specific technical skills required in modern manufacturing, creates a perfect storm for talent acquisition.
The skills gap further complicates the picture. Automation and digitalization demand workers with expertise in areas like robotics, data analytics, and advanced manufacturing processes. However, many manufacturers struggle to find individuals with the right qualifications, leaving them with unfilled positions and hindered innovation potential.
If your company provides staffing, training or workforce development services, now is the time to take a proactive approach and reach out to manufacturing companies in need of labor solutions. IndustrySelect can help you reach the decision makers most relevant to your type of business. Types of executive decision makers in IndustrySelect's database of nearly 400,000 manufacturers, include those in Human Resources, Health & Safety, Research & Development and more.
Further reading: How Staffing Agencies Can Find More Clients in Manufacturing
Although supply chain disruptions have largely eased as we move into 2024, challenge remains.
Decades ago, many manufacturers decided to outsource parts and electronics manufacturing. At the time, Asia could make small parts more cheaply than American manufacturers. Poor quality control and raising wages overseas have since made outsourcing less inviting. Increased shipping times also make it hard for manufacturers to plan accurate production schedules. And, of course, COVID was the ultimate icing on the supply chain disruption cake.
If you’d hoped that as concern for COVID recedes, supply chains would lose their kinks, you’re in for a disappointment. The pandemic was not the only event disrupting the flow of raw materials and components. Other disrupters remain evident:
• The U.S./China trade war
• Natural disasters, including severe flooding, hurricanes, and droughts
• Logistics complications and interruptions, such as national railway strikes or the 2023 UAW strike.
So how are sales and marketing professionals to navigate the bumpy road ahead?
First, if you are in manufacturing, keep fully abreast of any hitches with your company’s production. If you’re not seeing products coming off the line, you’ll know better than to make promises you can’t keep. However, if the merchandise is warehoused and ready to be shipped, ensure that you and your team press for every deal you can make. Slowdowns may occur at any time.
The Reshoring Initiative offers resources to manufacturers who want to bring their work home to America. A shorter supply chain carries less risk of disruption. If your company provides products and services that are in short supply, now is the time to reach out to more manufacturers. See IndustrySelect's intent data resources to discover what products and services are trending right now.
If you are not in manufacturing, but sell to manufacturers, familiarizing yourself with manufacturing terminology can help you speak your client's language. See this informative glossary of 80 manufacturing-related terms and definitions.
As has been the trend over the past several years, uncertainty in the manufacturing sector reigns supreme. The International Monetary Fund's October 2023 World Economic Outlook predicts global growth to slow down in 2024, raising concerns about a potential recession. Consumer spending may dip, impacting demand for manufactured goods. Supply chain disruptions and rising input costs further squeeze profit margins, leading to cautious investment and hiring decisions.
The key for manufacturers in this uncertain climate lies in agility and strategic foresight. Carefully monitoring economic indicators, diversifying markets, and exploring cost-saving measures can help weather the storm. Additionally, embracing digitalization and advanced technologies can improve efficiency and resilience in the face of potential disruptions
If you’re selling to manufacturers adaptability and fortitude is key. Offer flexible solutions with variable pricing or subscription models. Emphasize the long-term value your products deliver, even in an economic downturn. Be prepared to tailor your sales approach as economic conditions evolve.
Industry 4.0 promised to ease some manufacturing pain points. Unfortunately, the research and investments required have turned into issues in and of themselves. Manufacturers still don't have a full picture of what smart automation actually does, with the industry adopting solutions without a unified vision.
On the plus side, factory and warehouse automation do ease the labor shortage. Wireless networks make some of this automation possible. RFID chips track parts throughout the warehouse until the finished product ships. Wireless also gives floor managers a clear overview of every production point.
So, small- to medium-sized companies can see the benefits of automation but aren't yet positioned to take full advantage of them. If your company provides automation solutions, now is the time to step up your prescriptive selling efforts and hone in on sutomation solutions for your clients.
The U.S. manufacturing sector, intricately woven into the global tapestry, feels the tremors from recent world events. The ongoing war in Ukraine continues to disrupt energy markets and key material supplies, while geopolitical tensions in other regions add further uncertainty. Meanwhile, China's strict COVID-19 policies and potential economic slowdown cast a shadow on production and trade flows.
These global events translate into real challenges for U.S. manufacturers: rising input costs, potential shortages of critical materials, and volatile shipping routes. Proactive strategies are crucial to navigate these disruptions. Diversifying sourcing options, exploring alternative suppliers, and building stronger relationships with existing partners can mitigate risks. Additionally, investing in digital tools for supply chain visibility and risk management can provide valuable insights and enhance resilience.
While the global landscape remains unpredictable, proactive planning and resourcefulness can help U.S. manufacturers weather the storm and emerge stronger. By navigating the current challenges and building adaptable supply chains, they can ensure continued growth and success in an interconnected world.
This is the time to concentrate your pitch on your company’s ability to monitor and guarantee the quality of its goods. While anything can happen in an overseas factory, your inspectors will be on top of the fabrication at every production stage. Many U.S. companies still want to buy American-made goods if they can afford them. Do your best to come up with a way that they can.
A once-heated U.S. manufacturing sector faces a potential shift in temperature as signs of softening demand emerge. Recent reports, including the ISM New Orders Index mired in contraction for more than a year, indicate a potential cool down after a period of robust growth.
Several factors contribute to this trend: rising inflation putting pressure on consumer spending, global economic uncertainty impacting business confidence, and potential inventory adjustments after previous backlogs. To navigate this changing landscape, manufacturers need to be:
• Data-driven: Closely monitor market trends, customer behavior, and competitor activity to anticipate shifts in demand. Market research and data analytics companies and help manufacturers with this process.
• Flexible: Adapt production plans and offerings to adjust to changing market needs, offering customization or smaller batch sizes. Providers of manufacturing execution systems Iiot companies and additive manufacturing firms will find this a prime time to reach out to manufacturers.
• Innovative: Explore new markets, invest in product development, and diversify offerings to capture emerging opportunities. Industries that can help include design thinking consultancies and crowdsourcing platforms.
• Cost-conscious: Optimize operations, negotiate with suppliers, and explore cost-saving measures to maintain competitiveness.
One of the most exhausting manufacturing pain points is regulations. Manufacturers face strict regulations about plant operations, and most of them (a shocking 297,696 restrictions) come from the federal government.
Some of the regulations protect the safety of our nation’s food and drug supply. Others, such as the Buy American Act, boost America’s economy by relying on U.S. manufacturers as much as possible.
However, many regulations simply make it more difficult for manufacturers to operate efficiently. The National Association of Manufacturers estimates that federal regulations alone cost manufacturers $19,564 per employee every year.
The Environmental Protection Agency's (EPA) recent tightening of regulations on fine particulate matter (PM2.5), commonly known as soot, has sent ripples through the manufacturing sector. While the aim is to improve air quality and public health, the new standards present both challenges and potential opportunities for manufacturers.
Compliance Headaches: The lower PM2.5 limits require many facilities to upgrade their pollution control equipment or implement new processes. This can translate to significant upfront costs, potentially impacting operational budgets and profitability. Additionally, navigating the compliance process and obtaining permits can be time-consuming and complex, adding further administrative burdens.
Innovation Potential: However, the new rule also presents opportunities for innovation and long-term benefits. Investing in cleaner technologies can lead to improved efficiency and reduced operating costs over time. Additionally, manufacturers who embrace sustainable practices early may gain a competitive edge by attracting environmentally conscious customers and investors.
The key for manufacturers lies in understanding the specific requirements and impact of the new regulations on their operations. Turn their attention to compliance solutions and encourage them to conduct audits to resolve any potential non-compliance issues in the future. Environmental consulting firms, pollution control equipment manufacturers, regulatory specialists and environmental management software providers will find this a prime time to reach out to manufacturers to help them stay compliant.
It's important that manufacturers stay in compliance with any regulations that govern their business in order to save where possible. Turn their attention to compliance solutions and encourage them to conduct audits to resolve any potential non-compliance issues in the future.
Related to the above, as consumers grow more aware of their own carbon footprints, they expect a small carbon footprint from the products they buy. Manufacturing is one of the largest causes of environmental pollution. From toxic emissions to dangerous chemicals, manufacturing can be a hazard to the community.
While changing to a more sustainable business model may not be cheap, manufacturers should know that 76% of millennials surveyed are very concerned about environmental issues. They are also happy to pay higher prices for products from sustainable manufacturing plants.
Switching your manufacturing clients to wind or solar may not be feasible or practical. However, as their partner, you could give them some tips and small steps towards a more sustainable model.
Keep IndustrySelect on hand as your partner as well. With detailed profiles of nearly 400,000 U.S. manufacturers and one million executive contacts, IndustrySelect can help you connect with the manufacturing companies in need of your products and services. Set up your free demo account today, loaded with 500 real company profiles so that you can test all the features of this powerful software!
Editor's Note: This post was originally published in September 2021. It has been updated to reflect new manufacturing pain points and approaches to take in 2024.