It’s hard to believe that we’re already staring down the barrel of 2023. The past few years have been a whirlwind of change, mostly for the better. One of the most popular questions of this decade has to be, “What could possibly happen next?” While it’s fun to read up on Nostradamus and other psychics’ predictions for 2023, what are economic and business experts anticipating for the new year?
It’s likely that manufacturers will continue grappling with the same struggles we’ve seen during 2021 and 2022. The industry is currently experiencing concerns related to inflation and economic uncertainty. In addition, manufacturers continue to grapple with talent challenges that may limit the industry’s growth momentum.
Even though employment levels now stand higher than in 2008, the industry still needs more skilled workers. Moreover, supply chain issues, including sourcing bottlenecks, global logistics backlogs, cost pressures, and cyberattacks, will likely remain critical challenges in 2023.
Let’s unpack some predictions for 2023 and how your business can start preparing today.
The Manufacturing Workforce
We’ve all seen news stories and felt the direct impacts of the Great Resignation. Millions of employees left their jobs over the course of 2021 and 2022 in search of opportunities with better wages, better working environments, and better work-life balance.
This phenomenon has taken a serious toll on the manufacturing industry. The Washington Post reported that manufacturers had seen a nearly 60% increase in resignations compared to pre-pandemic numbers. Unfortunately, the Great Resignation will carry over into the new year. One in five workers says that they’re “extremely likely” or “very likely” to switch employers in 2023.
Addressing the tight labor market and high turnover amid evolving workforce priorities is expected to remain a top priority for most manufacturers in 2023. Despite a record level of new hires, job openings in the industry are still hovering near all-time highs at 800,000. Quits continue to outnumber layoffs and discharges, indicating substantial workforce churn.
Current and future manufacturing employees have more leverage now than ever before and are fighting for higher wages, flexible hours, advancement opportunities, workplace wellness programs, and more. Manufacturers must continue to implement new programs and policies to accommodate employees and remain competitive in 2023.
The modern worker is evolving, and increasing wages are no longer a surefire method to attract new talent. Employers need to take a step back and examine where employees’ priorities lie and how to capitalize on the opportunities they present.
Digital Transformation and Modernization
In years past, the relationship between a manufacturer and its customers was surface-level. Today, customers expect near-constant access to and regular engagement with brands, i.e., unbeatable user-experience design and enhanced technology to meet shifting demand. More than 60% of surveyed executives are partnering with specialized technology companies in 2023 to further their digital transformation strategy and remain competitive.
Manufacturers are investing in disruptive technologies such as augmented reality (AR), artificial intelligence (AI), the Internet of Things (IoT), additive manufacturing, blockchain, and advanced analytics. Robotics and automation can enhance efficiency, whereas artificial intelligence and machine learning capabilities can provide the required edge. Implementing digital capabilities across the value chain can help secure profitability, and manufacturers have multiple levers to engage when it comes to digital sophistication.
The right mix of technology adoption that strengthens your core business (process automation, data analytics) while also pushing the edges can improve efficiency. In 2023, we expect to see more manufacturers embrace innovation and jumpstart their digital transformation journey.
Manufacturing Supply Chain
Deloitte’s recent supply chain research found that 80% of surveyed manufacturing executives have experienced a “heavy” to “very heavy” disruption in their supply chains over the past 18 months. 72% of surveyed executives believe the shortage of materials and the ongoing supply chain disruptions present the biggest uncertainty for the industry in the coming year.
Manufacturers also continue to re-evaluate sourcing. Global supply chain disruption has made it challenging for manufacturers that source materials from other countries to get a hold of materials. This has prompted many manufacturers to diversify sourcing by adopting a “China, Plus One“ strategy, near-sourcing, or restoring operations entirely.
As many as 749,000 jobs were brought back to the US between 2010 and 2018 as a result of reshoring, and that number continues to grow. Reshoring Initiative reports that the total number of reshoring and foreign direct investment (FDI) jobs announced in 2021 reached 261,000. This brought the rate of reshoring plus FDI job announcements up 46% from 2020 to 2021 and over 4000% from the 2010 rate.
We anticipate a continued push to diversify suppliers and reshore operations in order to mitigate ongoing supply chain shortages and instability at the global scale.
The acceleration gained in 2022 is expected to continue into 2023, though supply challenges, labor shortages, and an uncertain economic environment will persist. Amid these uncertainties, solutions pioneered in 2022 are expected to ramp up in 2023, potentially altering tried-and-true business practices in the pursuit of success.
In 2023, we recommend that manufacturing companies and any business looking to thrive in the new year:
- Utilize digital technology and embrace modernization to increase supply chain visibility, productivity, and connectivity with suppliers, partners, and consumers.
- Focus on attracting and retaining talent through raising wages, providing flexibility, improving benefits, and promoting diversity, equity, and inclusion in the workplace.
- Re-evaluate current sourcing methods and consider switching to near-sourcing or reshoring
Here at MAU, we don’t just talk the talk. We’ve walked in your shoes and understand the difficulties you’re facing firsthand. It’s our mission in 2023 to Make Lives Better, and that starts with you.
To learn more about the ways MAU can help your business navigate transformation and surpass your goals, check out.