Welcome back! At Veritex Community Bank, we like to stay in alignment with what’s happening in the markets and industries we serve. Below is continued information you may find insightful.
Manufacturing Industry Update
In its latest Manufacturing Outlook Report, Deloitte1 highlights that in 2023, the U.S. manufacturing industry benefited from three key pieces of legislation enacted in 2021 and 2022:
Skilled Labor
Oracle5 article on manufacturing industry trends reports that, U.S. factories are struggling to find enough workers, and it’s getting worse. It* references a 2021 study by Deloitte noting that by 2030, there could be 2.1 million unfilled jobs, costing the industry $1 trillion.
Older workers are retiring faster than new ones can be hired, some are switching to better-paying jobs, and there’s a shortage of younger people with the technical skills needed for maintaining and managing robots, sensors and software leveraged in modern factories. The article5 further highlights McKinsey Consulting firm’s comments that the need for hands-on skills will drop, but demand for technical skills will rise. Still, factories can’t find enough machinists, welders, supervisors, and other skilled workers.
Manufacturers are combating this in a couple of keyways:
- Focusing on Employee Retention – Per Oracle5, retaining workers is a top focus, according to 83% of the U.S.-based manufacturing leaders surveyed.
- Leveraging the knowledge of retired workforce – Per Deloitte1, in 2022, nearly one-third of the manufacturing workforce was more than 55 years of age. Developing alumni programs for retired employees might serve as an effective strategy to transfer important knowledge to younger workers.
- Leveraging Digital Tools to support Talent Acquisition – Per Deloitte1, use of digital tools such as AI can be a powerful tool to both sizing the local labor market and to determine the need for employees in new or established manufacturing locations.
Supply Chain
A key factor discussed1 on the ongoing supply chain delays is the shortages in electrical/semiconductor parts which poses a complication to production and delivery of technology manufacturers. The IIJA and IRA acts increased the demand for clean technology and electronic components in general, and the semiconductor part shortage has been persisting for more than 30 months. While the CHIPS Act aims to ease this specific problem by increasing domestic supply of chips, it will likely take time for the investments to drive a significant uptick.
As a response to these challenges, Deloitte1 mentions a notable shift toward embracing digital solutions to enhance resilience and transparency. Manufacturers are increasingly adopting digital supply chain tools to gain better visibility across their value chain, with 76% already leveraging such tools.
- Emerging technologies like distributed ledgers (such as blockchains) and smart contracts are garnering interest, offering opportunities to streamline transactions and automate contract execution processes. These technologies can make transactions tamper-proof, verifiable, and efficient. About a quarter of surveyed manufacturers plan to implement distributed ledgers and smart contracts within the next year, reflecting a growing inclination toward innovative solutions to fortify supply chain ecosystems and drive operational efficiency1.
- There’s a burgeoning interest in industrial metaverse applications among some manufacturers to further strengthen supply chain resilience, with 21% already integrating metaverse technologies according to a 2023 Deloitte and MLC study1.
This convergence of digital supply chain solutions, emerging technologies, and metaverse applications underscores a pivotal moment in the industry’s need for greater efficiency, transparency, and adaptability within the evolving market dynamics.
At Veritex Bank, our Commercial Bankers pride themselves on staying connected with the latest and most relevant market information. We’d love to bring this intelligence to you as a Veritex Commercial Client.
About Veritex Community Bank: Veritex Community Bank is a mid-sized community bank serving its customers with a full suite of banking products and services. The bank has more than 30 branch locations in Houston, Fort Worth and Dallas, Texas with total assets of more than $10 billion. The bank specializes in providing depository and credit services to retail and small- to mid-size businesses, which have been largely neglected by national banks. The name “Veritex” is derived from the Latin word “veritas,” meaning truth, and “Texas.”
