By Jodie Mjoen, Impact Dakota CEO/President
701-712-1646 • jodiem@impactdakota.com

I’ve been working in North Dakota manufacturing facilities all of my adult life. For the past 30 years, the focus was on making products the cheapest way by offshoring. The next 30 years are about making products the smarter way: Empower your WORKFORCE, Fortify SUPPLY CHAINS, and Embrace ADVANCED MANUFACTURING TECHNOLOGIES for a thriving future is the North Dakota way!

It’s really enjoyable when times are booming and certainly, we know we don’t rest during challenging times- we hustle- that’s just the North Dakota way. The manufacturing industry cycles, and it is key/ critical to know how to best navigate these cycles to maintain and grow operations. You, I, all of us have been through this before and know how this cycle works.  But what’s different today?? It’s 2024 and our manufacturing environment is significantly different than it was just 5-10 years ago. You know it, I know it, we all know it- it is a different environment here in 2024- post-pandemic, new election cycle, tightened economy, the Vikings started the year 5-0, etc.

Where are we and what are the smart actions being taken to survive and thrive in 2024 and be ready for 2025? I want to share the top three areas of greatest impacts I’m hearing about from North Dakota manufacturers and the top three actions I’m seeing them taking.

Top Three Areas Impacting North Dakota Manufacturers in October 2024:

The current economic environment and the Manufacturing Purchasing Managers’ Index (PMI) are significantly impacting U.S. manufacturers in several ways:

1. Economic Environment Impacts
   1. Inflation and Rising Costs: Manufacturers are grappling with increased costs for raw materials, energy, and transportation. This inflationary pressure is squeezing profit margins and making it harder to maintain competitive pricing.
   2. Supply Chain Disruptions: Ongoing supply chain issues continue to challenge manufacturers, leading to delays and increased costs. These disruptions are often caused by geopolitical tensions, natural disasters, and logistical bottlenecks.
   3. Legislative Impacts: Recent legislation like the North Dakota AutomateND Advanced Manufacturing investments, Workforce Technical Skills Training investments, and the USA Infrastructure Investment and Jobs Act, the CHIPS Act, and the Inflation Reduction Act have injected significant funds into the manufacturing sector, particularly in areas like workforce solutions, advanced manufacturing, semiconductors, and energy.
2. PMI Impacts
   1. Contraction in Manufacturing Activity: The PMI has been below 50, indicating contraction in the manufacturing sector. US Manufacturing PMI edged up to 47.8 in October 2024 from a 15-month low of 47.3 in September compared to forecasts of 47.5.  This reflects reduced output and new orders, signaling weakened demand and economic uncertainty.    
   2. Employment Challenges: With the PMI showing contraction, employment in the manufacturing sector has dropped at the fastest pace since 2010 (excluding the pandemic). Manufacturers are reducing payrolls due to lower demand and excess capacity.
   3. Spending Adjustments: Manufacturers are scaling back on investments and spending due to economic uncertainty and lower demand. This includes delaying capital expenditures and focusing on cost-saving measures.
3. Employee Impacts
   1. Workforce Shortages: Attracting and retaining skilled labor remains a significant challenge. Many manufacturers are offering flexible work arrangements and higher wages to attract talent.
   2. Wage Pressures: Rising wages are adding to the cost pressures faced by manufacturers. While this helps in retaining employees, it also contributes to overall cost increases.
   3. Job Reductions: Due to the contraction in manufacturing activity, there have been job cuts and reduced hiring. This impacts employee morale and increases the workload on remaining staff.

Overall, North Dakota manufacturers are navigating a complex landscape marked by economic uncertainty, cost pressures, and workforce challenges. They are focusing on digital transformation and innovation to stay competitive and resilient in this environment.

Top Three Actions You May Already Be Taking or to Consider for North Dakota Manufacturers in October 2024

Given the current economic environment and the impacts on the Manufacturing Purchasing Managers’ Index (PMI), here are the top three recommended actions for manufacturing leaders:
 

1. Enhance Supply Chain Resilience
   1. Diversify Suppliers: Reduce dependency on a single supplier or region to mitigate risks from geopolitical tensions and natural disasters.
   2. Invest in Technology: Implement advanced supply chain technologies like AI and IoT to improve visibility and responsiveness.
   3. Build Strategic Reserves: Maintain a buffer stock of critical materials to cushion against supply chain disruptions.
       
2. Focus on Cost Management and Efficiency
   1. Optimize Operations: Use Lean manufacturing principles and continuous improvement strategies to reduce waste and increase efficiency.
   2. Energy Efficiency: Invest in energy-efficient technologies and practices to lower energy costs and reduce environmental impact.
   3. Digital Transformation: Leverage digital tools and automation to streamline processes and reduce labor costs.
       
3. Invest in Workforce Development
   1. Upskill and Reskill Employees: Provide training programs to enhance the skills of the existing workforce, particularly in areas like digital literacy and advanced manufacturing techniques.
   2. Attract New Talent: Offer competitive wages, flexible work arrangements, and career development opportunities to attract and retain skilled labor.
   3. Improve Employee Engagement: Foster a positive work environment to boost morale and productivity, especially during times of economic uncertainty.

These actions can help manufacturing leaders navigate the current challenges and position their companies for long-term success. How do you see these strategies fitting into your current operations?

Impact Dakota is your manufacturing infrastructure support partner. Our team of manufacturing professionals are helping our friends and neighbors at North Dakota manufacturers every day. Our mission is positively impact your organization. Many of you are already working with our team, but for some of you it may have been a while. 

Let’s connect – call your trusted friend/ neighbor at Impact Dakota or if you’re unsure who to reach out to see our team and contact information at Impact Dakota - Staff Directory.