Worcester Business Journal

www.wbjournal.com • Worcester Business Journal • 2 020 Economic Forecast 11 HOW DOES WORCESTER STATE FIT YOUR LIFE? 486 Chandler Street Worcester, MA 01602 508-929-8000 worcester.edu OUR ACADEMICS ARE GROUNDED IN THE IDEA THAT EVERY STUDENT HAS THE POWER TO CHANGE THE WORLD. With programs from biology to big data, philosophy to physical therapy, you'll find a world of opportunities to focus on your passions while broadening your perspective. A merican manufacturing is enjoying a resurgence powered by demand and innovation. Manufacturers are investing in factories and supply chains, looking for portals for hiring and retaining work- forces. Though the needs of companies are as varied as the products they make, these five trends define some of the most pressing challenges and opportunities. Labor shortages Central Mass. has a strong manufac- turing base. With consumer confidence high, a major challenge has been keeping up with orders. A tightening labor mar- ket makes it difficult to find workers. To combat these shortages, some man- ufacturers are investing in their workers through promotions and training. Others are working with schools to encourage students to consider careers in manufacturing and exploring apprentice- ships and adult training classes with job offers upon completion. Companies are relaxing historically rigid hiring rules, making room for part-time gig workers and welcoming back retired workers. A growing U.S. economy At the end of the first quarter, the U.S. economy had improved for 19 straight quarters. According to the Institute for Supply Management's national report of October 2018, 13 of 18 manufacturing industries are reporting growth. This surge may be a result of a U.S. tax law passed in 2017, cutting the corporate income tax rate. These tax savings, com- bined with tariffs on many imported components, spurred manufacturers to increase the capacity of existing factories and establish new ones here in the U.S. Challenging global markets According to the National Association of Manufacturers, expanding global mar- kets have created opportunities for man- ufacturers. While the World Bank pre- dicts global GDP growth will decline from 3.1% to 2.9% in 2020, important manufacturing markets for the U.S. are likely to see an increase in GDP over the next two years. However, trade tensions could disrupt complex global supply chains and reduce opportunities. Certain businesses are addressing these concerns by pursuing new opportunities in the U.S. and reinvesting in U.S. factories to accelerate time to market. Technology & innovation The World Economic Forum cites North America as one of key regions for harnessing the power of robotics, artifi- cial intelligence, the internet of things and other technologies. Yet, barriers to adopting new technology still exist. Small and midsize manufacturers face high costs for research, development and implementation of new technologies. Less than 10% of manufacturers are using IoT, though it could help firms test products at significantly lower costs. By reducing the cost barriers to adopt- ing tools for automation, smaller manu- facturers will become valued partners as they develop tailored products for their larger manufacturing counterparts. Beyond automation, larger manufactur- ers are using sophisticated data-collec- tion methods to measure and alert work- ers to potential problems. Regulation & the environment Though the U.S. Environmental Protection Agency has been loosening regulations, many manufacturers are not changing their practices or their suppli- ers. Many original equipment manufac- turers have rigorous processes in place to help them find appropriate partners. Moving forward, companies have strong incentives to being environmen- tally minded, as 87% of Americans favor products advocating for social issues. A 2017 consumer survey found a third of con- sumers prefer to purchase products from sustainable brands. Additionally, more than 90% of CEOs cite sustainability as important to their company's success. As our local manufacturers take advantage of these opportunities, they're growing in new ways. With each innova- tion and breakthrough, manufacturing companies are disproving the myth that U.S. manufacturing is over. As they move with the economy, they are looking ahead to make the most of the future. While the industry is enjoying a strong growth phase, continued success will depend on addressing labor shortages, trade uncertainty and automation. Edwin Shea is a business banking market executive for Bank of America and Central Massachusetts market president. Top five trends in manufacturing for 2020 ECONOMIC FORECAST 2020 BY EDWIN SHEA Special to the Worcester Business Journal W Edwin Shea

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