The Future of Manufacturing - Trends Shaping the Industry

Author: Scotty Lee, Partner Strategy Manager, Seagull Scientific

Manufacturing is facing challenges and changes: from labor shortages, supply chain disruptions and the environmental crisis. However, in some areas investments are increasing significantly.
Technology can help to address manufacturing challenges – from digital transformation to Smart Factories, the Metaverse to AI and Robotics.
Manufacturing is on the cusp of exciting times for 2024 and beyond

The last few years have been a rollercoaster for the manufacturing sector. With many highs and lows, the sector overall saw a downturn that was mainly driven by the shrinking workforce. While technologies and processes provide new improvements, without the workforce to implement these new technologies, the new advancements don’t seem to make much of a difference. In addition, the open roles within the sector tend to look for skills that few workers possess.

So, if we look ahead, what does the landscape look like for the manufacturing sector? What are the trends and challenges shaping the industry and what are the approaches that companies are taking to address them?

Labor Shortages Make Business Agility and Innovation a Challenge to Overcome

The aftermath of the pandemic has left the sector with an ongoing shortage of skilled labor, and manufacturing is still suffering from the repercussions of ‘The Great Resignation’ in 2021. Manufacturing was the worst-hit sector when it came to pandemic-driven workplace attrition, with 58% leaving their jobs in 2021 – a situation from which the industry is still reeling. With 2.6 million jobs lost over the next few years due to attrition and retirement, the workforce continues to decline as the number of open roles increases thus creating a larger gap. In addition, another factor that contributes to the labor shortage is the skill shortage as employers are looking for specific technical skill sets with new technologies.

Uncertainty with Economic Situations

The supply chain disruptions which were one of the defining features of the COVID-19 years are still lingering and making it difficult to create production schedules with complete certainty. Global economic upheaval and rising prices have hit manufacturing, as raw materials and component prices increase. Consumers with less disposable income have tightened their belts, leading to a downturn in demand for many products. This makes planning and forecasting a challenge, with many manufacturers probably wishing above all for a crystal ball to foresee the future. In this environment, resilience to get through uncertain and challenging times ahead is likely to be a key differentiating factor between the leaders of the pack and those who follow from behind.

Net Zero Emissions Goals

Of course, it’s not just the economic outlook that is causing alarm – from an environmental perspective, manufacturers know that they must play their part in slowing down the spiraling climate crisis. Ever more stringent regulatory demands and looming net zero targets are a challenge, and the investment market is shying away from companies that are (or are perceived to be) less than committed to environmental change.

Increased investment

Yet there are some positives in amongst the challenges. In the US, legislative changes enacted in 2021 and 2022 have brought about a significant increase in investment in the sector. The Infrastructure Investment and Jobs Act (IIJA), the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, and the Inflation Reduction Act (IRA) have between them seen an increase of 70% in spending on construction for manufacturing, with further growth predicted for 2024. Investments in clean technology and semiconductor manufacturing in 2024 are expected to be double those of 2021.

Addressing the Challenges

In 2024, the manufacturing sector must work out how to face its challenges, while also making the most of record investment. A big part of the answer is technology, which is set to take center stage in helping manufacturing companies to strip away inefficiencies, increase productivity, and meet environmental challenges.

Digital Transformation - the digitizing of information and automation of processes can be a game changer for manufacturing. Old, paper-based, manual tasks can be streamlined and made more cost and time-effective by digitizing all documents, allowing processes and workflows to be automated. This not only saves time and increases productivity but reduces human touch and therefore the risk of human error.
Smart Manufacturing - smart manufacturing integrates a range of technologies to build an intelligent, end-to-end self-adjusting manufacturing management system. It encompasses Artificial Intelligence (AI), 5G, the Internet of Things (IoT), data analytics and cloud computing. Smart manufacturing may use networked manufacturing equipment, sensors, and scanners; for example, to capture information from the production line and it might integrate that with information with inventory tracking, demand forecasts, or combine it all into real-time dashboards and reports for human decision making, or increasingly, into artificial intelligence (AI) systems for automated action. Smart factory technology is seen as a key driver of competitiveness, with 86% of manufacturing executives believing it will make a very real difference over the next five years.
The Metaverse – while many of us are more familiar with the metaverse in a social and leisurely context, there is also an ‘industrial metaverse’, transforming the way in which companies, including those in the manufacturing sector, operate. The metaverse creates digital environments that mirror the real world, using technologies such as robotics, and digital twins to quickly learn, teach, experiment and more with realistic scenarios. These new digital environments can speed up innovation, increase productivity, and reduce the costs associated with the physical world.
Artificial Intelligence and Robotics – the possibilities for AI and robotics in manufacturing are almost limitless. Some of what is currently done by humans can be handled more efficiently by AI – particularly in the areas of predictive maintenance, analyzing information captured from plant and machinery to determine the optimum schedule for maintenance, supply chain optimization, demand forecasting, and product and process design. Robots can ensure standardization and reduce hazards by taking humans out of high-risk processes. In many manufacturing assembly lines, robots and machines are currently automating many mundane tasks such as marking and coding products with a human performing a quality assurance check towards the end of the line.