Preparation is Key

Though most manufacturers have seen growth during this past year, that pattern may slow as we approach 2022. There are a few aspects manufacturers should be aware of in the new year, including rising costs, supply chain issues, and labor shortages. Being aware of challenges your business may face in 2022 will help you plan and adjust to make sure you still have a great year.

Rising Costs

Rising costs are a problem many industries are currently facing, and costs are projected to rise even further as we approach the new year. There are a few reasons for this, including supply chain issues, natural gas prices, and inflation.

A natural gas crisis is causing prices to go up substantially. If your company currently uses natural gas in the manufacturing process, keep an eye on prices as they continue to rise. Another factor that may influence businesses is inflation. Currently, inflation is above 5%, which is the leading cause of price increases across the United States and beyond. Some economists also believe that interests rates may go up early in 2022 for two reasons:

  • Inflation is already rising, and
  • A change to the Federal Open Market Committee membership is scheduled. The individuals who are projected to join this committee have differing opinions from current members, which could lead to increased interest rates.

Supply Chain Challenges

Supply chain challenges are already apparent in 2021 and may continue to get worse in the new year. These problems started with many companies showing increased inventory of raw materials due to hoarding. The supply chain is already slow, so many companies purchased whatever materials they could find. However, this ties up a company’s capital because often they’re waiting on one or two more materials to finish the full product, which leads to cash coming in at a slower rate.

Port congestion in California is extending lead times, and trucking companies are experiencing logistical issues causing a backlog. If you’re importing products, these may be unloaded at the ports but sit for an extended period until truck drivers can pick them up. Due to these issues, many companies are trying to re-shore in the United States.  It’s expected we’ll continue to see many companies make their way back. Finally, relations with other countries such as China aren’t improving, which makes many aspects of the manufacturing process more challenging.

Labor Shortages

With the end of extended unemployment benefits, many were expecting to see accelerated job growth and many people returning to work. Within the past few months, that hasn’t been the case in the manufacturing industry. There are many reasons for this, including:

  • Baby boomers are retiring – more people are leaving the workforce than in normal years.
  • Vaccine mandates – companies requiring vaccine mandates may see an increase in workers leaving if they don’t want to receive the vaccine.
  • Uncertainty with COVID – remote schooling may still be happening in parts of the country, which makes it difficult for parents to return to on-site jobs.
  • Skill gaps – trade professions require a high level of skill. Starting a new job may require more training that individuals who are looking for a job may not have.


To combat labor shortages, there is a push for automation at different levels in manufacturing to increase efficiency. Though many fear this means companies will lay off workers, manufacturing plants have started to retool their workers for different tasks. Many small changes can be made to automate certain processes without overhauling your entire business. Many companies are starting to use robots and cobolts that require a worker to monitor their process, which allows a company to hire workers with disabilities who could otherwise not do hard physical labor. They are still there to monitor the machines, so it doesn’t eliminate the need for workers entirely.

On the plant floor, manufacturers have begun to use robots who run conveyor belts to assist in transporting materials from one end of the building to another. Some companies have also purchased robots that do pallet work and other heavy lifting. This makes processes less cumbersome for employees and provides a safer working environment.

Though there may be many unique challenges facing your business in 2022, it helps to be aware of what may affect your business and the potential solutions available. To help plan for the year ahead, contact your Adams Brown advisor today.