In 2022, CompanyWeek profiled 301 manufacturers across Arizona, California, Colorado, Texas, and Utah in our state Manufacturing Report publications. These organizations included 170 OEMs or brands, 101 contract manufacturers or producers, 15 tech or automation companies, 11 materials manufacturers, three business services providers, and one company focused on engineering and prototyping.

We featured 47 of these manufacturers in Q4 alone, and the challenges, needs, and opportunities they shared provide us all with a snapshot of the current U.S. manufacturing economy. When we compare this data to that of Q3 2022 and the overall numbers from 2021, we have a handy roadmap that reveals where these trends may be headed in the next 12 months.

Top 5 Manufacturing Challenges in Q4 2022

  • Supply Chain 47%
  • Workforce 34%
  • Market Awareness 17%
  • Managing Growth 13%
  • Pricing 13%

In Q4 2022, supply chain and workforce continued as the most often mentioned challenges by the manufacturers we interviewed. The impact of supply chain, in particular, grew dramatically over the quarter — by 16 percent since Q3 — and over the year — by 24 percent since the end of 2021.

Workforce challenges increased by 4 percent over Q3 and 16 percent over the end of 2021. Market awareness and pricing replaced market uncertainty and market education in Q4’s top five.

Issues related to shrinking workforces, hiring and retention struggles, and supply chain woes make news headlines virtually every day, so these trends are not at all surprising. As the U.S. continues to onshore more of its manufacturing — and industry leaders look for ways to attract and train the next generation of employees — we hope to see these numbers soften in 2023.

Top 5 Manufacturing Needs in Q4 2022

  • Workforce/Labor/New Employees 49%
  • Real Estate/Space 26%
  • New Customers 13%
  • Finance/Funding 11%
  • Marketing 11%

Workforce was once again the most often mentioned need among the manufacturers our writers interviewed in Q4 2022 — a position it has held in nearly every quarter since we started tabulating this data in Q1 of 2017. The percentage of manufacturers citing workforce as a need increased by 6 percent over Q3. However, it fell 2 percent when compared to the end of 2021.

The number of manufacturers citing real estate and space as a need grew 3 percent over Q3 and 4 percent when compared to the end of 2021. The percentage of manufacturers mentioning a finance or financial need fell 15 percent, and marketing replaced equipment in Q4’s top five.

We’ve already discussed workforce above — no need to beat a metaphorical dead horse here. And we’re not surprised at the growth of real estate and space as a need of U.S. manufacturers. While most of the manufacturers we interviewed in Q4 haven’t yet felt the pinch of the tighter financial conditions ahead, rising interest rates lead to higher rental costs and greater difficulty obtaining financing for new locations or expansions. These are trends we expect to continue through 2023 if the Federal Reserve persists in raises to the federal funds rate.

Top 5 Manufacturing Opportunities in Q4 2022

  • Growing Market 40%
  • New Markets 34%
  • New Products 23%
  • Market or Product Leadership 13%
  • Technology/Innovation 4%

Growing market was the most-cited opportunity among the manufacturers featured in our publications in Q4 2022, a position it has held consistently since Q1 2020 despite the COVID-19 pandemic. While the percentage mentioning growing market opportunities fell by 5 percent when compared to the end of 2021, it increased by 4 percent over Q3.

The percentage of manufacturers citing new market opportunities increased over both Q3 — by 3 percent — and the end of 2021– by 11 percent. New product opportunities fell slightly by 5 percent. Technology/innovation and market or product leadership replaced new partners and managing growth in Q4’s top five.

In October, NPR
reported that 2022 has been a “very good year for U.S. manufacturing.” We’re inclined to agree. Factories had added 467,000 jobs since October of 2021, and U.S. factory production in September 2022 was the highest it had been in over a decade according to the Federal Reserve. Consumer spending has also continued to grow, despite inflationary pressures. As such, we expect demand for U.S. manufactured goods to remain high, enabling manufacturers to continue to innovate new products and push into new markets in 2023.

Angela Rose is Executive Editor of CompanyWeek. If you’re a manufacturer who’d like to be featured in a state Manufacturing Report, you can reach her at arose@companyweek.com.

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