As the nation ’ s economy seeks to rebound beyond the COVID- 19 pandemic , one industry that has already seen growth is manufacturing .
With the onset of the pandemic just over one year ago , the manufacturing industry rapidly declined , with production decreasing approximately 20 % between February and April 2020 .
“ The pandemic hit manufacturing hard . It was a very steep drop , comparable in many ways to the Great Recession ,” says Chad Moutray , chief economist for the National Association of Manufacturers ( NAM ). “ Some sectors , like motor vehicles , were hit dramatically harder than that . The good news is manufacturing has been a bright spot since then , bouncing back strongly .”
Following the first-quarter 2021 Manufacturers Outlook Report , a nationwide survey of manufacturers by NAM , Moutray expects manufacturing production nationwide will return to pre-pandemic levels by late spring .
“ I see gross domestic product growing by at least 6 % this year , which is strong ,” he says . “ Obviously , the U . S . economy shrunk by a half percent last year , which was the largest national decline since 1946 . That shows you just how strong that rebound has been .”
West Virginia-based manufacturers have also seen similar production increases .
“ The past year was surprisingly strong for manufacturing in West Virginia , being one of the only areas of economic growth in the state during the pandemic ,” says Rebecca McPhail , president of the West Virginia Manufacturers Association . “ We anticipate these trends to continue in 2021 as efforts increase to re-shore American manufacturing and address lessons learned about supply chain acquisition during COVID-19 .”
Despite this optimism , Moutray cautions that there are still many ongoing obstacles as a result of the pandemic , including a workforce shortage , which is just under 600,000 less than it was pre-pandemic . Workforce was one of the most critical concerns in NAM ’ s outlook report , second only to increases in the costs of materials .
“ That rebound doesn ’ t mean we are out of the woods . There are still many challenges out there ,” he says . “ The perennial challenge we continue to struggle with is workforce . Many of our member businesses tell us they are having trouble finding enough talent . This is something we ’ ve seen for a while . It is more of a structural issue as baby boomers retire and really questioning where the next generation of workers will come from .”
Supply chain disruptions also continue to be a problem , with nearly half of all manufacturers surveyed in the outlook report reporting challenges .
“ Manufacturers continue to tell us about several supply
“ The pandemic has forced people to look at supply chains even harder . This is a unique window of opportunity for companies that were already on the fence about relocating in the U . S . to shift more production back here . It ’ s easier to monitor quality here .”
chain disruptions that are really affecting them ,” says Moutray . “ The reality is that a lot of manufacturers slowed down overall activity when demand slowed down , and it ’ s taking a while for that to ramp back up now that overall demand is strong .”
Increases in material costs , the single biggest issue manufacturers noted at 76.22 %, have also affected the supply chain .
“ Production costs in China have increased . Logistics costs have gone up , so sometimes it makes more sense to produce materials here in the U . S . than making it elsewhere and shipping it ,” says Moutray . “ Those things have all played into it .”
Pre-pandemic , some manufacturers were already reevaluating their supply chains because of international trade issues and natural disasters like the Japan tsunami , Thailand floods and other one-time events that urged companies to consider duplicating or adding to their suppliers .
“ This has forced companies to consider that maybe they don ’ t need just one supplier . Or , if they have one supplier , maybe they need to have different locations ,” says Moutray . “ The pandemic , though , has forced people to look at supply chains even harder . This is a unique window of opportunity for companies that were already on the fence about relocating in the U . S . to shift more production back here . It ’ s easier to monitor quality here .”
Another lesson learned from the pandemic is the importance of knowing the source of materials .
“ I think the pandemic brings awareness to the need to balance our supply chain and sourcing — making sure that there are domestic options when it comes to critical manufacturing components as well as finished goods ,” says McPhail . “ Sourcing is very important for most manufactured goods to assure health and safety standards . Knowing where your products are sourced and the standards applied for quality of goods can ensure you know what you are getting and how the product will perform .”
While many manufacturing jobs are essential — frontline positions requiring on-site work — virtual work has become much more common where possible .
“ We did have a survey last year where we asked about interest in working remotely . We heard from a large number of our companies that they were reevaluating opportunities that could be done virtually ,” says Moutray . “ On the shop floor , that ’ s not always possible , so you have a lot of companies reevaluating their production processes to see where they can put more social distancing in place . Our companies have looked at their production processes in different ways . Virtual is possible , but it also means companies are also relying a lot more on technology to make that social distancing possible .”
Those technologies range from robotics and autonomous machinery to 5G mobile data .
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