Manufacturing Resurgence
Manufacturing is starting to take flight. The resurgence will be powerful and fast. As a well-connected business executive and trusted advisor mentioned recently, when manufacturing takes off, you will not be able to keep up if you aren’t already on top of it. He compared it to catching raindrops. When it starts to pour, you will have no hope of catching raindrops. Or, think about Newton’s First Law of Motion which states that states that an object at rest stays at rest and an object in motion stays in motion. Are you prepared for a resurgence in manufacturing?
Manufacturing Is Becoming Cool Again
On a Tesla earnings call and a transcript made available from AlphaSense, Elon Musk said “We need to make manufacturing cool again in America. We have too much talent in law and finance in America, and there should be more of that talent in manufacturing.” Of course, as manufacturing enthusiasts, we agree!
The pandemic provided insights into the value of manufacturing. Manufacturers that produced essential products became vital to survival. Employees realized that what they did had meaning, and students started to gain the understanding of how manufacturing could be important. After all, if you aren’t controlling the production of essential products, you might be at risk if your supplier runs into an issue or decides to prioritize another customer or a geopolitical risk occurs. The bottom line is that manufacturing gained in importance and started becoming cool again.
As geopolitical risks surge and disruptions create havoc across global supply chains, manufacturing gains further. In fact, Hurricane Helene and the Los Angeles fires prove the importance of regional supply chains and local manufacturing for quick turnaround of essential needs such as building and construction products and IV fluids. And as reshoring becomes popular, what started as a trickle can spur into a resurgence.
U.S. Incentives for Manufacturing
Trump immediately declared an energy national emergency and rescinded several of the prior administration’s regulatory and less favorable industry orders. Since energy and regulations are two of the most vital issues for manufacturers, it kicked them into high gear.
Additionally, Trump is rolling out executive orders that will be favorable to manufacturing. For example, the America First Trade Policy executive order is geared to supporting manufacturing. This order investigates the causes of our annual trade deficits in goods, the economic and national security implications and risks, and recommends appropriate measures. It also addresses economic and trade relations with China with an assessment and recommendations related to several trade topics with China to mitigate risks yet incent domestic manufacturing.
In a similar vein, Robert F. Kennedy Jr. mentioned in a senate committee hearing that Trump plans to incent the domestic production of medicines and medical supply chains. There is concern that it might be the U.S.’s top national security vulnerability. Of course, you don’t move this type of volume with the snap of fingers. If nothing else, it is clear that it will become a topic of conversation and a priority. Refer to our recent article, Creating a Robust and Resilient Medical Supply chain, on medical supply chains as movement is starting to occur.
According to Data Center Dynamics, Trump plans ‘100 percent tax’ on foreign semiconductors to incentivize U.S. manufacturing. Taiwan produces 90% of the world’s advanced computer chips and 60% of all computer chips, and Trump is concerned about the risks associated with these statistics. Currently, the CHIPS act is spurring the construction and/or expansion of computer chips facilities throughout the U.S. On the other hand, the natural resources and/or minerals required for computer chips must be addressed as well.
Along with these incentives, companies are evaluating geopolitical, supply chain, and other risks impacts on supply chains. Customer expectations continue to grow, and so quick lead times, fast product development life cycles, and last-minute changes are becoming the norm. When combined with the opportunities to automate, digitize, and utilize robots in their manufacturing operations and supply chains to drive cost out of the business, manufacturing is becoming more attractive.
Implications for Manufacturing & Supply Chain
There will be more opportunities than ever before for companies thinking ahead, preparing for growth, and investing in the appropriate talent, process improvements and technologies. On the other hand, the rest simply will not be able to keep up. The winners will separate from the losers, opening new opportunities for decades to come.
Assess your manufacturing footprint, make vs buy decisions, evaluate your sources of supply and related supply chains. Reshore, nearshore, and expand manufacturing capabilities. If you are outsourcing significant portions of your products, assess your risks. Review opportunities to diversify supply and expand manufacturing capabilities. Start preparing your most likely risks and opportunities.
Consider process improvements such as SIOP (Sales Inventory Operations Planning) processes to get in front of customers’ needs in the most efficient and effective manner. Upgrade your use of ERP systems and related technologies such as rolling out MRP (material requirements planning) improvements, upgrading to advanced planning systems (APS), optimizing inventory with master planning (MPS) and enhancing the customer experience with CRM (customer relationship management) and e-commerce portals. Stay on top of the latest trends and implement common sense improvements. To learn more about these, download our special report, “FutureScape: Crafting Tomorrow’s Supply Chain Today“.
If you are interested in reading more on this topic:
Digitization of the Supply Chain Drives Profitable Growth