This article was published in Forbes January 31, 2022. While it is by no means an objective report, we wanted to share because it makes good points about the larger impact of the recently-passed infrastructure bill.
With the recent passage of the $1.2 trillion infrastructure bill, there will soon be many new opportunities for U.S. manufacturers. Of course, as we all know, securing and maintaining those opportunities through new government contracts, while lucrative, won’t be easy or fast—thanks to bureaucracy, regulations, paperwork, and the like. But those challenges will be worth overcoming.
Among its provisions, the bill includes funding allocations of $89.9 billion to improve public transit, $65 billion toward better internet connectivity and access, and money for 500,000 electric vehicle charging stations, which could help address charging “deserts.” All of that’s good news for manufacturers who are already experiencing high demand, which could “continue on for months, if not years, going forward,” David Zrostlik, president of Stellar Industries, recently said in the Wall Street Journal.
The ultimate implications of this bill reach far and wide. Here are four key takeaways for manufacturers.
Prepare for a Flood of Demand (Particularly in a Few Sectors)—With Risk of Inflation
The sheer size of the infrastructure bill provides a massive boon for manufacturers, and it’d be all positive if it weren’t for the pesky, but very real, specter of inflation. That, or the possibility the feds tighten interest rates, could put a clamp on spending and steal the shine from the apple.
With the context of that inherent risk, there’s still this: Broad swaths of the manufacturing industry are going to see significant opportunity. “Having a trillion in additional spending in the economy is likely to be a positive for anyone in the supply chain, from suppliers and manufacturers to those in shipping,” said Ben Johnston, chief operating officer at Kapitus, in Design News. “The bill encourages domestic manufacturing and procurement.”
The bill widely focuses on improving passenger and freight transportation, for instance, so steel and material suppliers, including companies that produce materials for buses, trains, bridges, rail, or related equipment, could see heavy activity. Makers of products supporting things like 5G infrastructure and EV stations, too, will see demand.
And while the bill may eventually have implications both for the supply chain and for hiring—more on both below—manufacturers would be wise to focus on their internal processes in preparation. Creating and maintaining an efficient operation is “the only silver bullet we have,” my colleague Bass Khoury, director of operations excellence at MAGNET, told me. “The only sure thing right now is that getting rid of inefficiencies and waste will help companies get more product out the door, faster—and help them both in the short and long term.”
Count on Hiring Implications That Could Boost Equity
With demand rising and talent tight, manufacturers are looking for solutions that can ease the pressures on their overburdened teams. One bright spot: The infrastructure bill will provide hundreds of millions of dollars toward workforce training in the electric grid, clean buildings, and industrial sectors like metal or electrical equipment.
That said, on a short-term basis, operators will largely need to continue to ride out the storm, pay a premium for premium talent, and prioritize operational efficiency. Longer term, the bill offers glimmers of hope.
As a society, we’re undergoing a deep reevaluation of the workplace, resulting in wage pressures and talent shortages we’ve never seen before. There’s a silver lining: Many manufacturers have been forced to rethink not only the automation needed to power their plants, but how they should be paying and facilitating the careers of their workers. As we rejigger to compete with $18-an-hour Amazon and free-tuition Target, we can also make our industry more attractive to young talent.
So how do we land that talent? Investments in transportation infrastructure could provide access to talent pools from which we’re too often shut out. If public transit strengthens routes from cities to largely suburban plants, we can begin to fill our talent gap while creating more equity in the industry. Manufacturing is almost 80 percent white and greater transportation options to and from diverse inner-city communities to factories on city outskirts could change that.
Expect Relief for the Supply Chain
The infrastructure bill comes with $17 billion to repair and reimagine port infrastructure and waterways. Manufacturers know this money is overdue, and we hope that together with what we’ve learned watching the cracks in the supply chain emerge through the years, funding will produce the desired result of alleviating the disruptions and bottlenecks that have led to inflation.
In the meantime, it’s possible the bill will have another impact: encouraging reshoring. As Johnston said in Design News, “Supply chains have been stretched for two years now, and manufacturers and suppliers and wholesalers are going to look to shorten those supply chains.”
Even as relief appears to be on the horizon, it’s likely still miles from the coast. That means that during the ongoing disruption, it’s important to treat supplier relationships with care and thoughtfulness. Think twice before you play hard ball: If you argue for a lower price, your supplier may do the same with their supplier, which may only increase delays. Instead, it’s high time to treat suppliers as true partners.
“We engage with our supply chain partners on a regular basis and know what’s going on with their operations,” said Toby Bielenberg, executive vice president of operations at National Safety Apparel (NSA). “We’re really collaborating closely with them to better understand what their challenges are so we can adjust our plans accordingly. Because of these relationships, our suppliers will work much more closely with us to support our needs when things go sideways.”
Industry 4.0 Investments Will Be Vital
Finally, when it comes to technology, the infrastructure bill may well facilitate the next step in manufacturing’s powerful trend toward interconnectivity and automation, taking Industry 4.0 to the next level.
Aggressively moving toward these advanced technologies will be critical if we want to keep up with and fully benefit from demand. My message: Invest now, take advantage of automation, and reap the rewards later. The manufacturers that will win this battle are the ones who’ve actively invested in Industry 4.0 technology before the flood of opportunity lands.
Improved connectivity from broadband infrastructure investments likely will provide an even sturdier foundation for Industry 4.0. Regardless, it’s up to us as manufacturers to invest in pursuit of transformation. Doing so will put us in a strong position to take advantage of the many ways this infrastructure bill will shape our industry.