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January Roundup: Just-in-Time, Manufacturing Employment, Industrial Guardrail Standards

A look at the world of manufacturing and distribution

General Inquiry

Morning coffee with Cisco-Eagle photo
Welcome to 2023, and our look at the world of manufacturing and distribution.

Powell: Inflation and the Labor Market

The U.S. Federal Reserve estimates that America is currently short about 3.5 million workers across all its labor markets. One of the places where this hits hardest is in the core areas of manufacturing and distribution, where younger, physically capable workers with good skills have been short for years. The shortages are exacerbated, according to Reserve Chairman Jerome Powell, by around 2 million early retirements and another 1.5 million in Covid-related issues and slowing immigration.

Key takeaways

  • Demand was supercharged during the pandemic’s early days. Prices rose dramatically due to that demand and the challenges the pandemic imposed on supply chains. Powell says that those supply chain issues are easing, but still in flux. He believes that “goods based” inflation is decreasing due to bolstered supply chains and easing demand.
  • Labor markets are still overtaxed. Demand for workers “far exceeds” supply. Wages have grown in response, but inflation has largely erased those gains for many workers. Powell wants the Fed to restore balance between labor supply and demand. His speech states that labor participation is far lower than hoped. Covid-related illnesses account for much of that shortfall, as well as early retirements. In terms of labor availability, those early retirees were a short-term solution at best, since they will mostly have retired over the next 5-10 years anyway. Powell doesn’t expect a significant number of these early retirees to return to work.
  • The current rate of unemployment is about 3.7%–a five-decade low.  With GDP growth slowing, gains have slowed, but overall we still have 1.7 job openings for every unemployed person. This means continued difficulties staffing your picking lines, assembly jobs, warehouse positions and maintenance work.
  • What’s the plan to reduce inflation? In broad terms, Powell says that he wants to continue to slow economic activity for a “sustained” period. He wants to return balance to goods inflation and the housing market, as well as attempt to balance the labor market. He says that we have a “long way to go” toward a return to pricing stability.

Powell: “Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy. Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.”

Industrial guardrail and testing standards

Flexible forklift guardrail being tested.

Our friends at McCue added this deep dive into ANSI MHI31.2, which is a standardized testing method for industrial guardrails. Previously, you could compare various guardrails independent of each other, which would result in varying results, depending on the methodology. Industrial facility railing is there to protect people and property from forklift collisions, so it’s important to know how much impact the railing can take. This is a very good standard to now have at your disposal when you specify alternative protective systems.

Per McCue: “A test method with various impact speeds (either three, five or seven miles per hour) and surrogate test vehicle weight (from 9,000 pounds to 20,000 pounds) that can be used to replicate the kind of powered industrial truck impacts that can occur in manufacturing, warehousing or distribution environments. Previously, there were no standardized parameters for manufacturers of guardrail barriers and posts to use when performing independent testing of their products.” The test must be performed at at an ISO/IEC 17025 accredited testing facility.

Manufacturing: highest employment in a decade

Chad Moutray, Chief Economist of the National Association of Manufacturers, outlines the labor challenges for U.S. manufacturing and its ongoing efforts to re-shore. As of November, the sector employs almost 12.5 million–up from 11.3 million in 2010. As we move into the next decade, manufacturers will need to navigate solutions ranging from retention to automation.

Bullish on Houston

Geopolitical analyst Peter Zeihan covers the growth of future economic potential of Houston, one of Cisco-Eagle’s hometowns. Houston is already the third largest metro area in the country, boasting a very capable workforce, status as a world energy hub, its position to take advantage of NAFTA trade, and massive potential for heavy manufacturing. Houston is part of the Texas manufacturing triangle, which means that it is part of the largest manufacturing zone in America.

Quick hits

  • Visual Capitalist ranks the top U.S. states for business in this infographic. Its top five were North Carolina, Washington, Virginia, Colorado and Texas. Its methodology used 10 weighted categories, ranging from workforce factors, infrastructure, the overall cost of doing business, technology, economy and more.
  • EHS Today discusses the precarious balance between ROI and safety. The price of safety is high, but not as high as dangerous operations. The metric “Return on Safety” is discussed extensively.
  • Supply Chain Dive explores the question: did the pandemic really kill “just-in-time”? The piece interviews multiple industry experts. According to Abe Eshkenazi of the Association for Supply Chain Management, about 64% of companies are pivoting from just in time to “just in case” systems.

Scott Stone is Cisco-Eagle's Vice President of Marketing with more than thirty years of experience in material handling, warehousing and industrial operations. His work is published in multiple industry journals an websites on a variety of warehousing topics. He writes about automation, warehousing, safety, manufacturing and other areas of concern for industrial operations and those who operate them.

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