Last month, I wrote about 2024 trends in absenteeism, combining insights from our TeamSense customer data on why employees called off in 2023 with what the big industry analysts are predicting about attendance and employment. TeamSense was built by manufacturers for manufacturers. This post is about the other side of the “absenteeism in manufacturing” story: the manufacturing side.
How will manufacturing change in 2024 and what are the key trends that leaders need to plan for?
There are many prediction articles out there, written specifically for the manufacturing industry, and this seems to be “the year” for some manufacturing trends that are actually not particularly new. Whether fresh or stale, this year’s predictions fall into two big categories: technology innovations and commercial trends.
For technology, some of the usual predictions include: smart manufacturing or smart factories, supply chain digitalization, artificial intelligence, Internet of Things, Digital Twins, robotics, or a familiar legacy favorite from the mid 2010s: “data-driven decisions”. Good to see you again, old friend! There are also a few relative newcomers to the technology prediction lineup, like industrial metaverse, product electrification, and generative AI.
For commercial trends, many 2024 pundits predict persistent talent obstacles, the importance of aftermarket services, employee health and safety, reassessment of the supply chain, carbon neutrality, and reshoring. Also, 3D printing. Always 3D printing!
There are so many predictions to choose from, what’s a blogger to write?
I’ll fall back on the two trends where our company has been driving innovation since our founding: helping the smart factory get smarter and managing the growing labor scarcity in manufacturing (specifically at the critical moment of scarcity when COVID-19 broke out). The third topic–the rising importance of sustainability in manufacturing–has been super-charged by recent U.S. legislation, and our customers are using TeamSense communication to help manage all three of these tectonic shifts.
As we partner with our customers, TeamSense has a front-row seat on strategies for managing smart factory automation, labor scarcity, and sustainability.
In my blog post from last September, titled TeamSense Road Trip – Build It and They Will Combine, I described our trip to a major manufacturer of agricultural equipment. Since that visit, that company has adopted TeamSense at multiple plants. One of the things that impressed me during our factory tour was the incredible multi-decade investment in property, plant, and equipment (PP&E). We saw autonomous robots that racked parts before sending them into the painting room. Other robots swept the floor, keeping it pristine. We walked by more multi-ton machines than I could count. The PP&E at that site was definitely worth countless millions of dollars, if not billions.
Inevitably, some of that production equipment is going to malfunction. That site, and many like it, have hundreds of employees working with thousands of machines. Skilled maintenance workers are few and far between, and they often ride bicycles or golf carts to get to the site of a needed repair. That takes time and time is money. It’s far more efficient to proactively repair a piece of equipment before it breaks and halts production.
In its September 2023 article, “Charting AI’s Successful Course in Predictive Maintenance”, Boston Consulting Group (BCG) explained the connection between generative AI and workforce productivity in a “century-old” OEM that they advised:
“When the [GenAI-powered maintenance copilot] receives a maintenance alert from the predictive maintenance models, it quickly generates a custom repair plan with detailed instructions tailored to the OEM’s specific machinery issues. This approach not only swiftly identifies the problem and its solution by determining the necessary parts, checking their availability, and estimating costs, but also sends this critical information to the technician. In addition, the copilot prepares necessary documents for upcoming maintenance, with the goal of synchronizing repair tasks with planned downtimes, thereby transforming a days-long process into mere moments.”
This year, more manufacturers will leverage AI algorithms to analyze vast datasets generated by industrial IoT, with its connected devices and sensors. Reliable prediction of potential equipment failures, maintenance needs, and production bottlenecks will keep smart manufacturing systems running on schedule, boosting productivity and optimizing efficiency.
As AI is integrated into maintenance operations, more and more of those expert, data-driven maintenance workers will know when and where to attend to equipment in need of maintenance.
Hewlett Packard Enterprise defines “edge computing” as “a form of computing that is done on site or near a particular data source, minimizing the need for data to be processed in a remote data center.”
The concept of edge computing has been around for years, entering the mainstream in the mid-2010s with the rise of sensor networks and distributed data storage. In those early days we imagined the “edge” to be in the deep sea or on a frozen tundra–someplace without too many people. Another decade of innovation in IoT SaaS, wireless network technology, and sensors has moved that “edge” from the hinterlands into the heart of modern factories.
Edge computing enables smart manufacturing systems to process data hyper-locally, improving responsiveness for high-speed decision making. As more manufacturers recognize the importance and cost-effectiveness of real-time data analysis, the deployment of edge computing as a necessary component of smart manufacturing will allow GMs and their teams to produce more with less.
This won’t mean that machines will decide for themselves. No HAL 9000 from 2001: A Space Odyssey just yet, thank goodness. Instead, edge computing and generative AI will mean that more people can make faster, better decisions about how to optimize efficiency.
Those afraid of job loss shouldn’t worry. Edge computing will dramatically improve operational visibility. Net-net, this will make factories more productive and efficient and create more jobs, both for new employees needed to maintain edge computing networks and line workers who will benefit from growing productivity. Certainly the types of jobs will shift, requiring new skills.
The Harvard Business Review makes this point in an article titled, “Automation Doesn’t Just Create or Destroy Jobs — It Transforms Them.” The article mentions that “the World Economic Forum estimates that by 2025, technology will create at least 12 million more jobs than it destroys.” Aside from growth in the quantity of manufacturing jobs, the article makes the case for improvement in the quality of work as well:
“Automation can increase productivity, improve efficiency, and reduce errors. Robots can, and should, occupy professions that are too risky for human workers to perform, offer little in the way of purpose, and deprive human workers of the joys of free living.”
Read on to learn about another trend that should reassure manufacturing employees about job security. Job growth for manufacturing will look like a hockey stick this year!
Emerging 5G technology will play a pivotal role in driving smart manufacturing builds in 2024. The edge computing example I just mentioned only works if the data gathered by machine sensors can go somewhere for analysis or automatic monitoring. 5G makes that data transfer far more efficient.
For folks new to 5G, here’s a definition from McKinsey: “5G is the fifth generation of wireless technology. Its increased speed, lower latency, and improved reliability stand to revolutionize a wide variety of industries.”
PwC’s report “Smart Manufacturing Powered by 5G” sheds light on why 5G’s speed, latency, and reliability make edge computing and generative AI ready for smart manufacturing:
“By eliminating the need for wired connectivity, 5G will supplement the high-speed manufacturing environment with a far greater degree of flexibility. And the sheer richness of the 5G-enabled factory, which will have the capacity to maintain connections among far more sensors than either wired or previous wireless facilities, offers the potential to connect just about anything.”
Connect just about anything! Bottom line? 5G offers 10-100X the data throughput of 4G and slightly better throughput than Wi-Fi, but with much better range than Wi-Fi. Manufacturers who implement industrial IoT networks with 5G backbone will see unprecedented connectivity and data transfer speeds. This will foster seamless communication between IoT devices and the people who use them in production or maintain them.
This enhanced connectivity is particularly beneficial for applications that require high bandwidth, such as augmented reality (AR) for maintenance tasks and remote monitoring of manufacturing processes. Improvement to network speed and reliability will improve overall system efficiency, laying the foundation for a more interconnected and interoperable smart manufacturing ecosystem.
But I repeat: the robots will not take over. They will make factories safer and more effective for their employees.
Let’s shift to trends in the labor market so I can explain why I say that. With the resurgence in US manufacturing and all the construction going on, it’s quite clear that skilled manufacturing employees will not have trouble finding jobs. There’s a looming labor shortage.
In a January 2024 webinar, I talked with TeamSense co-founder and CEO Sheila Stafford about “The Shifting Landscape for Jobs in Manufacturing and Logistics.” You can watch that entire conversation here.
Major legislation in 2021-2022, including the Inflation Reduction Act of 2022 and the CHIPS Act of 2022 have had their intended results. They fired up investment in US manufacturing with the aim of reshoring critical industries. But it takes time to finance and build new plants, so 2024 is the year when many of those new plants will run their first shifts..
Deloitte’s report “2024 manufacturing industry outlook” shared the following graph, based on US Census Bureau Data, that shows the dramatic, but slightly lagging impact that post-COVID legislation has had on construction.
The same report by Deloitte states that, “As of July 2023, annual construction spending in manufacturing stands at US $201 billion, representing a 70% year-over-year increase and setting the stage for further industry growth in 2024.”
These are national-level statistics on US construction spending, but that construction is not evenly distributed across the country. Most new factory projects are concentrated in a handful of states. A study done by Goldman Sachs Research and reported in dealtown under the title “US Manufacturing Is Having A Renaissance” included the following chart. You can see that projects in eight states accounted for the vast majority of construction: Texas, Arizona, Louisiana, Ohio, Idaho, New York, Georgia and California.
Those new plants will create thousands of jobs, but many of those new jobs will be in states with tight or very tight labor markets.
An article by BCI Global in September 2021 titled, “Manufacturing in the US: now or never?” shared the following map, showing where the labor market was tight or very tight. We’ve scribbled on top of the original map to outline the five states where most of the new manufacturing construction and reshoring is occurring.
Source: Manufacturing in the US: now or never? | BCI Global | September 1, 2021
Notice that Idaho has a very tight labor market. Texas and Louisiana are a bit less tight, followed by Ohio. OF the five states with most of the manufacturing construction, only Arizona has a labor market with some slack.
Allow me to sum up:
Manufacturing construction spending up 70% YoY
$500 billion in mega projects are in progress (those greater than $1 billion in size)
Most of that production will go online where labor is scarce
If you’re a Chief Human Resources Officer at a major manufacturer, by now you’ve broken out into a cold sweat. How will you fill those new plants with enough employees ready to run the smart manufacturing your company just built?
One answer to that question is upskilling and reskilling. In 2024, many companies are will focus on reskilling and upskilling existing employees. Employers will invest in training initiatives to equip hourly workers with the skills needed to operate and maintain sophisticated machinery, interpret data analytics, and collaborate with automated systems. This shift not only makes the existing workforce more employable but also addresses persistent talent shortages by training a new pool of skilled hourly employees. Reskilling and upskilling are effective employee retention strategies in their own rights.
Global Technical Recruiters offers this advice in their piece, “The TOP Benefits of Upskilling and Reskilling in Manufacturing in 2024”: “The landscape of manufacturing is evolving, and in 2024, upskilling and reskilling emerge as indispensable strategies for success. The benefits are profound — from enhancing workforce agility and adapting to technological advancements to fostering innovation and securing a competitive edge. As we navigate the dynamic challenges of the industry, one thing is clear: investing in the skills and knowledge of our workforce is not just a choice; it’s a necessity.”
The emphasis of products produced in new factories emphasizes products that use resources and energy more sustainability. Look at the chart above from Goldman Sachs Research. The largest share of mega projects in Texas, Louisiana, and Georgia will produce clean energy, batteries or electric vehicles. But that’s what will be assembled.
There’s also the fact that these new plants will produce goods (whatever they may be) in a more sustainable fashion. That will demand new types of employees who focus explicitly on managing sustainability in manufacturing operations.
Sustainability and carbon neutrality aren’t buzzwords. They have become KPIs that companies measure and announce in annual reports. This means that there will be an increased demand for roles focused on sustainable manufacturing processes. Hourly workers may find opportunities in positions related to waste reduction, energy efficiency, and eco-friendly production practices. Jobs involving the implementation and maintenance of green technologies, such as solar-powered machinery or waste recycling systems, will become key components of the manufacturing job market.
A January article in HRDive, written by Carolyn Crist, was titled. “Demand for green skills grows as companies focus on sustainability goals.” Crist wrote that, “The demand for green skills is outpacing talent supply as companies try to recruit qualified workers who can help them achieve ambitious sustainability goals, according to a new ManpowerGroup report.” The article also touches on a supply-demand mismatch similar to the one I mentioned above:
Some industries have higher demands for green talent than others. The industries with the highest intentions to hire talent to meet sustainability goals included energy and utilities (81%), IT (77%), financials and real estate (75%), industrials and materials (74%), and transport, logistics and automotive (73%).
It’s not too surprising that the Goldman Sachs research shows us that top categories of new manufacturing capacity (clean energy and batteries/EVs) also have high intent to hire green talent (energy & utilities, industrials & materials, and transport, logistics & automotive).
Those new workers who will focus on making US manufacturing more sustainable, how will they do that? The will embrace circular economies, integrate renewable energy, and make their supply chains more transparent.
One of the main drivers of manufacturing sustainability will be the adoption of “circular economy” strategies. The US Environmental Protection Agency (EPA) defines a circular economy as one that “keeps materials and products in circulation for as long as possible.”
Manufacturers will increasingly prioritize the design of products with durability, reparability, and recyclability in mind. This shift involves rethinking product life cycles, minimizing waste, and promoting the reuse of materials. Companies will explore closed-loop systems where products are recycled and repurposed at the end of their life cycle, reducing the environmental impact associated with traditional linear production models.
TeamSense customers like Pella, HelloFresh, and Magna International are already tracking and reporting on how they are making their operations more circular. In August 2023, TeamSense customer The AZEK Company released its 2022 FULL-CIRCLE™ Environmental, Social and Governance (ESG) Report which describes how their FULL-CIRCLE Initiative led the company to reuse approximately 500 million pounds of waste and scrap in 2022 that would’ve gone to landfill. In its report the authors write:
“...increasing the use of recycled plastic material not only helps solve a broader societal problem of plastic waste, but also reduces the lifecycle environmental impacts of our products, lowers our carbon footprint and reduces our raw material costs.”
Circular economy strategies like these have human and environmental health benefits for the communities and states hosting these plants, but they’re clearly great business strategies–differentiating the company’s products for consumers who care about sustainability and reducing the cost of goods produced.
In 2024, manufacturing companies will continue to invest in solar, wind, and other renewable energy technologies to power their operations. This shift reduces the carbon footprint of manufacturing processes, enhances energy efficiency, and can reduce the cost of production. Smart manufacturing systems will play an important role in optimizing energy consumption, allowing manufacturers to harness renewable energy in real-time, and schedule production around moments when inexpensive electricity is most available.
Just as construction of new plants will generate demand for manufacturing jobs, so too will demand for renewable energy generate demand for renewable energy generation. That build-out is also occurring at breakneck speed.
I’ve been referencing one Deloitte report with 2024 predictions on manufacturing. Deloitte also published a separate report with predictions on the renewable energy industry. Of course, those two topics are not mutually exclusive. Modern manufacturers are looking for every opportunity to reduce production costs and minimize operational risk as they decide how to power their new plants. Inevitably, new power sources new skills.
In Deloitte’s “2024 renewable energy industry outlook” report, analysts open the section on reskilling the workforce with this assertion: “sustaining a record buildout of renewables and domestic supply chain will require growing and (re)training a workforce with the right skills in the right places.”
The report goes on to describe the construction activity I’ve already mentioned and the construction jobs it will create in the next five years. It also counts the ongoing jobs that the new plants will continue after the construction is finished:
“Announced manufacturing and generation projects across solar, storage, wind, and clean hydrogen plants and their supply chains anticipate the creation of 72,557 annual construction jobs over five years and 24,193 annual operations and maintenance jobs over the lifetime of the plants.”
This chart shows the relative magnitude of job creation in solar, storage, wind, and clean hydrogen.
Source: 2024 renewable energy industry outlook | Deloitte Research Center for Energy & Industrials | January 2024
U.S. manufacturing’s embrace of circular economies and integration of renewable energy will have direct impacts on the factories that produce doors, decks, and dinners. The same sort of full-system thinking extends throughout the supply chains leading into and out of plants, making those supply chains more transparent.
This trend will continue in 2024 and beyond as companies seek to understand and minimize the environmental and social impacts of their supply chains. This involves scrutinizing raw material sources, ensuring ethical labor practices, and reducing the carbon footprint associated with transportation, logistics and warehousing. Every year, manufacturers, suppliers and distributors will enjoy greater supply chain transparency by adopting new technologies and adjusting their processes.
A KPMG study called “Supply chain trends 2024: The digital shake-up” stitches together many of the themes in this post in its analysis of the trend in electric vehicles, transport and logistics:
“Smart logistics and transport will also be accelerated with the continued ramp-up of AI, IoT, data analytics and cloud across many use cases – improving traditional route optimization and applying machine learning, predictive and sensing capabilities to make material improvements to network efficiency, customer experience, risk reduction and sustainability targets.”
I’ve made a lot of predictions about what I believe will happen in manufacturing in 2024 and beyond. I have no crystal ball. I’ve mostly followed the data, referenced multi-year trends that were accelerated by COVID-related stimulus, and repeated what our TeamSense customers tell us about their optimistic view of the renaissance happening in U.S. manufacturing. Watch this blog for frequent reports on what TeamSense will witness during this next wave of renovation.
If you’re sweating the coming talent shortage and what you’re going to do about it, we’ve shown our customers how TeamSense reduces absenteeism and inspires employee engagement. Book a demo, and we’ll show you how you can do the same at your sites.