You’d never know it from the headlines about all the supply chain headaches, but manufacturers are feeling surprisingly upbeat about 2022, according to our just-released 2021 National Manufacturing Survey. 77% of our respondents are optimistic about the coming year, and 80% expect higher revenue—even though nearly 60% had lower revenue in 2020 than 2019 because of COVID.
One thing that stood out for me was how important the Paycheck Protection Program turned out to be for many manufacturers—something we saw firsthand among our clients. 74% of respondents tapped PPP funding to keep their teams working and drive growth. Beyond that, 80% used some type of tax incentive, and nearly 23% used the Employee Retention Tax Credit. Government programs don’t always work, but in this case they were a lifeline that helped many manufacturers position themselves for future growth.
The real test for manufacturers will be how they cope with hiring challenges, given that the current labor shortage won’t be going away any time soon. Staffing is (perennially, and not just for manufacturers) one of their top three priorities. Cost-cutting is a close second.
My guess is that the talent shortage will speed up the inevitable—a greater reliance on technology. More manufacturers are putting technology to work to drive efficiencies and automate processes, fill gaps and increase capacities. Half of the companies responding launched a new automation or technology project in the past year. It’s not surprising, given the changing of the guard that’s taking place in the industrial sector. With its value sagging, GE, once an icon of American manufacturing, just announced it will be split into three public companies in a move to reinvent itself.
One of the most compelling trends, from my perspective, is the increasing adoption of smart manufacturing, which relies on the Internet of Things. It’s taking place across sectors—automotive, food & beverage, consumer packaged goods, you name it. Over the past few years, our manufacturing industry specialists have been advising clients on how to put smart technology to work for them to improve inventory management, stay on top of service and maintenance needs, ensure worker safety and improve quality—and the survey shows this is nearly universal in the manufacturing sector. In these trying times, with shortages of both labor and materials, this could lead to greater profitability for many firms that are ready to ditch analog-era methods, at least in theory. Smart tech is a smart strategy, and it is becoming imperative for many companies to deploy.
But it also means firms need to prioritize cybersecurity. Progress always comes with its downsides, and there is sure to be more potential opportunity for hacking in the average manufacturing plant of the near future. Cybercrooks have been having a field day since much of our work lives moved online, and they’re only getting better at finding new scams, including at manufacturing plants. Fortunately, there are preventive steps you can take to secure your operation and build cyber-resilience, as well as remedial solutions to fix any problems. If you need assistance, your Marcum advisor can connect you with our team at Marcum Tech.
It’ll be interesting to see where this all leads. Many of the manufacturing firms we advise are family-run firms where multiple generations work side by side. With younger, tech-savvy generations transitioning to leadership positions, many of today’s manufacturers are uniquely poised to make the most of smart technology for growth and profitability. Why should startups see all the action?
P.S. Yesterday was Veteran’s Day. Thank you to all of the members of Marcum’s Veterans’ Associate Resource Group and all who have served our country for the sacrifices you have made to protect our freedoms.