How to overcome the top manufacturing industry challenges

The manufacturing industry represents a significant portion of the economy, employing more than?12 million workers ?and generating approximately?$2.8 trillion annually ?— according to data from The U.S. Bureau of Labor Statistics and The Bureau of Economic Analysis.

However, due to global trade disputes and other factors, such as inflationary pressures, manufacturers in the U.S. are facing significant challenges.

A 2022 survey conducted by The National Association of Manufacturers revealed that?90.1% of executives ?are most concerned about the rising cost of raw materials, followed by supply chain disruptions (85.5%), attracting and retaining talent (80.7%), the cost of transportation and logistics (73.2%) and the high prices of healthcare and insurance for employees (52.7%).

Despite these difficulties, the industry has proved resilient and adaptable, and many manufacturers are confident that they will continue to thrive in the next few years. Nonetheless, it's essential to be aware of these challenges, and here are some ways to overcome them:

1. The rising cost of raw materials

The rising cost of raw materials is the most significant primary concern for manufacturers, as they have to factor these costs into the price of their products or absorb them into their profit margins.

Although manufacturers have little control over the price, executives can consider taking part in long-term agreements with suppliers, which can help to keep costs stable. Alternatively, manufacturers can explore other ways to reduce costs, such as by improving the efficiency of their processes or switching to more affordable materials.

2. Supply chain disruptions

Manufacturers face several risks regarding their supply chain, including disruptions that can cause delays or halts in production.

However, manufacturers can mitigate the consequences by establishing contingency plans and communicating with suppliers about potential risks. Additionally, they can also consider implementing measures such as inventory management systems and?safety ?stock levels to ensure that you always have enough materials on hand to meet production levels.

3. Attracting and retaining talent

The manufacturing industry faces a shortage of skilled workers, and companies struggle to fill open positions. To overcome this challenge, manufacturers should develop an employee value proposition that will appeal to young people and retain existing workers.

For example, training programs, career development opportunities, flexible work arrangements, inclusive culture and looser entry criteria are some things manufacturers can consider implementing to compete in today's tight labor market.

4. The cost of transportation and logistics

Manufacturing companies are facing rising transportation and logistics costs, which affect the bottom line. To address this issue, manufacturers should look for ways to reduce shipping expenses by optimizing supply chains, streamlining operations and reducing waste.

5. The high prices of healthcare and insurance for employees

Health care and insurance are essential in the manufacturing industry, where employees often work long hours in physically demanding jobs.

To cut costs, manufacturers should consider keeping some employees on a staffing agency's payroll, bringing in more temporary workers or hiring independent contractors.