US manufacturers are facing significant changes as they adapt to new challenges. A recent study by Nationwide highlights three main issues: labor shortages, changes in supply chains due to tariffs, and rapid advancements in automation and artificial intelligence. These factors are reshaping how companies operate.
Despite these challenges, many manufacturers remain hopeful. The study found that eight out of ten expect their business to perform well in the coming year. This optimism persists even as companies shift towards sourcing materials domestically and increasing automation to manage external pressures. However, this shift brings new risks, prompting 82% of manufacturers to seek advice from their insurance agents.
Erika Melander, who leads Nationwide’s manufacturing practice, noted that manufacturers are eager to embrace new opportunities. They are looking for partners who can keep up with their evolving needs. She emphasized the importance of having flexible plans that can adapt to changes in staffing, equipment, and suppliers.
One of the more surprising findings from the survey is the increase in reshoring, with 35% of manufacturers already using US-based suppliers and half considering this option. While this move aims to reduce reliance on unstable global supply chains, it introduces risks such as less diversity in suppliers and potential disruptions.
Despite the push for domestic sourcing, 45% of manufacturers reported that US suppliers still cannot meet all their needs. Additionally, 87% expressed concerns about how shifting trade policies could lead to delays and price fluctuations, particularly for raw materials. As a result, there is a growing demand for insurance solutions that address these risks, including business interruption coverage and supply chain risk management.
Labor shortages continue to be a pressing issue, with 64% of manufacturers struggling to attract and retain skilled workers. Many companies find it challenging to upskill their current staff or find candidates with the necessary technical skills. This talent gap can impact workplace safety and productivity. Melander stressed the importance of keeping existing employees safe and engaged, especially when labor resources are limited.
To tackle these challenges, many manufacturers are investing in automation. The data shows that 91% are implementing inventory management systems, 83% are adopting Internet of Things (IoT) technology, and 82% are using robotics to improve production. However, Melander cautioned that without the right skills to implement these technologies effectively, companies might face new disruptions.
Insurance agents and brokers play a crucial role in this changing landscape. They can help manufacturers assess risks related to automation, workforce safety, and ensure that insurance coverage aligns with current realities. Melander pointed out that manufacturers are becoming accustomed to disruptions and are prepared for the unexpected.
As the manufacturing sector evolves, it’s essential for businesses to have the right insurance coverage and access to tools that can help them stay ahead of potential challenges.