Issues Faced by Manufacturing Industry in 2020
2020 was quite a year, with the Presidential impeachment, locust swarms and murder hornets, racial justice protests, Australian wildfires, and biggest of all, a global pandemic. The manufacturing industry has taken the brunt of all these events and while some have been addressed, some more still need our attention.
The Effects of COVID-19
As it goes without saying, COVID-19 has affected the manufacturing industry, top to bottom. Even with a proper business plan in place, most businesses struggled to address the rapid and unpredictable variables of the outbreak: playing havoc with supply chains, quarantining, schools closing, restricting travels, etc.
Increased Back shoring
According to the Reshoring Institute, “companies will be encouraged to take part in reshoring efforts for many years to come because of rising tariffs on electric components, aluminum, and steel, increasing foreign wages, and reconsiderations on the overall cost of ownership.” Predictably enough, businesses are now reconsidering their strategies on global manufacturing.
Sourcing and Retaining Labor
Up until the spikes in unemployment caused by COVID-19, the numbers of skilled workers were low in America. Today, manufacturers still face the challenge of finding knowledgeable, motivated employees. Another challenge is retention. Employees are consistently making lateral moves to increase their benefits and salary and as a result, retention has become difficult but not impossible. Businesses should make it a priority to create a great workplace and a culture of appreciation for employees so that they do not go elsewhere.
Traversing Changing Laws
Prioritize staying updated with the changing laws because laws change every year. With fluctuating legislation, you can maintain your sanity by focusing on seven areas of manufacturing industry laws:
- CARES Act
- Local and State Laws
- ISO Procedures
R&D Tax Credit is one benefit that is here to stay. Here you can deduct qualified expenses during sales process and also throughout the manufacturing process.
Keeping Up with the Increasing Demand
Some of the manufacturers are challenged with two types of demand-related issues. The first is an explosion in demand, thereby requiring the need to increase capacity. The second is demand-driven manufacturing which affects important company goals.
Increasing capacity can often force choices like expanding the current facility or shifting to a new facility. With excessive demand-driven manufacturing, many manufacturers are left with very little money and time to concentrate on critical initiatives. A smart way to overcome these challenges is by strategically using R&D activities along with funds from R&D Tax Credit.