There’s a positive outlook for the manufacturing industry in 2022. But to continue growing, manufacturers will have to face emerging manufacturing industry trends, like labor issues, a pressure for top talent and finding a new normal.
“The main trend in 2021 was really around a return to normalcy. There’s certainly a feeling of fatigue from the pandemic, but a return to normalcy has been impacted significantly by a need for labor,” said Brian Kramer, underwriting officer and manufacturing industry practice lead at The Hartford. “It’s also not just about finding talent, but safely integrating these individuals into the work environment.”
What Are the Current Trends in Manufacturing?
Kramer said he sees four topics becoming a trend in manufacturing:
- IoT and industrialization
- Talent shortages
- Focus on employee health and wellness
- A need for business continuity and supply chain diversification
“We’re seeing pockets of excitement of returning to what life looked like prior to the pandemic. There’s a trust in science, vaccines and knowledge around how to address and treat this disease,” Kramer explained. “In manufacturing, there’s a greater focus on employee health and wellness, especially in a tight labor market.”
1. Manufacturing and Industrialization
The manufacturing industry is still in the middle of the Fourth Industrial Revolution. Considered as a change to how humans live and work, the Fourth Industrial Revolution blends the physical, digital and biological worlds.1
Compared to the early 2000s, manufacturers have started to embrace technology and the efficiencies that automation brings. Car manufacturers, for example, are investing in robotics to help with production.
“We’re still in the throes of the Fourth Industrial Revolution and embracing technology, artificial intelligence and robotics,” Kramer noted.
One way the manufacturing industry is embracing technology is through the use of IoT, also known as connected devices. Companies began using IoT for a variety of reasons, such as:
- Improving worker ergonomics
- Risk management strategies
- Equipment maintenance needs
IoT in manufacturing is expected to grow at a compound annual growth rate (CAGR) of 4.76% from 2021 to 2026.2 One source estimates that the IoT market in the manufacturing industry will reach $399 billion by 2026.3
Insurers like The Hartford are also working with manufacturers and other customers to find ways to integrate IoT devices as a way to reduce losses and lower their cost of risk.
The Hartford’s Risk Engineering team, for example, may recommend a manufacturer use industrial IoT to prevent injuries and maintain worker health and wellness.
“We believe improving ergonomics and workers’ safety are significant benefit drivers of IoT technology in manufacturing and continue to see promising indications that there is additional value to be realized,” said Camryn Santos, director of strategy IoT innovation at The Hartford.
Santos added that manufacturers may see value in applying IoT technology in broader use cases, like:
- To enhance productivity
- Identify process and operational improvement opportunities
- Deploy predictive maintenance solutions
- Prevent theft or trespassing
2. Talent Shortage Affecting the Manufacturing Industry
Like many other industries, manufacturers are facing a talent shortage.
The number of resignations in the manufacturing industry have steadily climbed since October 2021 according to the latest data from the U.S. Bureau of Labor Statistics.4 In January 2022, 331,000 workers left the manufacturing industry.5
Another factor to the labor shortage is the manufacturing industry’s embracing of technology, automation and artificial intelligence. Kramer noted that because of this, the demand for skilled labor will rise.
“Some workers have retired or exited the workforce. And others may be on the sideline waiting for the right opportunity to join the industry. But finding, on-boarding, training and retaining new talent continues to be a challenge,” Kramer explained.
3. A Greater Emphasis on Manufacturing Worker Health and Safety
While the COVID-19 pandemic exacerbated the talent shortage in many industries, there was a silver lining in the manufacturing industry. Many manufacturers have put a focus on worker health, wellness and safety, Kramer said.
During the early days of the pandemic, the manufacturing industry relied on health and safety guidelines and recommendations for worker safety. This included:
- Social distancing
- Staggered shifts or alternative work schedules
- Wearing PPE
More recently, Kramer said the focus shifted to keep manufacturing workers healthy and safe on the job.
“Many used the pandemic to plan and modernize machinery, making upgrades to equipment for efficiency gains. Others have focused on worker safety, such as installing machine guarding or adding a lifting table to reduce manual material handling,” Kramer explained.
4. A Need for Supply Chain Diversification and Business Continuity Planning
The COVID-19 pandemic created unprecedented inventory and supply chain issues around the world. Political unrest in the world intensified this issue as companies around the world continue to struggle with supply and inventory. Manufacturers aren’t immune to this. In fact, they may be one of the hardest hit industries.
“There’s been some disruption across the board due to supply chain issues, both in terms of moving freight on water and on land,” Kramer explained. “Some manufacturers were able to diversify the supply chain or increase stock of components and ingredients needed for production, while others were forced to experience delays.”
Kenneth Travers, technical manager for the Ingeniería de riesgo Team at The Hartford, noted that it wouldn’t be uncommon for countries outside of the immediate Russian-Ukrainian War zone to feel the effects of the ongoing conflict. With Ukraine and Russia accounting for significant raw material supplies supporting the high tech, aerospace, energy and agricultural industries, moderate to significant disruptions are to be expected.
“These supply chains will become fractured because of obstructed access for vessels, trucks and aircrafts that operate in that region,” Travers said.
Kramer added that there are additional factors impacting manufacturer supply chains:
- The length of time it takes to unload cargo ships at ports
- A truck driver shortage to move goods once they’re on land
“There’s such a backlog across the supply chain, but it’s going to get better slowly. It’ll just take some time,” Kramer explained.
Shailesh Kumar, head of The Hartford's Global Insights Center, said productivity levels in manufacturing are rising, but not as quickly as needed. He added that delays with goods transportation are a main factor in supply chain disruptions.
“The percentage of global goods waiting on ships is at a multi-year high due to bottlenecks at the port,” Kumar said. “… Even if the sea-based movement of goods normalizes tomorrow, the post-port movement could remain a challenge.”
These issues highlight the necessity for the manufacturing industry to review their supply chains. Mapping out the entire supply chain, identifying potential problem areas and having an alternative option to use to prevent delays or an interruption in business operations is important, Kramer said.
A supply chain review is connected to business continuity planning. This plan should be reviewed and tested on a regular basis, but Kramer said the pandemic and current global affairs highlighted a need for manufacturers to make business continuity planning a focus.
While it’s impossible to predict the future, planning for the worst can help manufacturers be better prepared in case of an emergency. Professionals at The Hartford recommend that manufacturers and businesses have a business continuity plan that includes details on:
- Assessments to identify risks and key business areas and critical functions.
- Preparedness against emergencies.
- Response to know how to respond to emergencies or crises.
- Recovery strategies to reduce losses and bring your operations back online.
What Is the Outlook for the Manufacturing Industry?
Despite the manufacturing trends and challenges that companies may have to face in 2022, Kramer said he’s optimistic about the industry. He emphasized that it’ll take time for things to go back to normal and for manufacturers to work through the effects brought on by the pandemic.
“The impact will largely stem from the disruptions in supply chain or the delay in moving goods and the shortage of workers. These trends will continue in a post-pandemic world,” Kramer explained. “We’re seeing pockets of excitement of returning to what life looked like prior to the pandemic. It’ll simply take time to get back to a sense of normal and work through current backlogs.”
1 World Economic Forum, “Fourth Industrial Revolution”
2, 3 Mordor Intelligence, “Internet-of-Things (IOT) Market in Manufacturing – Growth Trends, COVID-19 Impact, and Forecasts (2022-2027)”
4, 5 U.S. Bureau of Labor Statistics, “Table 4: Quit Levels and Rates by Industry and Region, Seasonally Adjusted”
La información proporcionada en estos materiales brinda información general y de asesoría. It shall not be considered legal advice. The Hartford does not warrant that the implementation of any view or recommendation contained herein will: (i) result in the elimination of any unsafe conditions at your business locations or with respect to your business operations; or (ii) be an appropriate legal or business practice. The Hartford assumes no responsibility for the control or correction of hazards or legal compliance with respect to your business practices, and the views and recommendations contained herein shall not constitute our undertaking, on your behalf or for the benefit of others, to determine or warrant that your business premises, locations or operations are safe or healthful, or are in compliance with any law, rule or regulation. Readers seeking to resolve specific safety, legal or business issues or concerns related to the information provided in these materials should consult their safety consultant, attorney or business advisors. All information and representations herein are as of May 2022.
Links from this site to an external site, unaffiliated with The Hartford, may be provided for users' convenience only. The Hartford no controla o revisa estos sitios. La provisiòn de cualquiera de estos enlaces no implica la aprobación o asociación de The Hartford con dichos sitios. The Hartford no es responsable y no ejerce ningún tipo de representación o garantía relacionadas con los contenidos, integridad, precisión o seguridad de cualquier material publicado en dichos sitios. Si usted decide ingresar a sitios que no pertenezcan a The Hartford, lo hace bajo su propia responsabilidad.
The Hartford Financial Services Group, Inc., (NYSE: HIG) operates through its subsidiaries, including the underwriting company Hartford Fire insurance Company, under the brand name, The Hartford,® and is headquartered in Hartford, CT. For additional details, please read The Hartford’s legal notice at https://www.thehartford.com.
