By Brett Bauer, CPA
One of the most significant lessons we have learned in business over the past three years is that if your company is unable to pivot and adapt you will be left behind. So, how do you pivot in manufacturing? How do you adapt? This is the core concern of PICPA’s Manufacturing Conference webcast being held on Dec. 15, 2022. We will cover many timely subjects and work toward several solutions. One way we will do this is through the “Future of Manufacturing” round table that I’ll be a part of. I’ll be joined by three industry experts as we look back on the past three years to highlight how companies were able to succeed during incredibly difficult times. We will then discuss how those challenges are shaping how we prepare for tomorrow.
To give you a taste of what we will discuss at the round table and what the conference will cover generally, here are a few thoughts on the economy, jobs, and technology.
Although the rate of inflation has started to trend downward (nearly 1.5% from its peak this summer), it has clearly disrupted businesses for over a year now. The demand for higher wages is up and the cost of materials has increased. Many manufacturers, however, were too slow to pass along price increases to their customers. We’ll ask the panel what they have already done, or are planning to do, to lessen the lingering impact of inflation on their businesses.
Last month, the Federal Reserve approved a fourth consecutive increase in interest rates of three-quarters of a point, which is the most aggressive pace of monetary policy tightening we have experienced in several decades. We’ll delve into the impact higher interest rates are having on manufacturers with regard to expanding their businesses.
Also, the supply chain crisis that arose from the global pandemic and restrictions on international manufacturing and shipping has inspired talk about “on-shoring,” or bringing manufacturing jobs back to the United States. We’ll debate whether this is a real movement among manufacturers or just a recent talking point.
According to a May 2022 survey from the Pennsylvania Manufacturing Advisory Council, the most pressing issue for manufacturers is “finding, hiring, and retaining employees.” We’ll discuss how attracting and retaining employees has changed over the past three years and look at manufacturers who have been successful in addressing this issue.
Pennsylvania manufacturing has been, and will continue to be, the engine that drives economic success in the state. However, for a variety of reasons, the skills gap in manufacturing is growing at an alarming rate. The National Institution of Manufacturers predicts there will be 2.1 million unfilled manufacturing jobs by 2030 – nearly three times the current deficit. We will look at why manufacturers are struggling to fill open positions.
Technology upgrades in manufacturing have progressed significantly over the past decade. “Industry 4.0” offers many clear benefits to manufacturers, particularly in the areas of offsetting the impact of the labor shortage as well as in increases in output, quality, safety, and energy efficiency. That said, when walking through plants and talking to many in industry, I find most manufacturers haven’t fully implemented the technologies commonly tied to the term Industry 4.0 (industrial “internet of things,” big data, advanced analytics, robotics, cobots, machine learning and AI, additive technology, etc.). Our panel will discuss the obstacles manufacturers face in adopting Industry 4.0 and if there are any concerns about investing in these technologies.
When people talk about “the new normal” and adjusting to it, many picture offices and work-from-home scenarios. However, manufacturing jobs almost always require a physical presence at the plant. Please join us at the PICPA Manufacturing Conference webcast to find out how the “new normal” is different for manufacturers. To help define it, we’ll look back on 2022 for the most disruptive issues manufacturers faced and then look forward to help us prepare for the most disruptive issues manufacturers will face in 2023.
Defining the issues is the first step in understanding our new normal. And understanding our new normal will allow us to pivot, adapt, and succeed.
Brett Bauer, CPA, is a principal with McKonly & Asbury in Lancaster, Pa. He will be a presenter at PICPA’s Manufacturing Conference on Dec. 15, 2022. Bauer can be reached at email@example.com.
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