Covid-19 Pandemic Boosts US Manufacturing Revival
Article By : George Leopold
Covid-19 is rekindling and accelerating efforts to return manufacturing to North America.
Additional evidence is emerging that the novel coronavirus is rekindling and accelerating efforts to return manufacturing to North America, primarily by automating operations to help ride out peaks and valleys in demand.
An industrial survey released this week by Thomas, the product sourcing and supplier vendor, found that a hefty 64 percent of the more than 1,000 North American manufacturers it polled said they are likely to re-shore production and sourcing in response to Covid-19. Thomas said that figure represents a 10-percent jump from its March survey.
Meanwhile, one in four U.S. manufacturers polled are considering industrial automation. Another 20 percent said they have already installed such systems.
The survey also uncovered a “Boomerang Effect” among manufacturers as the pandemic spread and worsened. In February, when the first known Covid-19 cases were reported, only 60 percent of North American producers said their operations were affected. By April, that figure jumped to 89 percent.
Stable demand is often critical in investments decisions, for example whether or not to automate operations. Previous attempts at re-shoring manufacturing foundered once peak demand dried up. Manufacturers often ended up selling production equipment to Chinese competitors.
Pandemic uncertainty has made it harder for producers to predict demand. Forty-one percent of respondents to the April installment of the Thomas survey either expected a decrease or were unable to predict future demand. Either way, declining demand is seen as the greatest impact of the pandemic, cited by 24 percent of those polled.
Comments from two respondents summed up buyer uncertainty: “Our aerospace customers are increasing their demands while our commercial and industrial clients are declining in their demand.”
Said another, “Until we pivot, demand has dropped dramatically.”
As we’ve reported, the pandemic has exposed vulnerabilities in global supply chains as well as western dependence on mostly Chinese manufacturers for everything from electronics components to pharmaceuticals.
Experts argue the economic shock administered by the pandemic may offer the last best chance to reconfigure supply chains. Such an undertaking will require financially risky investments but could yield a game-changing western manufacturing revival— perhaps centered around regional hubs.
Recommended
Covid-19 Exposes America’s Vulnerability — and Resilience
Manufacturer Response to COVID-19 Disruptions: Increased Interest in Automation, Reshoring (Thomas)
A growing list of digital product sourcing vendors like Thomas are emerging to help manufacturers automate operations through tools like real-time resource management and the melding digital and physical supply changes.
“The COVID-19 pandemic will fundamentally redefine how industrial companies approach their supply chains and will further advance the digital transformation of manufacturing,” predicts Tony Uphoff, president and CEO of Thomas.
Indeed, interim investments in digital manufacturing service providers are picking up. Accenture, the professional services giant, moved earlier this month to acquire Callisto Integration, an Ontario-based manufacturing services specialist. Through the deal, Accenture gains Callisto’s industrial IoT and shop-floor control technologies.
Digital manufacturing integrators assist producers in implementing industrial IoT and “manufacturing execution systems.”
The latter refers to digital platforms used to track the transformation of materials into products. Purveyors of those services don’t actually make stuff. Instead, they help manufacturers fine-tune operations to maximize efficiency, equipment utilization and — most important — return on what has proven a risky investment in domestic production.
If the trends reported in the Thomas survey continue, especially a wave of re-shoring in response to the pandemic, domestic manufacturing could transition from a good way to lose money to a new era of economic growth.
“We’re seeing record sourcing activity as industry has begun to pivot towards a U.S. industrial resurgence,” said Dan Carr, Thomas’ director of new business acquisitions.
