For more than 100 years, the manufacturing industry has been the backbone of the U.S. economy. The Industrial Revolution introduced coal power and machine production in the mid-1800s, making the United States the go-to country for rapid, high-quality manufacturing. Subsequently, in the 1950s, engineers developed the first scientific and numeric computer programs, paving the way for the introduction of highly efficient manufacturing robots in the 1970s. Automation, paired with other technological innovations, made the United States a long-standing global leader in manufacturing.
If you have been keeping up with economic news, you know American manufacturing is no longer in its heyday. Companies are outsourcing, production is slowing, and American manufacturing companies are struggling more than ever before.
So, what changed? What happened to the manufacturing giant the United States once was?
For the first time in over 10 years, the U.S. Manufacturing Industry has seen a significant decline in production. According to the 2018 Deloitte and Manufacturing Institute Skills Gap and Future of Work Study, a change to a service-based economy, including financial and banking services, has contributed to the industry’s decline. Even today, due to the COVID-19 pandemic, manufacturing companies are facing cash-flow liquidity challenges and difficulties in managing debt obligations - not to mention the challenges that come with keeping on-site employees safe.
Fears regarding the global economy have further contributed to the decline. The National Association of Manufacturers released a study that claims 35.5 percent of manufacturers are facing supply chain disruptions, with a whopping 53.1 percent of manufacturers anticipating needed changes in their operations. Supply chain disruptions have not only affected OEMs but have caused a domino effect throughout the supply chain, impacting partners who may be experiencing challenges of their own.
In March 2020, following the global spread of the coronavirus, industrial output suffered the largest decline since 1946. Industrial production fell 5.4 percent, and capacity utilization fell to its lowest level since the Great Recession of 2008. While manufacturing has seen a slight increase in output since the first half of this year, companies should anticipate the long-term negative effects of an upcoming recession. Economists speculate the pandemic will have lasting effects on the manufacturing industry for the foreseeable future.
Are there any solutions?
First and foremost, comes a company’s obligation to keep employees safe and healthy amid the pandemic. The easiest way to do this is to implement sanitation measures and physical distancing procedures and to allow some workers to interact remotely. Telecommuting is not possible for all employees; yet, there is still a large number that does not necessarily have to work inside the manufacturing facility. Telecommuting can prove difficult for some companies, as issues over file distribution and collaboration can create disruptions in workplace efficiency.
Electronic Document Management Systems (EDMS) can help companies tackle these issues while preventing disturbances in operatorial efficiency. Cloud-based solutions offer an alternative to on-premise systems, as they allow for collaboration on mobile devices, giving workers the ability to interact with their files at safe distances on their tablets or smartphones.
Companies can also explore new ways to cut costs, both on the production floor and in the office. Depending on the size of their operation, software solutions can be expensive; however, many alternative, less expensive solutions become known if the companies spend a little time doing their research.
Engine-Box, eQuorum's Cloud workflow and document management solution, provides all the features needed by manufacturers to manage their engineering drawings but is licensed at a fraction of the cost of larger EDMS and ERP applications. With less expensive solutions, organizations can achieve rapid ROI – a benefit small to medium-sized businesses immediately recognize. This not only helps cash flow as a way to reduce debt, but it also helps companies save time and money, giving them more room for growth and adaptation.
Although the manufacturing industry has certainly seen better years, we can expect a recovery in the years to come if companies adopt innovative solutions in software and automation to reduce the number of workers on the production floor while maintaining their operations in full. Companies must also prioritize cybersecurity as the increase in remote access can make companies more susceptible to IP theft – something Engine-Box helps prevent.