Manufacturing Following the Pandemic

Many manufacturers are turning their attention to the future after a difficult year. While the pandemic’s effects on manufacturing will, in some respects, be temporary, it could have the following lasting impacts on global manufacturing.

Greater Reliance on Domestic Manufacturing

There has long been concern about U.S. reliance on foreign manufacturing, particularly in China. The pandemic’s impact on production in China and elsewhere, and its disruption of the global supply chain, put a spotlight on these concerns, particularly when it comes to medical equipment and supplies. Expect a push to produce more of these items in the United States to reduce reliance on overseas supply chain partners when facing future health care crises.

President Biden has made several proposals designed to encourage relocation of manufacturing facilities and jobs to the United States. For example, in the run-up to last fall’s election, Biden called for:

• Leveraging federal buying power and the Defense Production Act to manufacture more critical products domestically,
• Using tax penalties and tax incentives to discourage offshoring and encourage “reshoring” of manufacturing businesses, and
• Offering a 10% tax credit to companies that revitalize, renovate and modernize existing or recently closed manufacturing facilities.

How much of this moves forward through Congress remains to be seen. Manufacturers should stay on top of these proposals.

Focus on Digitization

Post-pandemic manufacturing will see an increased emphasis on digitization for two reasons:

1. Manufacturers will need to rely on the efficiencies offered by automation, artificial intelligence and Internet-of-things technology to maintain a competitive advantage in light of cheaper labor costs overseas, and
2. Post-pandemic, there will likely be continued interest in remote working arrangements.

As a result, manufacturers will need to rely on Internet-based diagnostic and management tools that allow devices on the shop floor to be monitored and operated remotely, as well as online communication and collaboration tools.

Be Prepared

With greater reliance on domestic manufacturing, questions remain: How long is the lead time to get the country up and running for a surge in manufacturing coming back? Do we have enough buildings, facilities and equipment? If not, how long will it take to build, renovate, and/or purchase and deliver them?

For manufacturers, the future once the pandemic is behind us is still unclear. One thing is certain, though: manufacturers that are prepared for a different world will have a competitive edge.

For assistance with adapting your manufacturing operations to this changed environment, contact us. We are here to help.

© 2021