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Manufacturing: Recovering after a Hard Hit by Pandemic, Supply Chain Woes

Sandy Smith

Deloitte noted in its 2021 Manufacturing Industry Outlook that in early 2020, manufacturing had regained much of the momentum it lost after the 2008 recession. Then the pandemic hit.

After the first wave of pandemic-driven shutdowns, segment recoveries for various manufacturers have been uneven, according to Deloitte. Looking ahead to the second half of 2021 and beyond, the recovery may take longer to reach pre-pandemic levels, as Deloitte projections based on the Oxford Economic Model (OEM) anticipate a decline in annual manufacturing GDP growth levels for 2020-2021, with a forecast of -6.3 percent for 2020 and 3.5 percent for 2021.

“Reeling from the effects of a global pandemic-driven shutdown, U.S. industrial production (-16.5 percent year-over-year) and U.S. total factory orders (-22.7 percent year-over-year) saw a steep decline in April, followed by suppressed improvement,” according to Deloittle. “The current U.S. Industrial Production Index stands at 105.7 in December (the most recent month available), a substantial dip from its pre-pandemic level of 110.”

Production and order levels are still below 2019 levels, but the trajectory of the decline has slowed, according to the report. Total industrial capacity utilization improved to 74.5 percent in December, up from 64.1 percent in April. However, it’s still below pre-pandemic levels of 77 percent.

The report points out that 2020 showed “a significant dip in manufacturing employment levels,” largely due to forced shutdowns early in the pandemic and suppressed orders, with April recording manufacturing’s lowest employment levels since 2010. Despite recent gains from much of the country’s manufacturing base back in operation, employment levels in December 2020 were still 543,000 lower than the previous February.

All is not lost, according to the National Association of Manufacturers (NAM), however. A recent survey shows that manufacturers are optimistic about the future, rising from 34 percent in Q2 2020, just after the pandemic was declared, to 88 percent in Q1 2021.

Technology to the Rescue

Carl D. Richburg, Global Quality Group Manager, Quality System/Compliance, Clorox, commented about some of the challenges that organization faced in 2020. “Competition, unexpected events and new consumer buying habits put relentless pressure on manufacturing in general. We have been experiencing this as a result of the pandemic and are continuing to adjust to meet supply needs and want to be able to sustain this improved capability long-term.”

As Orville Wright famously said, “If we worked on the assumption that what is accepted as true really is true, then there would be little hope for advance.”

“Our challenge, as I see it, is keeping up with or moving ahead of the rate of change in this digital age,” said Richburg. “Manufacturing systems, processes and consumer expectations are always changing [requiring new and improved products and solutions] very much quicker than in the past. But we are in a good place and on the right path, with a progressive,100 percent offensive journey.”

Forward-thinking organizations realize that digital transformation and disruption through the use of advanced technology such as sensors, cloud computing, machine learning, robotics, smart manufacturing, digital twinning, 3D printing and green manufacturing are key to manufacturing’s continuing ability to drive innovation. These technologies create increased connectedness between humans and machines and drive EHSQ 4.0 and Industry 4.0.

Want to learn more about the ways innovative organizations are using technology to adapt to a new normal and meet and exceed challenges? Download the full report, The New Retool: Pivoting Manufacturing To Be Ready for Anything.

July 20, 2021 @ 02:40 PM EDT Manufacturing Health & Safety, Operations, Quality, Risk Management, Supply Chain

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