Giving Thanks for the State of Manufacturing

As Thanksgiving Day approaches, now is the ideal time for manufacturers in southwestern Pennsylvania and the organizations that serve them to reflect on the bright present and brighter future of companies that employ about 88,000 people in manufacturing jobs. That figure is just under 1% of the national total and in line with southwestern Pennsylvania’s proportion of the U.S. population.

Most notably, the use of real estate by manufacturers in our region and their suppliers is up 4.4% over last year according to a report from JLL, a global real estate service company with offices in Downtown Pittsburgh. Given the persistent inflation that has recently begun to subside, that figure is most impressive and results largely from business expansions due to new demand from customers who are taking advantage of the Infrastructure Investment and Jobs Act (IIJA), Inflation Reduction Act (IRA), and Creating Helpful Incentives to Produce Semiconductors (CHIPS) bills that Congress passed and the president signed into law.

With the higher cost of financing capital projects and other aspects of manufacturers’ operations, one would think that the small- and medium-sized manufacturers (SMMs) we support with technical assistance, training, and other resources would be deferring investments and expenditures. In fact, many of them are moving forward with projects because of their strong belief in a better future.

That optimism is so widespread that we are on pace to help more than 200 companies in the counties of Allegheny, Armstrong, Beaver, Butler, Cambria, Fayette, Greene, Indiana, Lawrence, Somerset, Washington, Westmoreland exceed last year’s figures of nearly $12 million in cost savings, nearly 200 jobs created, and more than 500 jobs retained.

Preparing for an Abundant Future

As the recent recipient of a $10 million federal grant from the Appalachian Regional Commission (ARC) Appalachian Regional Initiative for Stronger Economies (ARISE), we have the good fortune of being asked to lead a multi-state effort to assist more than 1,000 SMMs with expanding or entering the green technology and clean energy sectors in more than 150 counties across Appalachian Pennsylvania, Maryland, New York, Ohio, and West Virginia. 

Funds will be used to provide training, technical assistance, supply chain mapping, and guidance on factory upgrades to support manufacturers of renewable energy, hydrogen power, low-carbon and decarbonized power, smart grid improvements, electric vehicles, and green buildings.

The projected result of those investments is the creation of thousands of well-paying jobs to help sustain the economies of cities and towns in a region that has trailed the rest of the country economically for decades.

In a similar vein, the RK Mellon Foundation is helping us strengthen our ability to help SMMs meet the challenges they face related to technology usage and workforce development. By awarding us $250,000 to enhance advanced technology training initiatives and expand opportunities for manufacturing career pathways, we are privileged to be developing a Digital Bridge to Manufacturing Jobs Initiative (Digital Bridge) that will launch next year.

The initiative is focused on the development of science and technology talent that can apply Industry 4.0 technologies to the needs of SMMs. To refresh your memory, Industry 4.0 is the integration of intelligent digital technologies with manufacturing processes. Those technologies include advanced manufacturing, additive manufacturing, robotics, artificial intelligence (AI), and smart (interconnected) automation.

The program will facilitate career pathways through pre-apprenticeships, apprenticeships, classroom and hands-on education in community and technical colleges, and placement with employers.

Defying the Numbers

Although Purchasing Managers’ Index (PMI) data reveals that the manufacturing sector was contracting for most of this year, there is reason for optimism. Namely, the rise of the smart factory through Industry 4.0 is allowing manufacturers to be highly productive even in the face of labor shortages. A recent Deloitte study showed that 86% of manufacturing executives surveyed believe that smart factory solutions will be the primary drivers of competitiveness over the next five years. We are already seeing that trend take root among SMMs in our region.

Increased reliance on technology, however, will not reduce the need for SMMs in the 12-county southwestern Pennsylvania region to find about 20,000 new workers by 2033. That’s a projected increase of more than 20% in a region that has experienced negligible population growth in recent years.

As we enter a time of year to celebrate with family and friends and plan our professional and personal courses of action for the next 12 months, we should reflect on the extraordinary opportunities available to manufacturers despite numerous challenges in the production sector and beyond.

By collaborating with one another to use the tremendous number of available resources that are becoming easier than ever to access, we can move this region forward in ways that strengthen the perception of our region among decision makers nationally and internationally as a great place to run a manufacturing business and enjoy life after the proverbial 5:00 whistle blows.

###