With a global recession on the horizon – or already here, depending on who you talk to, there’s a lot of uncertainty in the manufacturing industry. As one of the world’s largest economies, the future of the global market can be seen within the US.
America’s manufacturing sector has already started to decline, faster than similar markets overseas. While the accuracy of this crystal ball may not be infallible, there is always something to learn from the trends and commonalities within a cooling economy.
The Key Factors of Manufacturing in the US
While the size and diversity of America’s manufacturing industry can often make it difficult to pinpoint universal shifts in the market, there are some factors sweeping the nation. As the entire country deals with the after-effects of the pandemic, political uncertainty, and economic downturn, these trends have risen to the surface.
Ongoing Supply Chain Issues
Since the pandemic, the US supply chain has been playing catch up. With demand for consumer products starting to lower, the record high prices for transport have stabilized. However, that’s not the only issue facing B2B manufacturers.
With labour and parts shortages, as well as war overseas, higher taxes on imports, and natural disasters looming, companies are looking to invest in solutions for a more resilient supply chain.
This has taken shape through a reliance on automation and new logistics processes, which help to increase speed in production and delivery. Companies are also becoming more proactive when it comes to forecasting, and taking an analytical approach to data-driven decisions.
Employment Numbers Largely Untouched
While a recession would inevitably lead to a rise in unemployment numbers, the US Manufacturing sphere has yet to feel the impact of layoffs. In fact, manufacturers in the US employ roughly 106, 000 more people than they did a year ago, according to statistics released by the Commerce Department.
One of the suspected reasons for this is labour hoarding by companies who are wary of finding qualified replacement workers in the current market. Many of them just went through a costly hiring and training process, and are not looking to repeat that experience.
Falling Behind the Global Market
With energy prices dropping in the Eurozone, their manufacturing industry has been on the up. China is in a similar boat, with COVID numbers dropping. However, on the other side of the ocean, America is facing the bounce back from 2022’s increase in business.
As the US market has largely stayed in step with Europe’s ups and downs over the last ten years, this downturn may be cause for concern about the stability of the global market.
This is particularly concerning for B2B manufacturing, given the heavy reliance on overseas raw materials. With the costly tariffs on imported parts, US manufacturers have been struggling to keep up with demand, and the cost of production is rising.
New Business Declining
After a surge of activity coming out of the pandemic, the market is righting itself with a downturn. As consumers turn their attention to travel and entertainment, things that were lacking over the last few years, the demand for products is waning. Naturally, this means the demand for B2B solutions is now in decline as well.
Manufacturers are left with fewer clients to care for and fewer resources available. This, combined with rising material prices, is leading to decreased margins and profit. Many companies are now having to pivot their strategies to focus on long-term investments and partnerships to stay afloat.
A Factory Construction Boom
There was a boost in spending on construction, leading to a 71% increase from last year. This is due to increased spending from Washington. With more demand for domestically produced products, and the challenges posed by sanctions and import costs, manufacturers have read the writing on the walls and focused on bringing business home.
Having more factories in place across the country will also have positive effects on the supply chain, helping to reduce delivery times and costs.
US Trends for 2023
While these barometers may spell the future for the global market, companies within the US are not simply allowing things to happen to them. There has been a huge push across the parts, aftermarket, field service, and manufacturing industries to find recession-proof solutions for their customers.
Some of the most prominent trends include
- E-commerce – E-commerce accounts for 68.5% of all manufacturing shipments in the US. However, only 7% of manufacturers are focused completely on E-commerce as a way to get products to customers.
- Micromarkets – Aftermarket manufacturers have noted significant differences between comparable cities within the US based on individual zip codes. It’s becoming vital to understand exactly who you’re selling to where, as this effects affordability, eco-friendly tendencies, and competition.
- Sustainability – As the recession takes hold, businesses are more invested than ever in keeping their equipment running long-term. Field service companies are able to achieve this goal, while fitting into the eco-friendly mantra of refurbish, repair, remanufacture, and recycle.
- Predictive Maintenance – AI is everywhere, including the US field service industry. With enough data and machine learning, everything can be predicted from time of failure to needed parts, to how long an engineer will need to fix it.
- Blended Workforce – With a skill shortage taking full effect, many manufacturers and field service operations are looking to train up multi-skilled technicians. These workers would be able to perform any task needed of them, from quick fixes to complete asset overhauls.
- Mixed Reality – From training to remote service, virtual and augmented reality have become invaluable tools for field service and manufacturing workers. The more this technology is adopted, the more impressive the applications become.
By watching the market and investing in similar innovations, companies around the globe can prepare themselves for the inevitable. Economic downturn brings with it the need for smaller workforces and efficiency, and planning ahead will give your team the best chance at staying afloat.
While demand slows and inflation continues, there are many challenges facing the US market. However, with ingenuity and a drive to grow, many companies are managing to build something that will last through hardship.
The solutions to the issues facing the B2B world aren’t going to be solved by a magical crystal ball. Instead, companies across the globe need to make smart decisions about what they’re investing in.
Automation, sustainable practices, and a diverse workforce will lay the groundwork for an even stronger future.