Manufacturing Faces Growth Despite Economic Impacts

March 14, 2023
In the first of a three-part video series, CSIA’s Jose Rivera discusses some high points in the manufacturing industry.

The transcript below has been edited for length and clarity.

See Chapter 2 here 

See Chapter 3 here

Bob Vavra: Jose, I think you and I hear the same thing from everybody in manufacturing. [They say] we're concerned about the recession, we're concerned about the supply chain, we're concerned about worker shortages—but we've never been busier. How do you see this trend? 

Jose Rivera: What you're mentioning, it sounds like a contradiction—and it is basically what we're hearing. The supply chain has still not been resolved. I have heard from experts that when it comes to chips, power electronics and things like that, we're still like one or two years from being back to where we were before. But I think these challenges are also the ones that are creating the opportunity, right? In the case of the United States, we're having a lot of the initiatives around reshoring or nearshoring. And all that requires automation and those are all opportunities for system integrators to deliver on projects.

The other thing that I will say is that our industries are ones that are in the industrial space and they tend to lag behind the consumer ones. Imagine an end-user or a manufacturer is building a plant, and now all these economic woes are happening. If the project is far along, they will finish the plant. They will not stop until the outlooks improve. This means more stability for our industry. 

This is not to say that down the road we're going to have a slump, but oftentimes we are serving industries that are not completely in sync. Remember, during the pandemic, we had pharma, life sciences, food and beverage doing absolutely great, but we had oil and gas in the tanks.

Now, with this Russian war on Ukraine, right, the oil prices went through the roof. This whole oil and gas segment is like hitting on all four cylinders. And it was not just the Ukraine war. It was also like the economy coming back to the normal consumption patterns. But this is just showing how system integrators [have] to cover all the industries. It tends to average out. 

BV: You talked about nearshoring a little bit, and one of the things is that's going to create an opportunity for is new manufacturing growth as well as expanded manufacturing growth and facilities. But the current capacity isn't going to be enough. We're going to need to expand manufacturing in North America in order to be able to do nearshoring to the level where, as you said at the outset, it makes some financial sense.

JR: Completely, completely in line. And so these will not be just replicas of what was already there. It will be very modern, highly automated plants.

BV: It's going to be the next generation of the manufacturing that that we're seeing out there in the marketplace. So that's got to create some opportunities, as you said, but some challenges for CSIA members. What do you see as some of their near-term challenges?

JR: Supply chain remains a topic. They have been dealing with it in creative ways. A few system integrators wanted to have an inventory of components in their offices. Some of them have moved to doing that and other times there is shortage of talent. This has been forcing system integrators to rethink their approach to work.

For example, system integrators love to have lots of engineers and now they're thinking a little bit outside of that box. Maybe through teamwork they are trying to bring resources that are not necessarily coming from engineering schools and trying to leave more of the admin work to others.

There are more tools that help system integrators automate their own work. So automation of the automation work, right? Which sounds a little bit funny, but these are approaches tool to help, you know, deliver on all these projects with all the restrictions.

BV: I think that's a really good point is the nature of the work that everybody is doing is continuing to change and get more digital. And as a result, some things that used to be a very manual process can be automated at the front end so that you're not doing so much manual design work. It becomes much more of a plug-and-play kind of solution.

JR: I've been in automation for a very long time and there's nothing like a standard solution, Everybody wants to have it customized like a suit off the rack, but you still have to do some adjustmentsfinal adjustments.

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