Reshoring, AI, EVs, And More: 2024 Predictions For The Manufacturing Industry
By: Ethan Karp, Contributor, Forbes
In 2023, manufacturers navigated their way through emerging technologies, assessed rapidly evolving societal views on work, and faced the ever-present threat of recession. As always, 2024 promises to be full of more surprises. AI has catapulted its way into the consciousness of every business leader. Electric vehicle makers are experiencing uncertainty. And employees are (still) quiet quitting and reporting historically-low work satisfaction.
How will these trends shift and shape up in 2024? Here are five predictions for the coming year in manufacturing.
1. Manufacturers Will Reshore—by Capturing New Opportunity
Last year, I predicted reshoring would ratchet up. It has, and will continue to, but the largest gains are being driven by companies capturing new opportunities in the United States, rather than bringing significant foreign operations back home.
Our progress producing computer chips offers an example. The incentive-laden CHIPS Act set aside $52.7 billion in subsidies for companies willing to set up semiconductor plants in the U.S. Manufacturers like Intel and IBM have announced plans in Ohio and New York, respectively. It’s happening in the world of defense, as well, as the Department of Defense continues to dole out large sums of money for American manufacturers.
When it comes to nearshoring, I wrote earlier this year about how manufacturers are bringing some foreign operations closer to home—namely, to Mexico—seeking greater resilience, closer proximity, and moderate costs. Expect that trend to continue into 2024, as well.
2. The EV Hype Pendulum Will Swing Again (and Again, and Again…)
We closed 2023 on a down note in the world of electric vehicles. Major automakers have recently halted work on new factories and adjusted down sales targets. A year ago, the news cycle was flooded with EV makers projecting massive growth and announcing new deals.
My prediction for 2024? The pendulum will swing back—and going forward, perhaps back again, and again, and again. The news and noise around EVs will remain loud, but manufacturers would be smart to track it unemotionally, letting the facts be their guide. Here’s one strong indicator: EVs’ new sales market share came in at a record 7.9% during the third quarter of 2023, continuing its steady climb from 5.3% during the first quarter of 2022.
Broadly, we’re still seeing buying signals that sustainable products matter. I would not expect this to be the year the U.S. pushes across a regulatory overhaul à la the European Union, but that doesn’t mean manufacturers should stop pursuing sustainability and pushing to align themselves with sustainable products. EVs, of course, offer the most opportunity of all—even if the current markets may trick you into thinking otherwise.
3. Despite Long-Term Promise, Manufacturers Won’t Need to Invest Directly in Shop-floor AI in 2024
There are some great things manufacturers can already do with artificial intelligence when it comes to marketing, sales, and personalization (watch some YouTube videos on this topic to convince yourself that you should be experimenting with ChatGPT and other AI already for these purposes). But by and large, manufacturers shouldn’t lose their head in AI.
The truth is that, for most manufacturers, the benefits will come when AI is integrated seamlessly into our existing, third-party tools and platforms. Major ERP systems, for instance, are likely working on upgrades as we speak that will work AI into ongoing updates, making our systems easier to use and improving communication between supply chain partners. That’s exciting, and it will spell efficiency for manufacturers.
Of course, the largest companies in the world will spend money on custom AI applications that blow everyone away. But the development on such products is so complex—and the costs so high—that most manufacturers can and should sit tight, knowing they’ll be able to realize the power of AI without investing directly in the technology.
4. Our Workforce Challenges Will (*sigh*) Remain Challenging
The stats around the collective headspace of our workforce remain staggering. Gallup’s 2023 State of the Global Workplace report revealed that an astonishing six out of 10 employees are quiet quitting—a majority of the workforce. The study defines the term as “what happens when someone psychologically disengages from work.”
One of the most important things manufacturers can do to combat this is improve their workplace culture. Employees tend to work harder when they feel connected to their teammates and the larger reasons their jobs matter—fostering both of these things goes a long way to creating loyal, driven employees. So does accounting for the varied needs of the diverse workforce, which includes members of a whopping four generations.
Perhaps this is the year we start looking at worker shortages as less as a problem to be definitively solved, and more as just another business issue we need to continually manage. A recent MAGNET survey certainly confirms that manufacturers are making employee retention a top priority and recognizing that being a great place to work is now table stakes in the war for talent. A full 87% of manufacturers say they’re now offering increased flexibility to employees in hours and shift permutations, greater opportunities for cross-training, and more frequent pay to keep employees happy and on the job.
5. Manufacturing May Offer a Reprieve from Polarization
Election years are hard on all of us. This one will be no different, promising to drive us apart in some ways we can forecast and many we cannot.
But here’s hoping that manufacturing remains a place of agreement amid the charged discourse. Democrats and Republicans have aligned around manufacturing for years, believing the strength of the industry is important for the overall strength of the country. The CHIPS Act received broad bipartisan support, with both sides of the political aisle looking to tamp down China’s impact. As election season heats up, here’s hoping that bipartisan support of our industry continues.
Either way, 2024 should prove to be another eventful year. Although there’s always the threat of the unknown, the companies that invest in bettering their core business—improving their technology, hiring and retaining great people, and creating processes that spur innovation—will be best prepared to excel no matter what comes our industry’s way.
