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Global issues such as slowing economy, volatile trade agreements, and ongoing labor shortages are developing headwinds for manufacturers, especially on the sales front.
FREMONT, CA: Nevertheless, innovative technology has stabilized the overall economic growth in the U.S., and a focus on driving value to stakeholders offer multiple prospects for sustainability and growth. Amid the ongoing volatility in costs and policy decisions and significant impacts from the COVID-19 pandemic, how can the manufacturing industry remain resilient for the second half of the year?
Headwinds for supply chains and logistics
Despite a challenging trade and tariff environment, revenues and earnings remain strong for middle-market companies, with domestically focused industrial companies experiencing more significant growth than those that sell on the global market. Moreover, domestic producers had a clearer picture of costs coupled with the stabilization of commodity and input prices. This trend is expected to continue. Rising import and raw materials costs may push some companies to assess their global strategies.
Numerous companies have made changes in their global supply chains, finding new suppliers in lower tariff countries, like Mexico, and considering producing more in the United States. However, labor issues and the uncertainty of future trade deals made the management of supply chains much more difficult. In 2020, there is little clarity regarding when trade deals with China, Mexico, Canada, and others will be resolved.
Tariffs and the uncertain regulatory environment
Manufacturing growth will remain to be challenged by the significant uncertainty surrounding ongoing trade negotiations with China. To make matters worse, the additional tariffs on auto and other imports that is continued to create cost pressures on U.S. manufacturers and distributors.
Technology and the workforce of the future
Innovation drives profound change on the factory floor as sensors and robotics are increasingly managing mechanical and electrical processes. Manufacturers, ever mindful of cost structure, are highly taking advantage of production analytics to streamline their operations and, ultimately, save money. To take advantage of this advantage, these innovations will require a newly skilled and flexible workforce.