With 2022 in our rearview mirror it’s important to look back on the progress and trends that have emerged over the course of the year to best strategize and plan for the future of your manufacturing business in 2023. There are six key factors that are essential in ensuring quality and quantity expansion in manufacturing: commodities, labor, capital, markets, power supply, logistics, delivery, and land/space. In this article, we will provide a brief overview of the developments that have been seen in 2022, and what we can expect to see in the coming year.
Although the disruptions caused by the pandemic and global supply chain crisis in 2020-21 were severe, they acted as a catalyst for the manufacturing industry in 2022. Automation has been an effective solution to the crisis, with independent coding platforms, full-stop-solution automation, smart manufacturing companies, and universal standards helping to facilitate expansion. Factories and facilities had to quickly adopt smart factory operations in order to survive without relying on as much human strength and skills.
Human Resources
As the US manufacturing industry continues its decline, the government has initiated several incentives and tax deductions to help rebuild the industry. In 2022, Section 179 Tax Deduction has been renewed to provide a $1,080,000 write-off, and the ERC (Employee Retention Credit) offers a refundable tax credit against certain employment taxes equal to 50% of qualified wages paid to employees between March 12, 2020, and January 1, 2021. With the rise of Industry 5.0, smart factories are increasingly being adopted, which may lead to fewer manual operator specialists and more machine or automation operator specialists.
Sustainable Manufacturing
The world manufacturing industry contributes significantly to global greenhouse gas emissions. According to the 60-15 rule of carbon footprints, 60% of emissions come from 15% of sources with the highest carbon intensity, such as electricity, natural gas, gasoline, food, and aviation. In 2020, the COVID-19 pandemic drastically reduced air pollution and greenhouse gas emissions, leading to a 6.4% global decrease in carbon dioxide emissions, or 2.3 billion tonnes. To ensure a more conscious approach towards reducing carbon emissions and promoting a healthier environment, manufacturing companies must be prepared to adopt sustainable practices. This includes developing an Environmental, Social and Governance (ESG) roadmap with a timeframe of 3-15 years, establishing circular manufacturing processes to reduce waste and energy use, utilizing automation, AI, IoT and cobots to maximize the use of technology and equipment, producing eco-friendly products, and transitioning to renewable energy sources with minimal emissions. At Re:Build Optimation, we are committed to developing systems for a greener future, such as more efficient wind power systems, fuel cell technology and lithium batteries. We strive to create efficient, reliable and cost-effective technologies that will eventually replace fossil fuels, but we understand that this will take many years. Until then, we will take full advantage of natural gas and other resources with minimal emissions.
Smart Technology (Software and Equipment)
The past year has seen the shift to smart factory software and equipment providing a more proactive approach, offering effective maintenance as a priority due to the pandemic, with process efficiency to reduce overall operating costs. This includes a transition from vendor lock-in to LCNC (Low-Code No-Code) software, or a full-solution automation software provider that supports various programming languages for industrial automation. Through automation, productivity can be increased, providing a strong and powerful result for planning, supply chain logistics, and product research and development. Standardizing test-retest reliability, internal consistency, inter-rater reliability, and validity will also aid this process. At Optimation Technology, we focus on helping our clients transition to industry 5.0, where people and robots can work together harmoniously, with smart machines helping humans to work faster. Our team provides manufacturing solutions from start to finish, with designers, engineers, and skilled tradespeople providing the technical and industrial expertise to support our clients in the future of their manufacturing.
Economy Inflation and Recovery
After the rapid rollout of the vaccine, the US economy has seen a robust recovery despite the supply chain stresses. Real GDP increased at an annual rate of 2.9 percent in the third quarter of 2022, compared to a decrease of 0.6 percent in the second quarter. The manufacturing sector in the US accounted for approximately 11 percent of GDP. The supply chain crisis has led to an increase in inflation due to currency depreciation, as well as higher commodity prices. For example, according to USDA ERS, in 2022, prices for fats and oils are predicted to increase by 18.5 to 19.5 percent, sugar and sweets by 10.0 to 11.0 percent, and nonalcoholic beverages by 10.5 to 11.5 percent. Meanwhile, exports have grown by $104.5 billion (17.7 percent) and imports by $189.3 billion (23.8 percent) by March 2022. Inflation peaked in mid-2022, but is recovering rapidly as we enter the fourth quarter of the year. Most analysts are expecting lower inflation rates by 2023. By November 2022, the number of people employed in the manufacturing industry had fallen by approximately 7.4 percent to 12,934,000, compared to the 2020 count. To reduce inflation and help the economy recover, manufacturers should adopt a circular mindset to promote green and sustainable production. Circularity will reduce waste, stimulate innovation, and create jobs. In addition, manufacturers should digitize, automate, and invest in cost-efficient production systems to reduce costs and industrial waste. At Re:Build Optimation, we believe there’s always a way to save time and money, while increasing efficiency and productivity. We focus on both long- and short-term benefits to help legacy manufacturers stay ahead of the industry through digital transformation.
Logistic and Delivery
The past year has been chaotic and disorganized when it comes to logistics and delivery in all aspects of the supply chain. There are numerous major issues and challenges that are expected to arise in 2022, including factory closures, high diesel fuel prices, labor shortages, increasing wages and freight costs, customer complaints due to delays, inefficient inventory control, and lack of warehouse space due to shipping delays. Sectors like technology, mining, chemicals, automotive, semiconductors, and e-commerce have been particularly affected. However, these logistic challenges are not exclusively results of the pandemic because they don’t take into account other delivery difficulties. Rampant issues such as traffic, weather, lack of skilled drivers, and ineffective routing strategies affected supply and product delivery logistics globally. As we enter 2023, it will be essential to have a reliable and efficient digitized logistics partner to meet the rising consumer demand and maintain the supply chain.
2022 has been a tumultuous year for all of us, but 2023 promises to be different. This year, manufacturers have faced a multitude of challenges, including labor shortages, supply chain disruptions, increased market demand with lack of output, scarce workers with knowledge of automation, increased freight rates and delayed logistics, and factory downtime due to lack of maintenance supply or resources. Before you make any changes for the upcoming year, it’s important to ask yourself the following questions: What’s the company’s main objective for 2023? Do you have an automation system in place that can shift the system structure to higher efficiency and productivity? How can you make the best use of your frontline workers, and are there any ways you can make the process easier and faster with automation? Do you have the knowledge and resources required to upskill your employees to utilize and operate the existing automation system? Do you have a low-carbon or carbon-neutral manufacturing system, and do you have a 3-year ESG plan? Do you have a good employment program that will increase employee engagement and reduce turnover? Do you have an automation partner that can help your legacy system become much more efficient and productive to generate higher ROI with top safety measurements? By answering these questions, you will gain a better understanding of how to recover and expand your manufacturing company in the coming year. At [Company Name], we provide complete engineering, design, fabrication, and automation services to businesses in many industries. Contact us today to get a custom audit of your manufacturing system and bring your industrial projects to life.
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Citations:
https://www.bea.gov/data/gdp/gross-domestic-product#:~:text=Gross%20Domestic%20Product%20(Second%20Estimate,(Preliminary)%2C%20Third%20Quarter%202022&text=Real%20gross%20domestic%20product%20(GDP,percent%20in%20the%20second%20quarter.
