The State of Manufacturing

The year 2020 was more challenging than any of us could have ever predicted. We recently analyzed some of those challenges, as well as opportunities, while we worked to develop our annual report. Keep reading for some of our insights over the past year and enjoy viewing our annual report at the end of the post, which sheds light on all of the accomplishments our manufacturing communities still managed to achieve despite a turbulent year.

The Impact on Revenue

Most small and mid-sized manufacturers reported that their 2020 revenue numbers missed initial and revised targets. Some more severe than others.

While the general recessionary impact of the COVID-19 pandemic accounts for the majority of sales decreases, other contributing factors include raw material and input outages due to supply chain disruptions, temporary plant closures, firm inability to retain sufficient staffing, and rising input costs as stainless steel, pelletized plastic, aluminum and other inputs became (and remain) more costly. Those rising costs drove up final quotes to customers and reduced the frequency of successful sales efforts. Failure to hit on-time delivery requirements also impacted sales negatively – again, a consequence of supplier disruptions and staff shortages.

Ironically, many firms reported that they in fact hit their profitability targets–especially those with lower levels of sales loss, thanks to prudent staffing decisions and temporary downsizing, reduced energy and overhead costs, and the benefit of PPP loans, which were subsequently converted into grants.

Challenges in Management and Leadership

Other challenging areas amidst the COVID-19 pandemic were seen in management, human resources and leadership. For instance, how do companies keep individuals and teams engaged and unified when some employees work from home and some report to the physical workplace? For small, family-run businesses, how does leadership maintain operations when one or more family members must quarantine due to illness? There has to be a strategy in place for who’s to take over the helm. Now, employers are starting to have conversations around the COVID-19 vaccine. Should vaccination be required before returning to work? What if an employee refuses the vaccine? There are many factors and concerns to take into consideration.

An opportunity for manufacturers during this time is the chance to recruit new employees to the workface. But with this opportunity comes a new set of challenges, as attracting and upskilling workers remains a difficult task. Manufacturers believe that targeting laid-off workers from the lower-paying, higher-risk restaurant, retail and hospitality sectors may be a successful workforce attraction strategy. However, the extension of unemployment benefits continues to work against them. Other challenges relative to the workforce continue to persist or become worse—including how to efficiently upskill new hires. Are online courses as effective as classroom training programs? Additionally, traditionally low-paying employers are offering incentive pay, while warehouse and order-fulfillment roles are paying close to $20 per hour. How can manufacturers position themselves as a competitive option?

Changes in Sales and Workforce Development

Sales processes have also changed. Not only is gaining new employees a challenge, but so is gaining new customers. Pre-COVID, manufacturers relied on trade shows, traditional sales calls, and other in-person sales and networking approaches as viable strategies. The “new normal” forces manufacturers to secure customers through phone, video, and other virtual sales models, which are relatively new processes for individuals in this line of work.

In order to address workforce attraction and retention concerns, as well as meeting new safety requirements for social distancing, more and more manufacturers are turning to automation. Views on the adoption of automation, connectivity, advanced conveyors, sensors and other technologies will increasingly be seen as a way to compete with the warehouse and distribution sector, which pursues the same general employee profile, in terms of job quality and wages.

Forging Ahead

As manufacturers come together to rise above the aforementioned challenges, there are many others still in sight—from supply chain disruptions and shortages in raw materials, to cybersecurity threats, as more technology continues to be implemented in the workplace. It is a difficult and strange time for our industry, but we at Catalyst Connection also believe there is no better time than now to reshape the future for future generations of the workforce. We hope you’ll join us in forging ahead and enjoy this glimpse of all that we accomplished together over the past year.

View the 2020 Annual Report