Mar 26, 2023

How to Revitalize the Manufacturing Sector in the US Post-pandemic

  • By Harry M.,
How to Revitalize the Manufacturing Sector in the US Post-pandemic

In many ways, the COVID-19 pandemic posed significant challenges to the manufacturing industry. Manufacturing’s importance in delivering products that are critical to health, safety, national security, and the continuity of many sectors has been emphasized by the COVID-19 pandemic. It has also revealed the extent to which global supply systems are vulnerable to interruptions and shocks. All of this has occurred at a period when new technology, process breakthroughs, and increased demand are transforming the industry globally. The United States can take advantage of these advancements to improve the competitiveness of its manufacturing sector.

Despite a decade of tremendous import growth and employment losses, the manufacturing sector in the United States remains a significant element of the economy. Manufacturers now have the opportunity to put some of the lessons learned into action as governments and industries begin to find their way forward as limitations are eased.

Reshoring is the Key to Economic Recovery

Since 2010, almost 4,700 companies have moved some or all of their manufacturing and sourcing operations back to the United States. Despite COVID-19, reshoring in 2020 achieved a new record.

COVID-19 has been cited by 60 percent of reshoring enterprises since March 2020 as a reason for coming here. Personal protective equipment (PPE) and pharmaceuticals account for nearly half of the 60 percent. The rest were other manufacturers who were experiencing difficulties as a result of shortages or new prospects.

Risk mitigation, resiliency, agility, responsiveness, and a rapid time to market are all benefits of reshoring. As the reshoring trend picks up steam, more jobs will be created, unemployment will be reduced, and trade and budget deficits will be balanced. Because of its enormous economic contributions, manufacturing is specifically positioned to support the US recovery in the long run.


Before and Amidst the Pandemic

Manufacturing equates for 35 percent of productivity growth, 60 percent of exports, and 70 percent of private-sector R&D in the United States. Furthermore, manufacturers contributed $2.17 trillion to the US economy, accounting for approximately 12.1 percent of GDP.

According to Deloitte’s “2021 Manufacturing Industry Outlook” research, “Manufacturers seek to be disruption-proof.” The report assessed the manufacturing fallout from the pandemic while offering a path forward.

Based on the Oxford Economic Model, Deloitte forecasted a drop in annual manufacturing GDP growth levels for 2020-21, anticipating minus 6.3 percent growth for 2020 and 3.5 percent growth for 2021.


The report also mentioned the detrimental consequences of worldwide shutdowns on U.S. manufacturing, such as:

  • In the US, industrial production dropped by 16.5 percent year over year.
  • Total manufacturing orders in the United States dropped 22.7 percent year over year.
  • Total industrial capacity utilization increased to 74.5 percent in December 2020, up from 64.1 percent in April, but still falls short of the pre-pandemic level of 77 percent.
  • In December 2020, the US Industrial Production Index was 105.7 percent, down from 110 percent before the pandemic.

In the quest for recovery, Deloitte identified four essential criteria for manufacturers:

  • Identifying and resolving forecasting issues.
  • The extensive adoption of “digital twins.”
  • Increasing supply options to mitigate trade and other disruptions.
  • Employee “up skilling” for optimum workforce adaptability in the event of weather upheavals.

Accelerating Technology Adoption and Innovation

When pandemic shutdowns occurred, the need for remote working solutions became evident. The United States implemented adequate measures to accelerate production. Another factor is digital acceleration, which COVID-19 unquestionably benefited, such as the successful transition to remote working. Many professionals stated that they were able to move 20 to 25 times quicker than they believed possible on issues such as supply-chain redundancy, data security, and the utilization of innovative technologies in operations.

According to a McKinsey report released in October 2020, businesses are three times more likely than before the crisis to perform at least 80 percent of their consumer transactions digitally.

Another unintended benefit arose as businesses expanded their online presence to incorporate online training, maintenance, and virtual tours.

Wrapping Up

It is critical to re-establish R&D in manufacturing to foster technological innovation. It is becoming increasingly vital to restoring key supply-chain activities. Investing in appropriate 4.0 productivity tools can help industries reap the benefits of those technologies and accelerate production.

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