U.S. Manufacturing in 2020: What’s Gone Right and Why the Future is Bright

U.S. Manufacturing in 2020: What’s Gone Right and Why the Future is Bright

By: Raj Batra, President of Siemens Digital Industries USA

Editor’s note: Raj Batra is also the Chairman of the Board of Governors for the National Electrical Manufacturers Association (NEMA).

 

The pandemic has put a lot of stress on manufacturing. Companies of all sizes tell me that they’re concerned about keeping workers safe, ramping up production, and coping with the sudden collapse of consumer demand. 

 

But here’s what strikes me in all of these conversations: Manufacturers have been doing a lot that is right. One day we will look back on this time and see how our actions through every stage of this crisis—from response, to recovery, to reinvention—put manufacturers in an even stronger position than we might have predicted prior to the pandemic. Three things impress me most: their dynamism, their tenacity, and their agility.  

 

First, dynamism. To keep production going and ramp it back up to normal levels, manufacturers have adapted quickly to keep their plant-floor workers safe. PPE, social distancing, and attention to hand washing are all important. In addition, some manufacturers are taking advantage of high-tech digital solutions to distance work stations, eliminate high-traffic areas, trace cases of infection, and immediately contact team members who have been exposed.  

 

These digital technologies are enabling them to tap into the raging demand for durable goods like refrigerators, washers, dryers, and other items currently in short supply all over North America. With the most recent monthly Durable-Goods Orders report showing an 11.2 percent rise, an increase for the third month in a row, this trend is well underway.

Manufacturing has become far more strategic to the enterprise than ever before, especially manufacturing that is done in the United States. This will require a tech-savvy and highly skilled workforce on the plant floor.

Second is their tenacity. I see this in the continuation of massive digital transformation projects that were already in progress prior to COVID-19 and are nevertheless continuing apace. This is a time when some of the largest global brands are conserving cash. But the smartest companies continue to invest because they are betting on the future. And that future, while undoubtedly altered by the pandemic in ways large and small, still requires companies to get to market fast with innovative and environmentally sustainable products that consumers crave.

 

And, third, I am impressed by their agility. Many of the knock-on effects of the pandemic—both good and bad—are here to stay. High-profile retail bankruptcies stand out as a business casualty of the COVID-19 downturn. But there are many bright spots as well. Business models are changing. According to McKinsey’s analysis, ecommerce grew more in 90 days in the spring of 2020 than it did over the previous ten years.

 

Consumers are eager to continue those online shopping habits; the percentage of consumers who want to purchase all groceries, household products, and alcoholic beverages online has doubled. Adapting to this reality requires making our warehouses and logistics operations more efficient through advanced automation and robotics. It also means employing digital-twin technologies to accelerate innovation of consumer products that are designed with transportation efficiency in mind, such as new forms of light-weight packaging and low-water detergents and soaps.

 

What all of these trends have in common is digitalization. The technologies that are serving U.S. manufacturing so well in the face of COVID-19 are the same ones that will enable them to become more competitive after the pandemic has been tamed. Embracing digitalization—and the upskilling that goes hand-in-hand with it—will accelerate the digital journey that our plants and factories are already taking. Manufacturing has become far more strategic to the enterprise than ever before, especially manufacturing that is done in the United States. This will require a tech-savvy and highly skilled workforce on the plant floor able to command the skills that the 21st century economy requires. This is a winning combination for U.S. manufacturing and for the economy as a whole.

 

Published on: September 2, 2020