Business Operations

Getting a solid forecast of the year’s key issues in manufacturing can help your business prepare for anything. A panel of experts recently shared their 2024 outlook in the webinar “What’s Ahead for Manufacturing in 2024?” hosted by the Manufacturing Leadership Council, the NAM’s digital transformation arm.

They offered insights on the 2024 manufacturing economy, legislative climate, digital trends, resilience strategies and more.

Economic outlook: NAM Chief Economist Chad Moutray provided a manufacturing economic update.

Key takeaways: 

• The NAM Q4 2023 Manufacturers’ Outlook Survey revealed that more than 66% of member companies have a positive economic outlook for 2024, yet opinions are mixed on whether there will be a recession.
• The top economic challenge this year will be the workforce, with the labor market cooling substantially but remaining tight, Moutray said.
• Private manufacturing construction spending is at an all-time high of $210 billion thanks to the production of semiconductors, electric vehicles and batteries, and general reshoring.
• Risks this year include geopolitical turmoil, slow global economic growth, cost pressures, talk of a recession and labor issues, among others.

Policy perspective: NAM Vice President of Domestic Policy Charles Crain gave an overview of the current climate in Washington, D.C., and the NAM’s legislative priorities.

Key takeaways: 

• The NAM will continue its focus on tax policy following House passage of an NAM-supported bipartisan tax package that would reinstate three manufacturing-critical tax provisions.
• Manufacturing is facing a regulatory onslaught, with the average manufacturer paying $29,000 per employee per year due to unbalanced, burdensome regulations, according to a recent NAM-commissioned study.
• Artificial intelligence is a hot topic on Capitol Hill, with 60 AI-related bills introduced in Congress last year. The NAM is working to help policymakers understand the benefits of AI, including safety, worker training, product design and development, and efficiency.

Manufacturing 4.0 Trends: MLC Senior Content Director Penelope Brown offered a look at digital manufacturing trends on the horizon.

 Key takeaways: 

• Manufacturers can expect to see a broader adoption of existing AI applications, including predictive/preventative maintenance, improved processes and enhanced productivity.
• According to the MLC’s recent Smart Factories and Digital Production survey, 65% of manufacturers anticipate their level of M4.0 investment this year will stay the same as last year.
• Other trends to watch include the rise of global partnerships such as Catena-X and CESMII, digitized supply chains and reshoring.

Resilience perspective: Cooley Group President and CEO (and MLC Board of Governors Chair) Dan Dwight shared his approach to resilience in 2024 and the years to come.

Key takeaways: 

• Business leaders should prioritize agility and adaptability, even if it means admitting to suboptimal results that require redirection.
• Resilience doesn’t mean perfection; it means learning from failures.
• AI and machine learning contribute to resilience by building out end-to-end visibility across an organization—from vendors to manufacturing operations to customers.

For additional details from these experts, watch “What’s Ahead for Manufacturing in 2024?” 

Manufacturers are using data to improve everything from their supply chains to their workplace culture—and more. Data can lead the way to new innovations, new business models and even new revenue streams. Yet, many manufacturing executives say they are not scaling data-driven use cases successfully, meaning that much of the information they do collect is going to waste.

So how can companies get the most out of their data and ensure they aren’t losing out on key insights?

A unique event hosted by the Manufacturing Leadership Council, the NAM’s digital transformation division, aims to answer these questions and more. “Manufacturing in 2030: The Coming Data Value Revolution,” which will be held on Dec. 6–7 in Nashville, Tennessee, will explore the ways manufacturers can unlock value from their data to boost productivity, value and competitiveness.

On the agenda: This event will have three key areas of focus:

• Data value: Attendees will learn what the future holds for data monetization, data ecosystems and data-driven innovation.
• People and process: They will also hear about the future workforce, including emerging and evolving job roles, data-driven leadership and data culture.
• Technology and data: And lastly, they will peek into a future where artificial intelligence, data visualizations and the industrial metaverse are part of our everyday manufacturing world.

M2030 agenda highlights: The presenters will also share practical insights that participants can put into action right away.

• In “Capturing Intelligence for Business Model Innovation,” IDC’s Bob Parker will examine digital maturity and the future of enterprise intelligence. Parker will explain how to create new business models through enhanced customer experience, as well as how to capture and leverage economies of intelligence.
• In “The Rise of Data Ecosystems,” John Dyck of the Clean Energy Smart Manufacturing Innovation Institute will deliver a practical explanation of Manufacturing-X, Gaia-X and Catena-X as well as their goals and challenges. Dyck will discuss trends driving data-sharing initiatives as well as related technical and governance issues.
• In “Building Great Supply Chain Visibility by 2030,” Supply Chain Insights’ Lora Cecere will address why 80% of the data being generated from supply chains isn’t being used well enough. Cecere will also explore how data can be used to create more resilient supply chains by 2030.

The bottom line: Advanced technologies are only part of the digital transformation story. Manufacturers who want to get ahead need to understand data’s role and value, not to mention how people, process, technology and even data itself will evolve by 2030.

Sign up: Registration is open for Manufacturing in 2030: The Coming Data Value Revolution. Click here to learn more.

Washington, D.C. – The National Association of Manufacturers released a new analysis on the impact to the U.S. economy of Congress’ failure to reverse the stricter interest expense limitation that took effect in January 2022.

The jobs impact of the stricter limitation has nearly doubled over the past year given congressional inaction to ensure a pro-growth interest deductibility standard as interest rates have continued to rise. The data show that limiting manufacturers’ ability to deduct interest on debt-financed investments, over the long run, could cost the U.S. economy up to:

• 867,000 jobs;
• $58 billion of employee compensation; and
• $108 billion in GDP.

“A stricter interest expense limitation restricts manufacturers’ ability to invest in new equipment and create jobs. This analysis clearly shows that failing to reverse this damaging change will cut close to 900,000 jobs and billions of dollars of employee pay and harm economic growth. Even more, the study finds that manufacturers and related industries bear 77% of the burden of this policy,” said NAM Managing Vice President of Policy Chris Netram. “Congress must act by year’s end to restore a pro-growth interest deductibility standard and allow manufacturers to continue to invest for the future.”

Background:

Prior to 2022, the interest expense limitation was calculated based on a company’s earnings before interest, tax, depreciation and amortization (EBITDA). Last year, a stricter limitation based on a company’s earnings before interest and tax (EBIT) took effect. By excluding depreciation and amortization from the calculation, the stricter limitation increases the tax burden on manufacturers that make investments in long-lived capital equipment.

To view the full analysis click here.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.91 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

For two decades, the Manufacturing Leadership Awards have recognized outstanding manufacturing companies and their leaders for their groundbreaking use of advanced manufacturing technology. What started out in 2005 as a modest 50-person gathering in New Orleans has evolved into one of the industry’s most exciting celebrations.

This past June, the Manufacturing Leadership Awards Gala honored an impressive 163 projects and leaders, in front of an electrified crowd of 450 guests. The program’s growth is a testament to the momentum of Manufacturing 4.0 technologies and their success in creating performance improvements and boosting competitiveness.

With more manufacturers adopting digital and data-driven methods every day, there is still much to celebrate. The program’s 20th season is now open for nominations, with expectations running high for another amazing show in 2024. 

A proud heritage: Past winners from the Manufacturing Leadership Awards include companies and leaders from nearly every industry, from 10-person shops to multinational enterprises, located all around the world.

• Each entry is reviewed by a judging panel made up of industry experts with extensive experience in technology transformation. The top-scoring projects are selected as category finalists, and the category winners are revealed at the awards gala.
• Finalists and winners report that the awards have helped them gain new customers, boosted employee morale and team camaraderie and encouraged their executive leadership to continue investing in digital technology initiatives.
• Since the program’s inception, more than 1,000 leaders and projects have been honored for their achievements.

A wide range of candidates: The awards program welcomes submissions from small and medium-sized enterprises, as judges look for the overall level of impact that projects have had on a company’s operations—not the dollar amount of their investments.

• If technology has measurably helped a company improve its operational performance, upskill employees or enter new business markets, those projects are excellent candidates for award nominations.

The categories: Over the years, the awards have encompassed an evolving list of categories, currently at nine for projects and two for individuals.

• Project categories include AI and Machine Learning, Collaborative Ecosystems, Digital Network Connectivity, Digital Supply Chains, Engineering and Production Leadership, Enterprise Integration and Technology, Operational Excellence, Sustainability and the Circular Economy, and Transformational Business Cultures.
• Individual categories include Digital Transformation Leadership, for established manufacturing operations executives who lead Manufacturing 4.0 initiatives, and Next-Generation Leadership, for up-and-coming operations leaders aged 30 or younger.

Get involved: All manufacturers in any location and of any organizational size are eligible and encouraged to apply. Program details, rules and instructions for how to submit a nomination are available on the MLC website. Entries are due Jan. 17, 2024.

What exactly is the industrial metaverse? While the term sounds like something straight out of a science fiction movie, it’s already being used by manufacturers in the here and now. Put simply, the industrial metaverse is a collection of technologies that can create an immersive virtual or virtual/physical industrial environment.

The metaverse will contain virtual replicas of everything from complete factories down to individual components and parts, powered by evolving digital technologies like AI and cloud computing. As the metaverse develops, users will be able to access it from any internet-connected device, such as a smartphone, laptop or tablet, or using virtual reality headsets.

According to a new report released by the Manufacturing Leadership Council, the NAM’s digital transformation division, and Deloitte, 92% of manufacturing executives say they are experimenting with or implementing at least one metaverse-related use case. On average, the surveyed executives say they are running more than six.

How is it used? Manufacturers are using industrial metaverse technologies in four common areas: production, supply chain oversight, customer service and talent management.

• Production: Manufacturers are simulating key processes in order to evaluate them, creating virtual prototypes of processes or systems and creating simulated factories to optimize factory layout and setup.
• Supply chain: Other manufacturers are using the metaverse to track products and raw materials and to collaborate with suppliers.
• Customer service: Companies are also creating virtual showrooms and product demonstrations, which attendees can visit without leaving their own homes or offices.
• Talent management: Lastly, other companies are experiment with using the metaverse for immersive training, virtual plant tours and virtual recruiting and onboarding.

What are the benefits? Executives report that each of these use cases comes with significant benefits, including cost reductions. Respondents also said metaverse applications have improved employee attraction and retention.

• Immersive customer experiences and virtual aftermarket services, such as equipment service and maintenance, have also led to increased revenue, according to the survey.

The challenges: While the industrial metaverse offers many promising benefits, manufacturers are still finding some challenges, including:

• The high cost of metaverse technology and the cybersecurity protections it requires;
• A lack of employees with the right skills, along with the steep learning curve for those who must be trained; and,
• Insufficient digital infrastructure and other resources.

The solution: The report suggests that manufacturers can find success in the metaverse by building a culture of innovation, establishing leadership support and starting small by investing in a digital technology foundation. 

The last word: All in all, manufacturing executives are confident that the industrial metaverse will transform their operations. Learning to understand and use the metaverse will soon be essential for companies seeking a competitive future.

Download the full report, “Exploring the Industrial Metaverse,” to learn more. 

Flashback to 2015: “Hamilton” debuted on Broadway, millennials surpassed baby boomers as the largest U.S. generation and the term “Industry 4.0” was gaining traction in manufacturing circles. It was also when the Manufacturing Leadership Council created a conceptual framework called “Manufacturing 4.0.”

So what is the difference between Industry 4.0 and Manufacturing 4.0? While the terms may not sound all that distinct from each other, Manufacturing 4.0 represents the MLC’s commitment to a far-sighted, holistic approach to manufacturing’s tech-enabled metamorphosis—one that has served it well in over the past eight years.

The background: The 4.0 movement started in Germany in 2011 when the German ministries for education, research, economic affairs and energy developed a strategic initiative that would push forward the digital transformation of industrial manufacturing.

• They named this initiative Industrie 4.0. It featured an action plan that combined policy initiatives, public–private funding, strategies for technology implementation and the identification of business drivers and barriers.

The difference: For the MLC and its members, Manufacturing 4.0 is made up of transformations in three different arenas: technology, organization and leadership.

• Contrast this with Industry 4.0, which covers only technology topics—specifically nine pillars of technological innovation, which include autonomous robots, big data, cloud computing, IoT, cybersecurity, systems integration, simulation, AR/VR and additive manufacturing.
• “MLC, of course, covers all of these technologies, but, importantly, adds the dimensions of organizational and leadership change as part of its perspective on manufacturing’s digital transformation,” says David R. Brousell, the MLC’s founder, vice president and executive director.

MLC in action: While the MLC does provide member resources that focus on specific technologies and their uses in manufacturing operations, it also covers topics such as how leaders can prepare their workforce for digital transformation, how organizations should be structured to make business decisions based on manufacturing data and how leaders can ensure they set their teams up for digital success.

• Additionally, the annual Manufacturing Leadership Awards recognize not only high-performing digital manufacturing projects but also outstanding individuals who demonstrate both technological understanding and strong personal leadership.

M4.0’s continued evolution: Today, the MLC continues to use Manufacturing 4.0 as the overarching framework for its member companies’ activities.

• Its influence is apparent in the MLC’s annual Critical Issues Agenda, a member-created list of key business drivers and enablers of digital manufacturing.
• The agenda covers technological advances like smart factories and data analytics, alongside the organizational ecosystems that put such advances into operation—from the leaders who direct them to the cultures that make them succeed.

The Future of M4.0: As the MLC gets ready to set its 2023–2024 Critical Issues Agenda, it will continue to take a holistic approach to the technological changes sweeping the industry by recognizing the importance of people in making those transformations happen.

Go deeper: You can learn more about Manufacturing 4.0 by downloading the MLC’s white paper, Manufacturing in 2030: The Next Phase of Digital Evolution; reading a recent report, The Future of Industrial AI in Manufacturing; or attending its Aug. 30 virtual Executive Interview, Shifting from Disruption to Growth.

How will AI change the work you and your employees do? The Manufacturing Leadership Council—the digital transformation arm of the NAM—is helping manufacturing leaders figure out the opportunities created by new generative AI technologies, including ChatGPT.

Recently, the MLC held a Decision Compass discussion to help manufacturers learn how to take advantage of these new tools safely and effectively.

The participants: The conversation was led by two members of West Monroe’s Center of Excellence for AI: Ryan Elmore and David McGraw. Elmore and McGraw shared their expertise and addressed questions from manufacturers throughout the call.

The use cases: AI is a diverse and complex tool that is likely to have a lasting impact on manufacturers across the United States. According to McGraw and Elmore, there are a range of applications for the technology, from supply chain optimization and production planning to predictive maintenance issues. 

The workforce impact: According to Elmore, AI will also transform the manufacturing workforce.

• Some roles that involve repetitive tasks like data processing could be adjusted or eliminated, while some new jobs will be created around tasks like prompt engineering, which ensures AI programs deliver the most useful and accurate results. Most importantly, however, existing jobs will likely be modified to account for new tools.
• “Some are going to go away, some are going to be created, but the vast majority is going to change mentality, change infrastructure, change the way we work,” said Elmore.

Prompting success: Elmore and McGraw emphasized that the key to using generative AI effectively is developing useful prompts. How you ask AI programs for information, and what data you provide, will determine the quality of the output. They provided a few broad guidelines:

• Keep it simple: Your prompts should be detailed, precise and as succinct as possible.
• Data matters: The better and more detailed your data, the better your output will be.
• Keep it human: Generative AI still requires a human to determine the reliability of the output. Manufacturers shouldn’t plan to use outputs blindly without keeping a human in the loop.
• Share safely: Assume anything you put into AI that is not behind a paywall is not private. Only use data that you’re comfortable with others viewing.
• Follow up: If you receive outputs that don’t make sense, or that indicate some sort of failure, ask the program for more context and problem solving to assess whether the output is accurate or beneficial.

Safety first: AI can also be used in negative ways—for example, by cyber attackers attempting to gain private information from you using software that mimics the voice of someone you know.

• Elmore and McGraw emphasized that manufacturers using AI should consider providing trainings so employees can recognize and guard against safety issues.

The last word: “I think most importantly, you’re only limited to your imagination,” said McGraw. “There’s really a lot of use cases that can be solved with this technology.”

Learn more: Want to find out more about how digital tools are changing manufacturing? The MLC will delve deeper into these issues at this year’s Rethink Summit, taking place June 26–28 in Marco Island, Florida. Learn more and register here. Or download MLC’s new Manufacturing in 2030 Project The Future of Industrial AI Survey Report.

How can manufacturers recruit and retain employees amid a skills gap that leaves hundreds of thousands of manufacturing jobs unfilled every month? ALOM Technologies Corporation—a global supply chain management services and solutions provider based in Fremont, California—has an answer: focus aggressively on company culture.

The results are in and ALOM’s program is a remarkable success, leading to workforce and revenue growth for the company over the past few years. This achievement led ALOM to be named a finalist for the Manufacturing Leadership Awards, given every year by the Manufacturing Leadership Council (the NAM’s digital transformation division). Here’s a sneak peek into how they did it.

The program: After being named an essential business in 2020 due to its medical supply chain infrastructure, ALOM turbocharged its existing culture program, called DOING—which stands for Development, Opportunity, INclusion and Growth—to support staff recruitment and retention in a challenging labor market.

• The program had existed since 2018 and was based on ALOM’s longstanding cultivation of values-driven purpose. When the company expanded it during the pandemic, it enabled ALOM to build a higher performing team across multiple locations.

The details: ALOM has employed several strategies for reinforcing its cultural values, aiming to instill a sense of purpose and belonging in job candidates and veteran staff alike. These include:

• Showcasing their commitment to diversity, inclusion and sustainability both inside the organization and in recruitment efforts;
• Redefining the ALOM People Team mission and structure to emphasize staff development over compliance;
• Working to address employee wellness through stress and mental health education and resources; and
• Instituting a staff development online portal called ALOM University that empowers rapid onboarding, training and advancement.

The results: The program has been an extraordinary success, helping to increase ALOM’s workforce and strengthen the company’s bottom line at the same time. In 2021 alone, the company achieved:

• 70% workforce growth;
• 60% revenue growth;
• A 6% decrease in employee attrition for 2021, as compared to 2018; and
• A 65% reduction in recruitment days to fill open positions.

Looking ahead: ALOM isn’t done yet. This year, the company is working on a digital transformation effort, called DOING DX, designed to make all of ALOM’s tech systems and business processes more efficient and effective.

• It will focus on staff recruiting, performance management, supplier management and evaluation, team building, mentoring and much more.

The last word: “When I started ALOM 26 years ago, I was determined to build a supply chain company that did right by everyone,” said President and CEO Hannah Kain.

• “This has become the foundation of ALOM’s corporate culture. We believe in using the supply chain to help the world be a better place—for the environment and for every person, supplier and company. Experiencing our values in action instills a sense of pride and belonging in our staff that helps us attract, build and retain an exceptionally talented team.”

Get involved: Want to learn more about this successful workforce effort, as well as a whole host of other innovations by leading manufacturers? Join the MLC for its Rethink summit in Marco Island, Florida, on June 26–28. Sign up here.

It’s no easy feat to transform a struggling family business into a thriving digital enterprise, but that’s exactly what Cooley Group President and CEO Dan Dwight is doing.

Change for the better: Cooley Group was formed in 1926 as a family-run textile manufacturer in Rhode Island. In 2011, Dwight, a member of the NAM Board of Directors, joined the company as president and CEO to navigate the ship through a new age of manufacturing and market demands.

• Today, the private equity-backed extrusion and textile manufacturer is the leading global maker of polymer-coated textiles. Applications range from single-use blood-pressure-cuff materials, to proprietary urethane combat raiding crafts for U.S. special forces, to liners and covers for some of the world’s largest water reservoirs.

How they did it: “As a family-run business, Cooley inherited aging equipment and an aging workforce,” said Dwight, who also serves as vice chairman of the Manufacturing Leadership Council’s Board of Governors. (The MLC is the NAM’s digital transformation arm.)

• “We not only modernized our equipment and infrastructure to compete in the digital age, but also revolutionized our culture. Hierarchies slowed us down.”
• “Digital transformation isn’t only beneficial for the advancement of our physical technologies; it’s also critical to develop a more collaborative company culture that empowers employees at all levels to take action.”

Starting small: “Digital transformation—the integration of digital technology into all facets of an organization—can seem daunting at first,” Dwight said. “But that can’t deter an organization from jumping in.”

• “I advise companies, particularly mid-sized manufacturers like Cooley Group, to approach digital transformation incrementally,” he said. “Don’t expect the cultural, institutional or technological benefits of digital transformation to manifest overnight as some mega-solution.”
• “Think strategically about the areas of your business that are the first movers. Once one aspect of the business is modernized, the digital insights and team’s enthusiasm for change will build momentum to push the remaining pieces into place.”

Gaining momentum: The transformation of this firm of 300 people is ongoing. “Ten years ago, we had trouble keeping our equipment operating for any period of time,” Dwight said. “Now everything in all our factories is digitally [Manufacturing 4.0]-driven across a single operating platform.”

• The company plans to do the pilot phase of an artificial intelligence implementation later this year.

Figuring it out: The MLC was key in Cooley Group’s remarkable transformation, according to Dwight.

• “I’m not sure we would have figured it out on our own,” he admits. “I’m an avid reader; I was born excited to build things. I read a lot about manufacturing and leadership. But even if I could have figured out M4.0 strategy, actually implementing it on the plant floor would have been difficult without the support of MLC members to share best practices and to encourage the Cooley team to embrace transformation.”

Get involved: Companies can jumpstart their own digital transformation by attending Rethink, the MLC’s premier event for manufacturing executives, in Florida on June 26–28. Check it out here.

For small and medium-sized manufacturers, digital transformation can seem like an especially harrowing task. But smaller organizations can be uniquely positioned for success in implementing firmwide digital strategies.

Small but mighty: Just look at Graphicast, a 25-person precision metal parts company in Jaffrey, New Hampshire.

• “Because the cost of data collection and analytics is getting lower and lower, even as a small company we can collect data at a rate that gives us meaningful information we can act upon,” said Graphicast President Val Zanchuk. “For example, we created a linear programming model of our business. If we’re growing at a certain rate, I can use it to determine the most economical next steps, such as whether we should hire more people, work overtime or purchase more equipment.” 

A workforce solution: Graphicast, which counts Fortune 100 companies among its clientele, has used cloud computing, AI-based systems and more to help it succeed, according to Zanchuk.

• The manufacturer is also looking into the use of collaborative robots as a potential solution to the labor force shortage.
• “When it comes to Manufacturing 4.0, we think about what our customers will be looking for from us in terms of digital collaboration,” said Zanchuk, adding that some of the business’s larger customers are “transforming at a different rate than we are.” That means it’s up to Graphicast to consider client expectations and see how best to meet them given “what’s financially and operationally feasible” for the company.

The MLC helps out: To aid in Graphicast’s digital transformation, Zanchuk joined the Manufacturing Leadership Council, the NAM’s digital transformation division.

• “The MLC is the only place I know where I can discuss broad industry trends in an open fashion, where small companies like mine and large companies like Ford or GM can all be involved in the discussion,” said Zanchuk, who serves on the MLC Board of Governors.

• “Being part of the MLC lets us know if we’re on the right track and how we can make adjustments,” he continued. “It connects us to a group of incredibly talented, intelligent and experienced people who are focused on many of the same operational challenges we face.”