Five Major Trends Affecting Manufacturing in 2022
Two things have been true throughout history:
1) Everyone wants the future predicted
2) No one is all that good at predicting it
As humans, it seems like we’re getting better at it, but that’s just because we’re starting to understand what trends actually influence outcomes. So, let’s focus on that strength and identify the trends that are going to define the year for manufacturing instead of fishing for a correct prediction.
1. The Supply Chain Crisis is Making Itself Worse
The supply chain crisis we’re facing right now isn’t just one problem, it’s dozens of smaller issues that have become tangled into one massive knot. It seems like pulling one of the many threads should help loosen the whole knot, but instead things just keep getting tighter as more and more sectors are pulled into the mess.
It’s not only getting bigger, it’s also making itself harder to untangle: The things that would help the crisis — truck parts, new port cranes, microchips for new equipment, etc. — are now running into their own production and shipping delays because of the crisis itself.
If all that weren’t enough, the labor contract for all US West Coast port workers expires this summer. There aren’t signs of trouble yet, but a lockout or strike would take the slow drip of freight arrivals and choke it off completely.
The contract expires on July 1 of this year, so news of how negotiations are going should be floating around in late May or June. If the mood is bad, taking an inventory position in key supplies ahead of the negotiations might be wise for businesses with the available space and cash flow.
2. Reshoring and Onshoring Are Increasing
The supply chain crisis definitely increased the interest in, and the pace of, onshoring and reshoring. According to Industry Week, 38% more jobs came back from overseas in 2021 than they did in 2020 and all signs point to that increasing again in 2022. A massive increase in federal investment in semiconductors and the growth of the electric vehicle industry — more on this below — are two big factors in the growth, but plenty of other sectors are bringing jobs back from abroad in an effort to insulate themselves from some of the supply chain shocks.
This is great news for a lot of different reasons. More local manufacturing means lower environmental impact, higher sustainability, and good jobs across the country. Having it happen organically instead of in response to tariffs or trade wars is even better.
One word of caution as we head into an election year: You’re likely to hear a LOT about onshoring/reshoring this year. It’s an issue that’s politically beneficial for both parties and has little downside, which makes it really appealing to talk about.
Onshoring is happening, we have the stats to prove it. The pace is increasing, which is great. Just beware of the hype which may overstate both the speed of it and its short-term impact. It took decades for the current state of the market to take shape, it won’t be undone overnight.
3. COVID Variants Are Still Emerging
The news in this post-holiday period in the US has been dominated by record-high COVID case counts as the Omicron variant spread rapidly throughout the country. Businesses and schools are once again facing questions of whether it is safe to open their doors, adding to the decision fatigue we’ve all faced since March 2020.
No one wants to still be dealing with COVID issues, but they’re going to be a huge force for the foreseeable future. Hiring will remain challenging, especially for jobs that really must be done in person; global factory outputs will remain below their pre-pandemic rates and that’s going to keep the supply chain crisis in full effect.
Two years of data give us a pretty clear indication that there will be a lull this summer as people spend more time outside, but what happens on either side of that break will go a long way to determining how the year as a whole will look come December 2022.
4. Demand Across the EV Space is Taking Off
The first fully electric vehicle (EV) debuted in the US in 1890, so it’s about time the concept really started to get traction! Sure, the modern movement is less than 20 years old, but still…
The emergence and uptake of fully electric trucks from Rivian, Ford, GMC, and soon Dodge is yet another sign that EVs aren’t a trend, they’re a big part of the future of transportation. Even Sony — yes, the company behind the Playstation and Walkman — has announced they’re making an EV.
One of the things that had limited their growth to this point was the slow rollout of public chargers. There are a decent number of them now and their number should absolutely skyrocket in the next few years. In addition to the increased demand spurred by the sale of more EVs than ever before, the infrastructure bill passed last year allocated $7.5 billion for the construction and installation of EV charging stations.
Yes, sales of EVs doubled last year, but they doubled from 2% of cars on the road to 5%, so we’re still very much in the early part of this shift.
For shops looking to open up a new market, the EV space is unquestionably worth investigating, but move quickly. Many of the producers are planning to open their own EV-only facilities soon, so now is the time to establish those supplier relationships.
5. The Speed of Automation is Increasing
Trends like this one happen slowly, then all at once, and we have pretty clearly hit the second phase. Automation has been happening for generations — the first industrial robot showed up in 1959 after all — but for many shops it has become the difference between survival and growth. Advancements in connectivity and miniaturization have allowed businesses of all sizes to develop smooth, consistent flow with predictable maintenance schedules that keep customers happy and minimize strain on employees.
Smaller shops that would have previously been crowded out by larger competitors are now better able to compete, and are even finding new markets opening to them, as consumer behavior changes mean that nimble shops have an advantage over the slower movers.
There have certainly been great advances in robotics, but automation now includes painfully manual tasks like billing and account management, scheduling, and employee workload balancing. Concerns about automation leading to job loss have proven to be largely misplaced as shops that automate well can often hire more people since they have more work to do.
As the results of digital transformation become more widespread and visible, it’s no wonder that more shops want to claim those gains for themselves and the pace of automation uptake is increasing.
The expansion of broadband internet access and a growing skills gap in the workforce is only going to accelerate this trend. To stay ahead of the curve, the best time to start digitalizing processes was a few years ago, but the second best time is now.
All five of these trends will play a meaningful role in determining how manufacturers do in 2022, that much is clear, now the challenge is figuring out how to ensure that your business is ready to face the year no matter what else the world throws at you.