The manufacturing industry finds itself on the brink of a pivotal year in 2024. Despite facing challenges such as labour shortages, supply chain issues and economic pressures the industry is poised for growth over the next few years with an estimated annual growth rate of 3.57% until 2028. This resilience can be attributed to factors including infrastructure initiatives, research advancements and innovative practices.
To successfully navigate these obstacles and seize opportunities within this transformative landscape manufacturers are actively exploring strategies to improve efficiency adapt to evolving market demands and embrace practices. In this changing environment, E3 Recruitment remains dedicated to providing our clients with insights and guidance necessary for navigating the intricacies of the manufacturing industry while achieving success not only in 2024 but also, in future endeavours.
Supply Chain Challenges
Supply chains have been in disarray since the COVID-19 pandemic and the beginning of the War in Ukraine, with manufacturers now leading production back home due to disruptions happening on a near-global scale.
This has made re-shoring very lucrative for a lot of manufacturers due to the many advantages that are associated with it. Some of these may include:
- In local manufacturing, long-distance shipping will not be a necessity, and hence transportation costs associated with long-distance shipping are eliminated. The environmental impact of such shipping is also reduced to almost zero. With this, production costs will come down, and competitive prices will be placed for the consumers.
- Moving the production back home ensures that the company gets closer control of the production process, and there is control as well to ensure its products are of superior quality consistently.
- Shorter lead times from production to market are a crucial aspect of today’s competitive business landscape. Re-shoring can significantly reduce these lead times, enabling companies to adapt quickly to market changes and meet customer demands more efficiently.
- Local Economic Impact: Re-shoring creates jobs and boosts local economies, particularly in regions with a strong manufacturing heritage. This can revitalise communities and foster economic growth.
The persistent component shortage has fuelled the re-shoring trend. With overseas supply chains experiencing disruptions, companies are seeking to secure domestic sources of critical components to ensure consistent production.
As global supply chains remain vulnerable to disruptions, re-shoring is likely to continue to gain momentum. Companies are understanding the advantages of bringing production closer to home, which increases resilience and reduces reliance on foreign suppliers.
Labour Shortages
The manufacturing sector is facing a severe shortage of skilled labour, which is expected to persist throughout 2024 and beyond. The Manufacturing Institute predict that the industry could be met with 2.1 million unfilled jobs by 2030. This shortage is due to a number of factors, including an ageing workforce, a lack of interest in manufacturing careers among young people, and a low number of qualified applicants.
The shortage of skilled labour is having a significant impact on the manufacturing industry, causing production delays, increased costs, and a decline in productivity. According to Make UK’s latest research, 36% of vacancies in manufacturing are proving hard to fill as applicants lack the appropriate skills, qualifications or experience. This compares to an average rate of 24% across all industries. The shortage is estimated to cost the UK economy £39bn each year.
The Impact of Labour Shortages on Manufacturing in 2024
The labour shortage is expected to have several negative consequences for manufacturing in 2024, including:
- Manufacturers are having to pay higher wages to attract and retain skilled workers, which is putting pressure on profit margins.
- The shortage of skilled workers is leading to longer lead times and lower output, which is reducing the productivity of manufacturing businesses.
- The shortage of skilled workers is causing project delays and disruptions, which is frustrating customers and damaging the reputation of manufacturing businesses.
- Increased reliance on temporary workers: Manufacturers are increasingly relying on temporary workers to fill the skills gap, which is adding to their costs and making it difficult to maintain consistent quality standards.
Strategies to Address Labour Shortages in Manufacturing
There are several strategies that manufacturers can use to address the labour shortage and secure the skilled workers they need to succeed. These include:
- Manufacturers can invest in training and apprenticeship programs to develop the skills of their existing workforce and attract new talent.
- Manufacturers can partner with educational institutions to develop new courses and programs that focus on manufacturing skills.
- Work with key industry partners to improve talent attraction strategies, and work with reputable recruitment agencies such as E3 Recruitment who can not only help fill roles but give guidance and insight on the current market.
Inflation and Stability
Supply Chain Challenges & Labour shortages have led to increased costs of goods and services, causing inflation issues across all sectors of the economy. The manufacturing industry is no stranger to the broader economic environment, and inflation and stability are among the key challenges that manufacturers will face in 2024. Rising prices for raw materials, energy, and other inputs are putting pressure on profit margins and making it more difficult for manufacturers to invest in innovation and growth.
Despite these predictions, many also predicted an impending recession in 2023. Thankfully, this was avoided due to inflation rates slowing down. Goldman Sachs expects a more stable global economy in 2024, predicting odds of just 15% for a recession in in the next 12 months.
Technological Advancements
The manufacturing industry is constantly evolving, with new technologies emerging all the time that are transforming the way products are designed, manufactured, and delivered. To stay ahead of the curve, manufacturers are adopting new innovations such as:
- Industry 4.0, the fourth industrial revolution, which is characterised by the use of cyber-physical systems, the Internet of Things, and cloud computing to create a more interconnected and intelligent manufacturing environment.
- AI is being used to automate tasks, improve decision-making, and optimise processes.
- Robots are being used to perform repetitive tasks, handle hazardous materials, and operate in confined spaces.
- Additive manufacturing is being used to create prototypes, produce complex parts, and reduce waste.
The manufacturing industry is undergoing a period of rapid technological change. Manufacturers that are able to adopt new technologies effectively will be well-positioned for success in the years to come. However, it is important to be aware of the challenges associated with technological advancement and to develop strategies to address them. By doing so, manufacturers can maximise the benefits of new technologies and create a more competitive and sustainable future for their businesses. In an era where the manufacturing world is buzzing with phrases like “Industry 4.0” and “digitalisation,” it’s crucial to acknowledge the essential role of hands-on practical skills. While the industry transforms, one thing remains constant: manufacturing relies on the skill and expertise of those working on the factory floor.
Click here to read more on The Power of Human Skills in a Digital World.
Environmental & Ethical Challenges
The manufacturing industry is facing increasing pressure to reduce its environmental impact and operate in an ethical manner. This is due to growing public awareness of environmental issues, the importance of corporate social responsibility (CSR), and the rise of conscious consumerism. Consumers are calling for products that are produced in an environmentally and ethically responsible manner, and manufacturers are responding to this demand by adopting sustainable practices and upholding ethical standards.
To address these challenges, manufacturers are adopting strategies such as:
- Transitioning to renewable energy sources, can reduce the environmental impact of manufacturing operations by eliminating the use of fossil fuels, which contribute to greenhouse gas emissions. Renewable energy sources such as solar, wind, and geothermal power are becoming increasingly affordable and efficient, making them a more attractive option for manufacturers.
- The manufacturing industry is reliant on a global supply chain, and it is important for manufacturers to ensure that they are sourcing their raw materials from ethical and sustainable sources.
- Manufacturers can play a role in promoting responsible consumption by educating consumers about the environmental and ethical impacts of their purchasing decisions. They can also partner with retailers and other stakeholders to develop programs that encourage consumers to reduce their consumption of harmful products and to recycle and dispose of their waste responsibly.
The manufacturing industry stands at a pivotal moment in 2024, navigating both challenges and opportunities. While supply chain disruptions, labour shortages, and inflation pose significant hurdles, the industry is also witnessing a resurgence of re-shoring, the rise of Industry 4.0, and a growing emphasis on sustainable practices.
To overcome these challenges and capitalise on the opportunities, manufacturers must adopt a strategic approach that embraces innovation, collaboration, and adaptability. By leveraging advanced technologies, fostering a skilled workforce, and prioritising sustainability, manufacturers can position themselves for long-term success in the ever-evolving manufacturing landscape.