The U.S. manufacturing industry employs 8.51% of the workforce and accounts for 11.39% of total economic output. For manufacturing companies to maintain operational efficiency and employee health and safety, they must remain aware of industry-wide threats. In this article, we present five key considerations for manufacturing organizations: worker safety, regulation adherence, cyber risk, digitalization, and talent succession.
The U.S. Bureau of Labor statistics indicate that manufacturing is the third-most dangerous occupation with regards to job-related injuries and illnesses. Excluding fatal injuries, in 2019 the industry had 395,300 workplace injuries and 35,000 workplace illnesses.
Workplace injuries in the manufacturing industry include:
These dangers are especially notable for lone manufacturing workers, as they may not have coworkers nearby to warn them about hazards or help them access medical care. To avoid worker injuries and associated costs, employers must remain aware of workplace hazards, regularly communicate safety policies, and be receptive to employee reports.
One of the most significant risks posed to manufacturing supply chains is compliance with technical, legal, and corporate requirements. This includes regulations imposed by state and local regulatory bodies, the EPA, the FDA, and the SEC. Violations can lead to hefty fines and/or litigation. In recent years, manufacturing companies have had to pay over $2.95 million in civil penalties to address violations in the Clean Air Act and over $20 million for Clean Water Act violations.
OSHA violations are another cause for concern. Common OSHA violations in the manufacturing industry include machine guarding, hazard communication, and respiratory protection. Since companies have to report compliance violations to prospective clients, this can cost millions of dollars in lost business opportunities. Maintaining compliance is critical for operational efficiency, worker safety, and organizational success.
Manufacturing companies face intellectual property risk as well as risk of loss of nonpublic information, such as client details and personally identifiable information (PII). This can prove costly: the average price of a data breach in the United States is $188 per lost or stolen record, or approximately $5.4 million per organization breached.
As manufacturing companies digitalize and increase remote operations, cyber risk becomes increasingly prevalent. To combat this problem, employees should be regularly and comprehensively informed about potential cyber risk and how to report and respond to suspected threats.
In recent years, the manufacturing industry has begun implementing digital technologies to improve business operations. Digitalizing can improve efficiency, streamline information access, improve data transparency, and introduce new business opportunities. For manufacturing companies, digital updates can also help forecast product demand, track inventory, and improve worker efficiency.
The United States’ Smart Manufacturing Leadership Coalition (SMLC) estimates that plants leveraging smart manufacturing techniques will have a 10% improvement in operating efficiency, a 25% improvement in energy efficiency, a 25% reduction in consumer packaging, a 25% reduction in accidents, a 40% reduction in cycle times, and a 40% reduction in water usage.
More broadly, using digitalization to spur digital transformation indicates an organization’s ability to adapt and address evolving customer needs, which can improve customer satisfaction and retention. Digitalization can also simplify and automate business operations. This helps companies stay competitive, tap into new markets, and improve communication and growth.
Due to the Baby Boomer generation and updated age discrimination legislation, the median age of workers is rising in the United States. This has significantly affected the manufacturing industry: currently, almost 25% of the sector’s workforce is age 55 or older. Within the next 10 years, an estimated 22% of manufacturing workers (2.7 million) will retire, and 700k more will be needed.
Impending retirements means that the industry must prepare to recruit skilled new talent that is willing and able to learn new technologies. In the meantime, manufacturing companies must adjust to an aging workforce. For example, older workers have a higher likelihood of getting injured, tend to miss more days of work, and are often less comfortable with emerging technologies.
To prepare for seamless talent succession, manufacturing companies must anticipate changes in staffing and devote resources to hiring and training new workers. As they digitalize, they should also seek to modernize processes, prevent worker injury, and attract new talent.
Although manufacturing suffered production declines as a result of the COVID-19 pandemic, most executives have a positive outlook of future growth and success. As the industry resumes in-person operations and demand increases, it’s important to consider these threats and seek to prevent and address them.
One way to do so is to implement Vector Solutions’s LiveSafe platform, the industry leading two-way risk communications tool. With LiveSafe, organizations can upload customized resources about safety procedures, broadcast updates about workplace hazards, and receive worker-submitted tips. This improves communication and provides insights that facilitate effective incident prevention.
Additionally, research has found that when organizations make digital applications available and highly accessible to workers, there is a 16% increase in collaboration, a 17% decrease in time spent on manual processes, and a 16% increase in decision making. Learn more about LiveSafe here.