It’s 2020! Here’s What Manufacturers Have to Overcome

workers in a manufacturing facility

It’s almost time to ring in the new year. For any business, it’s an opportunity to reset and refresh. It’s a chance to develop better strategies for growth. Before your business fully embraces 2020, it’s best to close 2019 by understanding the manufacturing challenges that lie ahead:

1. Labor Shortage

Manufacturing businesses might have to work with a staffing agency this 2020. The sector’s growth in 2019 was slow, according to Deloitte. Only 6,000 jobs each month were available. The previous year, it was a whopping 22,000.

Even then, many manufacturers still struggle to fill vital positions. It can be a combination of many factors. One of these is a tight labor market primarily due to immigration policies and laws.

The United States is a land of immigrants. According to the Pew Research Center, over 44 million Americans were foreign-born in 2017. At least 13% of the total population also came from other countries.

The current immigration policies, meanwhile, focus on family reunification. In fact, it comprised 66% of the total visa categories in 2017. Only 12% fell on employment-based immigration.

President Trump’s administration, though, hopes to change the system into a point-based process. For example, the country might prioritize those who already know how to speak in English.

Some of the largest immigrant groups in the country are non-English speakers. These include Mexicans, Chinese, Vietnamese, Cubans, and Koreans.

2. Trade Wars

As manufacturers, you can still find yourself in a tight spot between the United States and the rest of the world. Take, for example, the US versus China. A report by the New York Times in September 2019 cited how it can be costly for an average American family. It could increase their spending by nearly $500 a year. That’s more than enough to cover a month or two of utilities.

One of the reasons is tariffs on imports, which are now 15%. That immediately raises manufacturing costs. Couple that with a labor shortage, and products in the United States can be less competitive in the global market.

This “war” also doesn’t show any improvement anytime soon. China is still mum about the progress of its talks with the United States, according to a December 2019 CNBC report.

Meanwhile, while Trump said the trade deals are going well, they might not sign an agreement until after 2020 elections.

3. E-Commerce

online shopping and selling

Online commerce represents only a small percentage of the B2B sales of manufacturing companies. A Digital Commerce 360 report said that it comprised only 5.9% in 2018. But this is actually an increase from 5.2% in 2017.

Statistics showed that e-commerce will only continue to grow in the coming years. In 2018, about 10% of retail sales were from online purchases. Many manufacturers, though, struggle with boosting their e-commerce. Based on the report:

  • More than 22% said they didn’t have any support from their top management
  • About 19% confessed resistance from their organization’s sales departments
  • 18% didn’t want to compete with Amazon

No industry operates without challenges, and that includes your business. The good thing is these can teach you innovation, bootstrapping, and more skills on how to be more effective in your industry.

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