Monday, November 21, 2022
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Manufacturing Ramps Up, but How?

A host of industries are still not yet fully recovered from the remarkable fallout that has surrounded the COVID-19 pandemic—and the ripple effect can be felt across many waters of the globe. But this has me wondering which sectors will continue to grow more rapidly than the economy as we head into 2022. If I were a betting person, I would guess the best sectors that are outperforming others have greatly begun the digital transformation journey.

I would even go as far as to say these are the industries—and even more specifically, the companies—that are searching for returns that beat the broad market index and have looked to technology as a means to help them out—with or without workers.

The answer to this is simply not about rolling the dice in a game of chance,but rather looking more closely at multiple sectors and to see how each industry performed during the pandemic when product, people, and services hit an historic low. In this three-part blog series, we will dig into the numbers and share some market details and make some industry observations about whether success will continue. First up, manufacturing.

It’s impossible to talk about manufacturing without looking at some current government numbers and take an even closer look at the trends. Investors had an opportunity to follow the trends to make some investments with the least amount of risk. The U.S. Census shows shipments of manufactured durable goods in October was up five of the last six months and increased $4 billion, or 1.5%, to $261.5 billion. This followed a 0.6% September increase. Transportation equipment led the increase. It seems we are trending in the right direction.

Meanwhile, the BLS (Bureau of Labor Statistics) shows job openings and labor turnover continues to trend upward, year-over-year, although curiously the unemployment rate is trending downward.

The Federal Reserve suggests industrial production rose 1.6% in October after falling 1.3% in September; about half of the gain in October reflected a recovery from the effects of Hurricane Ida. Manufacturing output increased 1.2% in October; excluding a large gain in the production of motor vehicles and parts, factory output moved up 0.6%. The output of utilities rose 1.2%, and mining output stepped up 4.1%.

At 101.6% of its 2017 average, total industrial production in October was 5.1% above its year-earlier level and at its highest reading since December 2019. Great news, right? It seems industrial production is strong, and we are seeing progress. Still, this is marred by the fact we are facing real workforce shortages and supply chain struggles.

Here is the question at hand: if we are short on workers, but gaining some on output, how are we doing it? It’s simply the age-old acronym: IoT (Internet of Things) is doing its part here. So, let’s dig a little bit deeper and explore why the IoT is making a difference.

Deloitte suggests acceleration in digital technology adoption could bring operational efficiencies to scale. U.S. manufacturers have room to run with advanced manufacturing compared to many competitors globally, according to the company. It points to advanced global “lighthouse” factories, which showcase the art of the possible in bringing smart manufacturing to scale. Add to this the investment in robots, cobots, and AI (artificial intelligence), and technology is poised to continue to transform operations.

Here is what Deloitte predicts for manufacturing specifically in the year ahead: Foundational technologies such as cloud computing enable computational power, visibility, scale, and speed. Industrial 5G deployment may also expand in 2022 along with advances in technology and use cases.

This is precisely what the Manufacturing Institute predicted earlier this year, when it surveyed manufacturers on the potential for 5G connectivity. Here is what it found. Nearly all manufacturers (91%) believe 5G connectivity will be important to the overall future of their business, with three-fifths indicating it will be extremely important. Roughly 91% believe 5G will help them compete globally and nine in 10 expect the use of 5G to lead to the creation of new processes and the creation of new businesses.

Yes, it seems, as business ramps up, manufacturers are in fact looking to technology as the powerful solution to fill in the gaps left by the pandemic. We shall see how it all unfolds in the year ahead.

While manufacturing is one example, many others are paving their own path in these uncertain times. This week, over on Constructech, we are exploring how the construction industry is holding up. In future weeks, here on Connected World, we will look at other market sectors such as energy and healthcare, exploring the state of these industries and how they are enduring, all while exploring the role technology is really playing. Stay tuned.

Want to tweet about this article? Use hashtags #IoT #sustainability #AI #5G #cloud #edge #futureofwork #digitaltransformation #green #ecosystem #environmental #circularworld



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