Once the powerhouse of all rising economies, it seems like the manufacturing sector has moved way past its golden phase. Last year, a report made by Industry week, revealed that over the last seven decades, the manufacturing sector share in the US economy has become the smallest. Despite its shrinking footprint in many developed countries, the manufacturing industry is still expanding on the global landscape. In many developing countries, it is the manufacturing sector reinforcing and boosting economic growth. Also, experts believe that the development and fine-tuning of renewable technologies will reinvigorate the manufacturing sector across the globe.
Over the years, the manufacturing industry has braved various threats and risks and come out stronger and secure. It is an ongoing exercise, and the industry is still facing many existing and emerging risks. Here, I will give you an overview of six risks that the manufacturing industry is countering all around the world.
Widening Skill Gap
Widening the skill gap is the most imminent threat the manufacturing industry is facing, especially in the US and many other first-world countries. A 2018 study by Deloitte forecasts that there will be around 2.4 million positions unfilled in the manufacturing sectors between 2018 and 2028 in the US.
The reason behind this widening skill gap is very simple: millennials and Generation Z don’t regard the manufacturing sector as a good career choice. They are skeptical of the job stability and growth that the sector has to offer.
On top of that, the alternative presented by the tech and service sector with the promise of good growth and competitive salaries further shade the reputation of the manufacturing industry. In the meanwhile, seasoned skilled workers are aging and retiring. In view of all this, it is only logical that the manufacturing sector is going through a widening skill gap.
To bridge this gap caused by a lack of human resources, local manufacturing industries and groups have to go old school. They need to partner with local governments and educational institutes to commence apprenticeship programs for the youth. Also, they need to change their outlook, improve the work environment, and market themselves in a better light since they are up against the “cool” tech sector.
Rules and regulations governing manufacturing processes have become quite stringent in the last couple of decades. Moreover, non-compliance with regulatory directives has become an unforgivable sin for manufacturing facilities. The unbending manufacturing regulations and swift action against their non-compliance have increased the instances of a product recall. A product recall is a major disrupter in any manufacturing environment. It can mess up the entire supply chain while costing a lot to the affected company and or facility. Besides direct monetary losses, frequent product recalls can also destroy the bottom line by inflicting outlays in terms of future sales loss, reputation damage, regulatory fines, and litigation expenses. The product recalls in the food industry alone cost up to $10 billion in both direct and indirect losses. The manufacturing sector has to be more diligent with the implementation of relevant directives, especially if they are supplying overseas contractors. They also need to employ real-time traceability to quickly identify and remove defective inventory from the supply chain.
Security of Smart Facilities
The manufacturing sector is gradually moving towards a smart future. It has been estimated that manufacturers will spend north of $250 billion on IoT technologies by the end of this year. While smart facilities will ensure quicker turnaround, streamlined supply chain, and intuitive quality control, they will be vulnerable to cyber-attacks. A potent cyber intrusion can bring a smart manufacturing facility to a screeching halt. Manufacturers adopting smart technology need to invest in improving cybersecurity in the same proportion for providing sufficient cover to their smart infrastructure.
Regularizing 3D Printing
3D printing can be a gamechanger for the manufacturing sector in both senses. On the one hand, it can boost the production rate and cut down costs. On the other hand, it can promote counterfeiting and poor quality production. Also, a manufacturing facility may have to face false liability claims because criminals will replicate counterfeit goods by leveraging 3D printing. They can make proprietary products at lower price points but with questionable quality.
Intellectual Property (IP) Protection
Protecting intellectual property has always been a challenge for the manufacturing industry. Tracking IP thefts and copyright infringements become impossible, especially when the supply chain and target market expand. As per one estimate, it has been estimated that IP theft in the US, which includes patents, trademarks, trade secrets, and copyrights, cost hundreds of billions of $$ to the economy.
Protecting intellectual property is certainly not a mean task. However, a manufacturing facility can devise a more robust and effective IP protection regimen with strict scrutiny of its supply chain. It includes a more detailed identification and validation process for suppliers and improved end-to-end visibility. Minimal reliance on outsourcing entities is also essential to minimize the chances of IP theft.
For homeowners, a pest might not be more than mere nuisance. However, a manufacturing facility has to pay high costs if it fails to curb this problem before it blows out of proportion. Pests can’t just ruin the reputation of a business but also stop the manufacturing process. It is common for facilities to stop the entire manufacturing plant because a rodent got stuck in the blower.
In many cases, product recalls occur because the traces of pests are found in a given product. The constant presence of pests can infest the manufacturing facility with diseases that are not good for the employees working there. To get rid of the pest problem and make sure it doesn’t occur, a manufacturing facility must get its premises fumigated and disinfected by any experienced pest control service.
With more diligence, strict quality measures, and continuous technological integration and adaptation, manufacturing facilities can take care of all the risks discussed here except for widening skill gap. It is one thing not in direct control of the manufacturing industry. A large-scale manufacturing revival tied to various economic factors and government policies is needed to address the skill gap issue and should be a top priority for all parties.