Focusing on Productivity

In many of my latest conversations with North American manufacturing leaders, they key focus has been on productivity, and its recent decline across North America, getting in front of this decline will be absolutely critical in the years to come, this article is focused on Productivity, and trends, driving productivity gains is key to what SBTI does.

Manufacturing productivity is a crucial benchmark for a nation's economic growth, as it drives the creation of jobs, improves exports, and increases the standard of living for stakeholders. The North American region has experienced significant shifts in its manufacturing industry in the past decade. Over the years, there has been a decrease in the number of manufacturing jobs, and, consequently, a decline in productivity. This paper is aimed at analyzing North American manufacturing productivity in the last ten years, examining the trends, drivers, and challenges affecting the sector.

Overview of North American Manufacturing Industry

North America comprises Canada, Mexico, and the United States, and the manufacturing sector is an essential component of these countries' economy. According to a report by the National Association of Manufacturers, the US manufacturing sector continued to experience moderate growth in 2020, with a contribution of $2.33 trillion to the US economy. At the same time, Canada's manufacturing industry accounted for $174 billion, representing 10% of its GDP. Mexico's manufacturing industry experienced steady growth, providing around 20% of its GDP. The manufacturing sector's growth is critical because it leads to new job opportunities and higher GDP per capita.

Productivity Trends in North American Manufacturing Industry in the last ten years

Productivity is an essential metric used to measure an organization's efficiency over time. According to data from the Bureau of Labor Statistics, productivity in the U.S. manufacturing sector increased by 2.8% from 2018 to 2019, with output increasing at a rate of 4.5%. It is a significant improvement compared to 2015, which experienced a decline in output growth rate. However, it is a meager improvement compared to the 3.6% growth in productivity that the manufacturing sector experienced annually in the 1990s.

Similarly, productivity growth in the Canadian manufacturing industry has been slow, with a productivity growth rate of 3.7% in 2019, compared to its 6.5% growth rate in 2000. Mexico's manufacturing industry has experienced a sharper decline in productivity growth, with a rate of 0.9% in 2019, compared to 5% in 2000.

Drivers of Productivity in the North American Manufacturing Industry

The productivity of the manufacturing industry is influenced by various factors, including technological advancements, workforce, and automation. Advancements in technology have significantly impacted the manufacturing industry, with the introduction of automation, artificial intelligence, and machine learning contributing to increased productivity. Companies such as Tesla and General Electric have implemented advanced technologies to improve their efficiency and high volumes of production. Robotics and automated systems have helped in improving consistency, precision, and accuracy, increasing production output.

The workforce is also a key driver of manufacturing productivity. Trained and experienced employees have a critical role in ensuring the effectiveness of manufacturing processes. Employee training helps to improve skills and knowledge, leading to a higher quality of products and services. Proper training also helps employees comply with safety standards, reducing workplace accidents, and increasing productivity.

Challenges Affecting Productivity in the North American Manufacturing Industry

Despite the efforts made to improve productivity, the manufacturing industry still faces significant challenges. One of the significant challenges is the shortage of skilled workers. Experts predict a shortfall of around two million manufacturing workers by 2028 in the US alone. Additionally, political and economic disruptions, such as the recent US-China trade war, have impacted the global manufacturing industry. Supply chain disruptions due to the COVID-19 pandemic have further highlighted the industry's vulnerability to sudden crises.

Conclusion

North American manufacturing productivity has experienced fluctuations in the past decade, with some countries experiencing an increase, while others have experienced a decline. Technological advancements and workforce training have contributed positively to the manufacturing industry's growth. However, there is a need for corporations to invest in critical areas such as training and upgrading facilities to ensure continued efficiency. Addressing workforce shortages and political-economic disruptions is crucial in ensuring a stable and reliable manufacturing

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