Should You Invest in the Manufacturing Industry This Year?

Where are you investing your money in 2022? A lot of people are making decisions about where they should invest their money this year, and some are wondering if manufacturing is a place they should be considering investing some cash. The answer is not quite as simple as a yes or no answer. Learn more about investing in manufacturing below.

The Good News

The COVID-19 pandemic certainly has taken a toll on the world. However, things are revving back up nicely, including the manufacturing industry. The manufacturing industry in the United States is expected to meet record growth between 2022 and 2023. As a matter of fact, it is not one specific manufacturing industry that is expected to see tremendous growth; it is all sectors of manufacturing expected to enjoy some growth.

The Bureau of Labor Statistics projected that metal fabrication manufacturing will grow at least 9% by 2026. Other industries are also expected to enjoy between 10% and 25% growth over the next five years. Manufacturing is making its way back to the United States, and the orders are coming. The left and right, and the outlook is sunny that manufacturing will continue to blossom. However, it is not all good news.

Labor Shortages

Some experts are concerned over the positive predictions when it comes to manufacturing investments because of the labor shortage. There was already a labor shortage before the pandemic and now that shortage has reached crisis levels. Some sectors have been crippled by the labor shortage, while others seem to not feel the pinch at all. What can you do as an investor to ensure that you are choosing the latter business to invest your money in? Do your research.

Whenever you are investing money, you should do your due diligence and get to know the company. Read the news that is relevant to the industry, do a deep dive into what is happening in the business as far as employee retention. See if you can dig up information about how many employees the company has and whether that has increased or decreased over the last couple of years. A little information can go a long way in helping you to make the right choice.

Supply Chain Issues

There are still some bumps in the supply chain because of the pandemic. Some of the bumps are simple obstacles that most manufacturers are able to deal with, but some of the bumps are gaping holes that are not easy to deal with. As an investor, you have to be able to look afield sometimes to see the long-term picture. For example, if you are considering an electrochemical fatigue crack sensor manufacturer (they are used in detecting cracks as minimal as .01 inches in a structure) and that manufacturer is having issues getting the chips they need, you might want to pass. Electronic chips typically come from China, and it may take quite a few months for backorders to be filled, which of course will affect revenue.

Again, do your due diligence to ensure you make an informed decision. The supply chain issues will not go on indefinitely. There is an end in sight. When investing your money in manufacturing, you should ask yourself how long you want to park that money before you see some real growth. If you can go for the long haul, then the supply issues right now will not be a long-term problem.

Automation Is a Big Deal

Manufacturing companies that invest in their business by keeping up with state-of-the-art automation are the companies that are going to see the most growth. Automation is here to stay and it is the future of manufacturing. Consider investing your money in manufacturers that are already ahead of the automation power curve. Those manufacturers that have largely automated have been unscathed by the labor shortage.

Is manufacturing a good place to put some money this year? Yes, as long as you take the time to do the research. There is always risk in investing money, but it feels good to take that risk for something you believe in. Invest in American manufacturing and feel good about your investment.

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