From 2018 to 2023 the manufacturing sector has taken some hits and one of the main reasons for this was COVID.  Revenue was down a small percentage through these years as well as the number of employees and their wages.  As a result of COVID-19, the US economy has shifted toward being more service-oriented, especially as production processes are being moved abroad.

COVID caused many problems for manufacturers due largely to the hardships that the supply chain faced. This was due to lockdowns and travel restrictions when COVID-19 first started.  The recovery after COVID has provided aid for the manufacturing sector and has begun to stabilize both demand and supply chains.  Per IBISWorld, “According to the National Association of Manufacturers, for every $1.00 spent in manufacturing, there is a total impact of $2.60 on the overall US economy, representing one of the largest sectoral multipliers in the economy.”  After the pandemic, the manufacturing sector has started to take new actions to rebuild its position.  These new actions align with pre-pandemic strategies, such as increasing imports and exports.  Both of these took a big hit during the pandemic due to the travel restrictions and lockdowns.

 

After the pandemic, manufacturers have been forced to grow and adjust their production methods.  A big way that will help manufacturers will be online shopping, and this will provide them great opportunity for growth.  International trade is another segment of manufacturing that has taken a new turn since the pandemic.  Many companies are outsourcing to international companies that have lower wages and a lower cost basis, which has helped these companies stay competitive due to their lower cost and better margins.

 

One competitive force that this sector and domestic companies are experiencing is the growing number of imports from companies moving their production overseas to lower their costs and maintain a lower price for their product.  Efficiency and adaptability are other key factors that manufacturers need to have if they want to stay competitive because consumer preferences are constantly changing with time.  During the pandemic, as well as post-pandemic, many consumers have experienced different needs and preferences, and this is why adaptability is one of the key competitive forces that companies in this sector must have. With automated workforces and AI, companies are forced to adapt and become more efficient to compete in this sector post-pandemic.  Lastly, strong distribution channels are a key factor that goes with this growing online presence that we are seeing today.  Many companies in this sector are competing for limited retail space, which has caused many companies to create their websites to make their products more accessible to consumers.

 

Manufacturers are improving efficiencies and lowering their production costs by using automated workforces and AI.  The cost structure in this sector has been affected by the rising prices since the end of the pandemic.  This has made the cost to produce increase and their profit margin has taken a slight hit due to the larger price that they are having to pay for products and materials.