The past year has dictated many new trends in manufacturing spanning changes in how things are made, regulations, where materials are sourced from and what is in demand. Some of those changes are temporary – at least we hope they are – and others manifested innovation to carry into the future.
If you are a discrete manufacturer, you may have relied heavily on parts imported from China which now are cost prohibitive thanks to exorbitant tariffs and long lead times. According to Fox Business, by December of last year, the cost of a standard shipping container from China (roughly $20,000) doubled the cost from January. For those manufacturers who had no choice but to adapt to the cost increase, that increase was passed on to consumers, driving up the cost of goods and contributing to increasing inflation.
What changed in 2021?
- Labor shortages drove companies to adapt to keep up with demand while social distancing rules made work conditions difficult for employers and employees alike. Some companies had no choice but to raise wages to attract workers who were collecting more money staying home on unemployment. Others with the means to do so adopted machine operator automation to replace people for the execution of redundant tasks. While the technology requires a significant investment upfront, those businesses will save on labor and increase productivity in the long run. Unfortunately, the outcome is fewer available jobs in that industry.
- Supply chain disruption made on-time delivery next to impossible for some industries, depending on where they sourced their materials. When overseas shipping routes came to a stand still due to Covid restrictions and ships unable to dock, some businesses coped with empty shelves, changed suppliers, or changed their products completely to survive.
- Rising costs were not limited to shipping containers. Tariffs were applied to a wide range of imports from steel to epoxy and many more.
The auto industry has come to a standstill awaiting delivery of eternally delayed chips for cars and trucks sitting in lots. We must ask ourselves how the United States manufacturers never had a domestic backup plan.
And we can ask the very same question about vital medical equipment and pharmaceuticals, the majority of which are made in China. We have now faced the unfortunate outcome of not having essential pharmaceutical ingredients on hand to manufacture medicines we use every day in the treatment of many illnesses.
The businesses that survive and thrive will do so with American-made resources and won’t be afraid to explore new marketing channels or modify their products. Had some businesses not started making face masks, sanitizer, or ventilators when there was a need for them, they may not have kept their doors open nor their employees paid. Any material that is vital for production can make or break a business and that alone dictates the need to source locally whenever possible. Let’s hope the future holds brighter, healthier days ahead both for humanity and the survival of important American industries.
Story by Waqas Malik
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AFP
