07 Jul 2021

The Manufacturing Industry: A Half Year Review

The Manufacturing Industry A Half Year Review
 

The pandemic has thrown a big spanner in the manufacturing works, to say the least.

From suppressed consumer demand and spending habits to high unemployment levels, the disruption has been widespread.

However, it’s not all bad news – in fact, manufacturing is regaining its footing and moving towards pre-pandemic functionality. And doing so quickly.

In this blog post, we’re going to look at the trends and challenges that arose during the first half of 2021. We’re also going to delve into our predictions on what’s to come (and how manufacturers can prepare for it).

First up…

The Renowned Chip Shortage

Global supply chains have struggled to cope with the influx of semiconductor chip demand. The explosive growth is largely down to much of the world’s population needing technology that uses semiconductor chips to adjust to the pandemic. Understandably, laptops and phones have become ‘must-haves’ for remote workers.

The issue is, semiconductor chips are not easy to make. Manufacturing a chip typically takes more than three months and involves giant complex factories, completely dust-free rooms, and multi-million dollar machines.

On the plus side, Intel and others are making moves to expand their US chip manufacturing operations, and in Intel’s case spending $20bn on two new factories in Arizona. These are specifically designed for advanced chip manufacturing.

This is expected to somewhat ease the strain on the existing semiconductor supply chain, but it’s predicted that the benefits won’t be seen until at least the first quarter of 2022 - so the financial effects will still pose an issue for this half of 2021.

The Ramp Up of Automation

Operational resilience has become a key objective for manufacturers, and automation is a strong solution.

Even pre-pandemic, manufacturers were facing rapid fluctuations in demand and supply chain disruption. However, Covid-19 only magnified these issues, creating a more pressing need for agility and flexibility to avoid a loss in productivity.

This is where automation has been ramped up, with many manufacturers making the move to deploy automation on the work floor.

And we’re seeing a shift from automation to autonomous. Manufacturers are realizing that in the very near future, machines will have the capability to make key decisions. In 2021, the journey towards this autonomy will continue, with AI-based applications actually enhancing humans’ understanding of what’s normal and abnormal in manufacturing operations.

The Deferral of Work Catch Up

When the pandemic hit, as a result of workforce and supply shortages, manufacturers were in a position where they had to defer work.

Now, all the work that was put on hold is back in full swing, alongside the new work as demand increases simultaneously.

Coupled with a cut-back workforce, manufacturers are generally struggling to play catch up and meet demands as they come in. The good news is, all the signs point to a rebalance and we’re expecting this to level out slowly as the year continues.

More Production in Existing Spaces

To add to the deferral of work catch-up, manufacturers are having to ramp up production in their existing spaces. Key equipment is having to be rapidly sourced and brought on board, and also extra utilities to accommodate the equipment needs.

The warmer weather is also seeing a heightened need for cooling systems to keep production spaces at optimal temperatures.

This is particularly important for employee health and safety with the existence of PPE and face masks, but also the added heat from extra machinery and equipment.

Sustainability is Still High Priority

Clearly, the manufacturing industry has been under immense pressure. And while sustainability objectives were paramount pre-pandemic, there has been a slight setback in the face of the year’s uncertainty.

However, we’re seeing that sustainability and energy transition is still very much being pursued with vigor. The setback was merely a bump in the road due to Covid and customers are still serious about their targets.

It appears that hydrogen as a fuel is right at the beginning of a key acceleration. In fact, investment in hydrogen is on the rise. Where historically, hydrogen power has been kept back by a lack of investment, it’s now being pushed forward as a priority - as long as the industry continues to step up its production, storage, and distribution game.

Final Thoughts

There are many changes on the horizon, adding to the changes we’ve witnessed over during 2020 and the first half of this year. But one thing has been made abundantly clear: the manufacturing industry is adaptable.

The most effective way to embrace these changes is through technology, digital supply chains, and automation - this will only improve flexibility and mitigate business risks.

On top of this, manufacturers need to be helping their employees to learn new skills to help combat the skills gap. Communication and investment in existing employees will go a long way to retaining irreplaceable talent that will be integral to facing the challenges ahead.

 

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