2024 Industry Trends Blueprint

2023 has emerged as a pivotal year, marked by significant industrial electronics and automation transformation. Influenced by global events, technological advancements, and shifting market dynamics, there have been significant challenges in our industry.??

From the intricacies of inventory management in the post-pandemic era to the complexities of cybersecurity in an increasingly digital world, the first half of 2024 will still pose many challenges. We will see things begin to improve in the latter half of 2024.?

Inventory?

In 2023, the industrial manufacturing sector experienced notable dynamics in terms of inventory management and supply chain activities. The aftermath of COVID-19 led to an accumulation of inventory due to manufacturers stocking up on essential parts during the pandemic.??

This created a backlog in inventory across various channels. However, there are signs that this trend is shifting as we move into 2024. This includes adopting smart factory IoT solutions and exploring Artificial Intelligence (AI), which are expected to enhance operational efficiency and resilience.??

The industrial automation sector is gradually moving towards a more balanced state as inventory backlogs clear and supply chains stabilize. The integration of advanced technologies and strategic shifts in manufacturing models are critical factors that will influence the trajectory of this sector in 2024.?

Consolidation?

In 2023, mergers and acquisitions (M&A) in industrial, commercial, and building supply distributors and manufacturers experienced a significant uptick. With cash on hand and access to private equity, the number of M&A transactions doubled, but it is interesting to note that the majority of M&As were much larger distributors acquiring much smaller operators. That trend will continue.?

Looking to 2024, the continued consensus in economic forecasts is that the previously anticipated hard recession will be much lighter. However, with the backlog in inventory and potentially shrinking profit margins, smaller distributors will find it much harder to weather the storm, and with falling interest rates in 2024, M&As will exceed 2023.??

Cyber Security?

In 2024, cybersecurity in industrial facilities is facing an increasingly complex landscape. New technologies and the rise of sophisticated cyber threats pose significant risks to plants and operation networks. A primary concern is the growing threat to the Internet of Things (IoT) devices, which are becoming more prevalent in industrial settings.??

Cyberattacks such as ransomware, phishing, and insider threats remain pervasive. Regulatory compliance in cybersecurity is becoming more stringent, and companies are actively working to comply with regulations like the General Data Protection Regulation (GDPR).??

The focus is shifting towards a more holistic approach to cybersecurity, emphasizing the importance of continuous monitoring, training, and adapting to the latest technologies and regulatory requirements.?

Human Capital?

The industrial automation space in 2024 will continue to face challenges related to human capital. In the wake of the Great Resignation and the need for more skilled workers, the employee profile—what they are looking for in a job—has changed.???

New criteria and perspectives have emerged and what matters most to employees post-COVID is finding a job that makes them happy. Effective leaders will need to listen to employees, seek understanding, focus on well-being at work, and reinforce culture, values, and purpose to attract and retain talent.?

To address the skilled worker shortage, many industrial firms are turning to automation technologies, including autonomous robotics, collaborative robots (cobots), and artificial intelligence (AI). These technologies not only increase productivity but also decrease labor costs by performing tasks such as assembly, packaging, machine tending, and even operating in hazardous environments.?

As the manufacturing sector integrates more automation and AI, the demand for advanced IT skills, basic digital skills, entrepreneurship, and adaptability is growing. The industrial automation space is adapting through technological advancements and a shift in skills demand. The focus is on leveraging automation and AI to bridge the skills gap, while also redefining job roles to align with the evolving digital landscape.?

Reshoring and Nearshoring?

Location is the new name of the game. With reshoring, manufacturing moves from overseas to the domestic market, while nearshoring manufacturing moves from overseas to a neighboring or nearby country. Reshoring and nearshoring have gained momentum during the COVID-19 pandemic and continue to be a significant factor in the industry in 2024.?

The reshoring trend in 2024 is part of a broader movement towards digitization, sustainability, and supply chain resilience. These shifts are indicative of a significant transformation in the manufacturing and logistics sectors, aiming to create more robust, efficient, and environmentally friendly supply chains.?

Manufacturer facilities have already begun and will continue to make their way back to the Western Hemisphere. Central and South America will find themselves as the new manufacturer territory, and Costa Rica will most likely find itself as the new Mexico.??

Conclusion?

The integration of technology, particularly in areas like AI and IoT, is set to redefine how industries operate, enhancing efficiency and security. However, the human element remains crucial, with a focus on skill development and adaptation to new working paradigms.??

As we move into 2024, these areas stand at the forefront of change, poised to leverage their learnings from the past while embracing innovative approaches to overcome future challenges and capitalize on emerging opportunities. The journey ahead is one of continuous evolution, driven by a commitment to excellence and a vision for a more resilient and technologically advanced industrial future.