The manufacturing sector has been a force of global economic growth for decades. But that doesn’t mean to say that it hasn’t come without its challenges. From economic recessions and market fluctuations to quality standardisations and globalisation, the manufacturing sector has faced and overcome a variety of significant hurdles. As we step into 2024, here’s a closer look at the five most pressing challenges expected for manufacturers in the coming year.
1. Supply Chain Disruptions
From the pandemic to the more recent geopolitical tensions, global events have significantly impacted supply chains for manufacturers. Supply chain disruptions often have a significant impact on manufacturing operations, affecting everything from material availability to production timelines and ultimately, market delivery. Here’s what we might expect to happen in 2024:
Conflicts between nations, political instability, and diplomatic standoffs often lead to supply chain disruptions. With the ongoing Russo-Ukrainian War, and now an escalated conflict between Israel & Gaza may result in sanctions and trade barriers, directly impacting international manufacturing supply chains.
Brexit might be old news, but the aftermath continues to disrupt supply chains especially with exports from the UK to EU buyers. EU clients are tired of Brexit checks with many resorting to more local suppliers. Trade barriers continue to impact UK manufacturers by making it increasingly difficult for them price to competitively and deliver products to market.
Despite supply chains predominately returning to normal from the global pandemic, COVID-19 has and continues to change supply chains. Pre-pandemic supply chains mostly involved a global network of buyers and sellers, combined with the trade barriers from Brexit, manufacturers are set to ‘bring supply chains home’ to avoid the vulnerabilities of global supply.
Supply chain disruptions present a significant challenge for manufacturers, requiring strategic and proactive approach to risk management and operational planning. In light of Brexit, the pandemic and global events, manufacturers might steer towards more localised suppliers and buyers, and work on making their products more attractive. From our experience of working with manufacturers, product development is a reoccurring strategy to remain competitive and increase orders. Primarily engineers focus on designing products that are 1% faster or lighter or cheaper, but rarely do they do enough to tell their customers about it. Take our client Delkim for example. A manufacturer of a leading range of bite alarms, but fierce competition meant that their products were being lost in the noise. To combat this challenge, we designed a new website and continue to carry out their full scale digital marketing efforts. As a client of ours for over 5 years now, we’ve significantly increased their online visibility and engagement with their customers.
2. Global Economic Uncertainty
With the global economy currently experiencing significant volatility, will likely have a direct impact on UK manufacturing. Global economic uncertainty often stems from a variety of sources, but with the current economic and political climate, here’s what we might expect in 2024:
Fluctuating Currency Values
Exchange rates play a fundamental role in international trade and are constantly moving based on supply and demand, but currency values are often impacted by political factors, like an upcoming general election. Typically, the pound tends to be impacted by elections if political instability is a possibility. When currencies fluctuate wildly, it creates risks for manufacturers engaged in exporting and importing goods, affecting pricing strategies and profit margins.
Economic Policies of Major Economies
Inflation has been a hot topic of 2023 and although inflation in the UK has recently come down, interest rates remain high and are expected to remain high globally. Where major economies are likely to keep monetary policy tight to bring down inflation can have a ripple affect globally. Interest rate changes, quantitative easing, or fiscal policies often impact global economic conditions, leading to changes in demand for products and raw materials.
Global Trade Policies
Changes in trade agreements or the imposition of tariffs and trade barriers, much like what we saw with the aftermath of Brexit, can disrupt established trade relationships. But as we enter 2024, the European Union are set to introduce a new wave of international trade policies, as they aim to be the first climate neutral continent. The outcome of this for manufacturers are likely to be further compliance checks, otherwise face market access restrictions and additional supply chain costs.
Global economic uncertainty poses several implications for manufacturing, supply chain disruptions, cost management and demand forecasting are to name a few. So how can manufacturers navigate around these challenges? Strategy is a good place to start. Adopting flexible and resilient business models, diversifying markets and supply chains, and embracing new technology can assist manufacturers in the coming year.
Our client Franklin for example, a leading manufacturer of airline seat upholstery, were looking to push further into the European market and strengthen their global position within the airline industry. To successfully diversify their market in Europe we applied a new brand strategy to suit the needs of their European clients, which proudly launched through a multi-platform campaign culminating at the AIX exhibition in Germany.
3. Technological Advancement & Adoption
2023 was a year of unprecedented technological advancement and while tech offers solutions to many challenges, the pace of it can be a hurdle in itself. As the Fourth Industrial Revolution continues to develop, especially with the arrival of Artificial Intelligence (AI), what challenges can tech advancement have on manufacturing in the coming year?
Skilling & Reskilling of the Workforce
As technology evolve, they create new roles and require specific skill sets. Robotics and automation are nothing new, but as they advance further and accompanied with the introduction of AI means the role of engineers and handlers become more dynamic. Maintenance, programming, understanding automation software and troubleshooting are a skill set in growing need for manufacturers. Balancing automation and the human workforce are another challenge in the pipeline, as automation can significantly increase efficiency, it raises the concerns around job displacement.
Investment in New Technologies
Adopting new technologies involves significant capital investment, and considering the rapid pace of technological advancement, keeping up with these are a challenge in themselves. For many manufacturers, particularly small and medium enterprises, finding the capital for such investments can be challenging, but when growth is limited, is actually the best moment to invest. It comes as a greater possibility for SME’s across the manufacturing sector with the Made Smarter programme and a 4.5bn funding as part of the UK Governments Advanced Manufacturing Plan.
Staying Ahead of the Competition
Finally, there is the challenge of not just keeping pace with technology but staying ahead of competitors. But AI and machine learning (ML) is an opportunity for manufacturers to successfully navigate the competitor landscape with accurate consumer demand predictions, optimising production schedules, and improved supply chain operations.
Adopting technology presents a complex but essential challenge for manufacturers. Focusing on long-term scaling and investing in both technology and their workforce can help manufacturers stay ahead of the curve. But technology shouldn’t only be embraced to streamline the production process. To be optimally competitive, and especially where there’s more than one decision maker in the buying cycle, marketing technology enables manufacturers to communicate with potential business prospect at the right time, with the right person, with the right content. Our client SIS for example, continue to successfully use Marketing Automation to generate and nurture leads throughout the buying cycle. Manufacturers using technology like marketing automation can significantly improve their lead to order times.
4. Environment & Sustainability
Environmental concerns are leading to stricter regulations and a push towards sustainability. As awareness of environmental issues increases globally, manufacturers can expect greater scrutiny and expectations to adapt their practices to meet both regulatory standards and the growing demand for sustainable products. Here’s what we expect manufacturers should anticipate in 2024:
Circular Economy Principles
A circular economy is a concept based on extending the life of raw materials, and is a practice expected to grow in the coming year. It presents significant challenges for manufacturers, from investment and transitioning to design concepts and logistics. Shifting from the traditional liner model of ‘take, make, dispose’ to a more sustainable approach of ‘reduce, reuse, recycle’ will require collaboration with the whole value chain.
Merging Technology & Sustainability
Although Smart Manufacturing is not a new concept, AI and ML algorithms are expected to optimise the manufacturing process, reducing waste, and improving energy efficiency. Combined with IoT is set to monitor real-time data on energy use, waste generation, and other environmental impact metrics allowing for immediate adjustments to improve sustainability.
Rising inflation, interest rates, and high energy costs pose a significant negative impact on manufacturers sustainability goals. But investments that futureproof manufacturers in sustainability pay dividends down the line. As previously mentioned, manufacturers aren’t required to bear these costs alone where government funding is set to become available through the Advanced Manufacturing Plan and local Green Business Programmes.
While environmental and sustainability challenges present a multifaceted and evolving landscape for manufacturers, addressing these challenges provide opportunities for an enhanced market positioning. Sustainable product development and eco-friendly manufacturing processes allow brands to communicate a genuine commitment to environmental responsibility, gain a competitive advantage, and enhance brand reputation. Again, with our client Franklin for example, took on a sustainable product development with their airline seat upholstery, making it light weight and space saving to reduce emissions on flights, without comprising on comfort. We successfully communicated their message around ‘Sustainability meets comfort’ through a multi-channel campaign.
5. Skilled Labour Shortages
The ongoing skilled labour shortage has been an issue for manufacturers since the UK left the European Union, then further impacted by COVID-19. But the manufacturing sector faces new challenges when it comes to its workforce.
With an aging workforce leaves a significant portion of skilled workers nearing retirement, creating a gap as experienced employees leave the workforce. The majority of the manufacturing workforce is over 40. It comes as many manufacturers attempt to close the loop by offering higher wages in recruitment and upskilling the current workforce with training programmes on automation and advanced manufacturing technologies.
As previously mentioned, technology has paved the way for new roles that require specific skill sets. But finding the talent to fill these vacancies is problematic. Some 36% of vacancies in manufacturing are hard to fill as applicants lack the appropriate skills. Manufacturer’s ability to seize growth opportunities is hindered by this talent shortfall.
Misconception of the Industry
Many people perceive manufacturing jobs as high labour, low-skilled, long hours with low wages. Although this could be said during a time before robotics automated much of the production process, jobs in manufacturing today are in fact more tech focused and high skilled. Manufacturers must overcome this misconception by communicating the digital advances in manufacturing and engage schools and colleges to attract new talent.
Without overcoming these recruitment and retention challenges, manufacturers face reduced productivity, operational inefficiencies, and may struggle to compete with global competitors with better access to skilled labour. Four out of five manufacturers intend to invest in technology in the next two years, however the growing concern around skilled labour shortages threatens to impede the sector’s transformational future. Manufacturers must engage both the next generation of workers and their existing workforce. Employer branding is an effective strategy manufacturers can adopt to recruit and retain the best talent.
Beach Marketing has the skills and know-how to position brands as an attractive place to work in the manufacturing industry. Highlighting aspects like innovative work environments, opportunities for personal growth, and leveraging a brand with distinct values and culture. Take our client Lantmannen for example, Europe’s largest bakery group where internal communications is a critical function. They came to us because they wanted to bring a diverse group of professional bakers, technicians, and management teams together across multiple countries and languages. To make it happen we developed a highly stylised internal magazine infused with energy, with content drawn from all over the business that reflects everyone and help bring the brands purpose to life.
Let’s Brace for the Future
As we’ve explored, manufacturers face a potential landscape filled with challenges in the coming year. From important technological adaptations to the pressing demands of environmental sustainability, navigating these challenges requires not just insight but strategic action.
Need a hand?
At Beach Marketing, we see challenges as opportunities, and specialise in empowering manufacturers to not only meet these challenges head-on but to thrive amidst them. Our expertise in B2B marketing, combined with a deep understanding of your industry, positions us uniquely to elevate your brand, enhance your reach, and thrive in a changing world.