2024 Recap
As we reflect on 2024, it was an interesting year in the world of manufacturing that was marked by uncertainty over inflation and the election on one side, and huge Federal funding commitments in areas such as infrastructure and semiconductors on the other. National numbers showed manufacturing activity contracting for 25 of the last 26 months, but there were still manufacturers going strong whose struggles were around workforce and supply chain. In New York State, the picture was muddier as the Federal Reserve Bank of NY’s Empire State Manufacturing Survey bounced between growth and contraction while trending up. So, what can we expect in 2025?
Supply Chain Pressures Grow
With the election behind us, some expected the logjam to break but that hasn’t been the case quite yet as manufacturers seem to be waiting to see what will happen post-inauguration, especially with tariffs. That’s because a significant expansion of tariffs will create a domino effect for manufacturers potentially forcing changes in sourcing, costs, pricing and even demand. Any sort of “Buy American” requirements could supercharge the impact of tariffs, forcing manufacturers into a search for domestic suppliers that may not be price competitive, may not have capacity or (worst case) may not exist. This would increase costs for buyers but could also open opportunities for certain domestic manufacturers. Here in WNY, we could see Canadian firms moving manufacturing operations here to avoid tariffs on imports.
Conclusion: Take steps now to have domestic sources in place or at least identified for critical needs.
WNY Resources: Insyte Consulting, Invest Buffalo Niagara. Event: Supply Chain Strategic Sourcing – March 13 & 14
More Workforce Challenges?
Workforce is another critical area for manufacturers that could be significantly impacted by the new Administration. New immigration restrictions and/or increased deportations would negatively affect the supply of workers which could open additional workforce gaps, increase workforce costs or both, especially in certain areas such as food processing and rural manufacturing.
Conclusion: Optimize production to maximize capacity with current resources while working to make your company an “Employer of Choice” to facilitate your hiring and retention.
WNY Resources: Northland Workforce Training Center, Insyte Consulting and for rural manufacturers the Clean Energy Manufacturing in Appalachia (CEMA) program.
Is Technology the Answer?
Advanced technology offers one avenue for addressing both workforce and sourcing concerns. For example, Cobots (collaborative robots) can directly offset some types of labor, while Artificial Intelligence promises to help manufacturers optimize their performance to squeeze more capacity and production out of their existing resources—workforce, materials and footprint. The challenge is how to effectively select, implement and maintain these technologies which require external and/or internal expertise, something that can be particularly difficult for smaller manufacturers, except in WNY which is blessed with world-class advanced manufacturing technology assets.
Conclusion: Identify technologies now that can help, especially with your key constraints, and invest in technology training for key workers.
WNY Resources: Buffalo Manufacturing Works and Shift 2.0.
Cybersecurity Crunch Coming
The U.S. Department of Defense’s (DoD’s) CMMC (Cybersecurity Maturity Model Certification) requirement became effective at the end of 2024, which means manufacturers in the DoD supply chain must be compliant or they’ll be shut out of expanding Defense opportunities as the U.S. moves to counter China’s miliary expansion. Most manufacturers are not ready (some don’t even know they’re in a DoD supply chain), which will result in a scramble for cybersecurity resources, especially after the inevitable “public hanging” of a major DoD supplier losing a contract or worse, having a cyber breach. Non-DoD manufacturers, especially smaller companies, will also feel the downstream effects of this as cyber criminals (who are already targeting smaller manufacturers) shift their focus away from those manufacturers with good cybersecurity to those that are still vulnerable.
Conclusion: Get your cybersecurity situation in order, especially CMMC if you’re a defense supplier, immediately.
WNY Resources: Insyte Consulting. Event: CMMC Bootcamp – Mastering CMMC Implementation – Mondays in March
All in on CHIPs
Building on our strength in nanotech, NYS became a major beneficiary of the CHIPs Act, a federal effort to bring semiconductor fabrication back to the U.S. to secure supply and lessen reliance on Taiwan and other offshore producers. Micron is building a new fab near Syracuse and a Buffalo-Rochester-Syracuse consortium was awarded $40M to help prepare the way with training and support. This represents a longer-term opportunity for manufacturers who are, or could be, supplying the semiconductor supply chain for a long time to come.
Conclusion: Stay tuned as programs and opportunities are rolled out.
WNY Resources: Invest Buffalo Niagara and Insyte Consulting.
Energy may be Electrifying
NYS’ aggressive CLCPA (Climate Leadership and Community Protection Act) pushes for a rapid transition to alternative/green energy, threatening supply and cost issues for manufacturers across the State. With reduced support from the federal government, this promises to be a huge challenge in the near future unless a more moderate and manageable transition is arranged.
Conclusion: Monitor NYS policies and pronouncements and weigh in through your preferred advocacy partner(s).
WNY Resources: Buffalo Niagara Manufacturing Alliance, Buffalo Niagara Partnership and Insyte Consulting.
