While the world continues to adjust to the pandemic, manufacturers face an uphill battle with their talent needs.
The rapid pace of the manufacturing industry has created high demands for efficiency, quality and consistency. Unfortunately, reaching these standards can be difficult when there are not enough workers to meet demand. Plummeting employment numbers during the pandemic brought the industry to its knees last year, but the good news is that those numbers are steadily climbing back up. In August, 37,000 jobs were added to the industry following 27,000 jobs in July, 39,000 jobs in June and 36,000 in May. The manufacturing industry is adding more jobs than it is losing. Yet despite these numbers, the rising headcount is still not up to the pre-pandemic level, and the talent gap remains wide.
The manufacturing industry has also seen an unprecedented wave of cyberattacks. In 2020, it suffered from system intrusion, social engineering and basic web application attacks, with the most common threats being phishing and hacking to gain the initial foothold. From there, credentials were compromised and utilized, or the threat actors installed malware.
With each challenge comes opportunities, however. In response to the economic hardships of the past year, an increasing number of manufacturers are seeking to make acquisitions or are embracing mergers. In a recent survey of leaders of companies with over $250 million in sales, around 65% said they planned to make acquisitions in response to economic conditions created by the pandemic. In parallel, many smaller companies that supply parts for larger producers currently struggle to survive and may be attracted to a merger.
Tackling these obstacles with the aforementioned talent gap is no easy feat, but there are several ways you can bridge talent resource limitations and improve your company’s overall productivity.
1. Look for Additional Bandwidth in Finance
Improving your organization’s economic condition can fuel competition in the manufacturing job market, but to do so your leadership team needs the assurance of sound financial reporting and metrics. One way to track your organization’s financial heartbeat is to rework your financial reporting function to provide a real-time look into models, forecasts, cash flows, use of dashboards and other tools. A rolling forecast can help you prepare for the future and succeed. For example, suppose you have concerns over performance issues due to a lack of qualified workers. In that case, a financial forecast can provide detailed insight into sales and liquidity to test business scenarios impact on financial performance.
Outsourcing your accounting to support your company’s back office is another opportunity that enables you to meet short- and-long-term obligations cost-efficiently and addresses unexpected needs. It allows your back office to operate smoothly during special projects and transition periods.
The tax landscape is constantly evolving, placing a heavy burden on internal tax departments. Integrating external expertise with your internal team can allow more bandwidth to address emerging tax needs and help you stay compliant. You can save on taxes while remediating past errors quickly and issuing filings on time while leaving room in your full-time headcount for key positions.
2. Take a New Approach to Risk Management
One of the reasons cybercrime is increasing is because some manufacturing companies are shrinking their internal audit budgets. (The Institute of Internal Auditors found 36% of companies reduced internal audit spend in 2020.) As a result, security protocols are falling through the net and have left a gap in cybersecurity protection. It may be beneficial to utilize internal audit resources with a wide array of IT controls experience to close that gap. Review the results of your recent internal audit to assess whether your controls and staff are positioned to address areas of emerging risk. This may aid in your determination about what additional resources your organization could use for its risk management function.
To zero in on cyber breaches, seek external guidance on securing systems and data. An assessment of your system and potential vulnerabilities can identify realistic and practical cybersecurity safeguards. For example, if you have never done one, comparing your control environment to a common industry framework such as the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) or the Center for Internet Security Critical Security (CIS) can help identify issues before a breach occurs, reducing the time and extent of potential damage.
3. Seize the Opportunities in Mergers &Acquisitions (M&A)
In the second quarter of 2021, deal activity continued at a feverish pace, proving to be on track for a record-breaking year driven by continued economic recovery, low-cost debt, high levels of unspent cash reserve and the possibility of a higher capital gains tax rate. Mid-market deals accounted for over 68% of the overall deal count for the first half of 2021—the highest annual proportion on record.
As more organizations take advantage of the benefits of M&A during the pandemic fallout, the need for logistical expertise is higher than ever. An experienced M&A team can help your organization focus on practical business, while deal flow, due diligence and other transaction-related activities are adequately addressed. For example, if there’s a possibility of an exit on the horizon, consider using a provider to assist with sell-side due diligence sooner than later to identify potential deal drivers and stoppers. Companies considering an imminent exit may also want to undergo a financial statement audit to provide potential buyers more insight into the reporting environment.
Preparing for What Comes Next
Bringing in additional resources can help your team embrace new opportunities and mitigate its talent gap challenges. For a deeper dive into solutions for personnel constraints and action items, check out our guide. You may also connect with a member of our team.