With the holidays behind us, it’s time to come to grips with 2023 and the opportunities and challenges it is likely to present for small manufacturers in WNY. Obviously, there is significant economic uncertainty borne of rampant inflation, the Federal Reserve’s aggressive interest rate hikes and the stock market’s fall in response. These factors have certainly had an impact as both national and WNY manufacturing measures ended 2022 in contraction. However, in the long run, these are short-term disruptions of longer-term manufacturing trends that are already underway and will continue to shape manufacturing in WNY and beyond throughout 2023. Understanding and embracing these trends can help you position your manufacturing company for success this year and into the future:
- Workforce shortages have been a major trend since before the Great Recession in 2008-9, as demographic trends inexorably affected all industries. In WNY, the Northland Workforce Training Center is a national best practice model for training new workers that gives us a regional advantage, but it cannot solve the problem alone. Manufacturers must also fundamentally change how they recruit and retain people, looking beyond pay & benefits to improve company culture, emphasize purpose over profit, embrace sustainability or ESG (Environmental, Social, Governance) and find flexible ways to work that will appeal to younger generations, while retaining the institutional knowledge of workers beyond retirement age.
- Advanced Manufacturing Technologies are another long-term trend, as well as a part of the workforce solution using new cobotic technologies that can complement machine loading and traditional robotics to maximize labor efficiency. New materials and additive manufacturing have the potential to fundamentally alter products and processes for the good, if manufacturers can find the band width to understand and implement them. Again, WNY has a huge competitive advantage in Buffalo Manufacturing Works which offers world-class advanced manufacturing expertise right in our own backyard. Its new SHIFT 2.0 program, funded by Empire State Development and our “Build Back Better” grant from U.S. EDA is scheduled to launch in January and will offer WNY manufacturers a path to understand and implement cobotics and other advanced manufacturing technologies.
- Supply Chain/Re-Shoring are trends that picked-up speed more recently as COVID-19 and tariff wars made the risks of international sourcing more apparent than ever. Many manufacturers are now looking for domestic back-ups to supplement or even replace international supply chains.
- Corporate Social Responsibility includes both long-trends such as environmental sustainability and newer aspects related to ethics and inclusion. This is a broad topic that can include everything from corporate governance to diversity training. Expect major OEMs to increasingly push such social requirements to their suppliers as part of ESG (Environmental, Social, Governance) initiatives. But addressing social responsibility may also provide tangible workforce benefits through improved recruiting and retention of younger workers concerned about these issues.
- Cybersecurity is a growing challenge in the wake of the Ukranian conflict and sanctions against Russia, a major cyber actor. At the same time, business digitization is increasing. According to Sophos, 55% of manufacturers surveyed (419) reported ransomware attacks in 2022 with an average payment of over $2 million, the highest of any industry surveyed, yet the time and cost to harden IT systems and train employees, often means small manufacturers remain vulnerable.
It’s already difficult to beat your competitors on quality, price and delivery, leaving many manufacturers with little bandwidth to address these critical trends. That’s where Insyte Consulting can help. We are already active in all these areas with tools, processes and expertise to help WNY manufacturers succeed. No matter how you tackle these challenges and opportunities, we wish you all a successful 2023!