Insights: Manufacturing’s Real Estate Shortage, DC Survey and More
What's new in manufacturing and distribution?
What are the top concerns of distribution center managers in 2023? The latest MMH survey lays it out. We also delve into manufacturing’s real estate problems, batch picking and a little more in this month’s roundup.
What’s causing sleepless nights for warehouse distribution in 2023?
In its annual warehouse/distribution center equipment survey, Modern Materials Handling magazine detects what it calls a more conservative approach to automation spending and facility upgrades. That seems natural after several consecutive record-smashing years. The survey targets a number of questions, but its basic aims are to discover the purchasing plans in distribution and warehousing for equipment, integration and software.
Key takeaways
- Distribution companies are still automating and adding capacity. They’re fighting a chronic labor shortage, but tamping the brakes a little on their automation plans. Some are “holding off” — taking a breath to assess the situation after rapid upgrades over the last 3 years. The current mood is “cautious”, but everyone understands that they’ll need to become more labor-efficient.
- Hardly anything is in real decline. The survey demonstrates a slower pace as these companies assess demand and look at their budgets.
- Labor availability – to no surprise at all – was still seen as a primary issue for warehousing companies. Everyone is still looking for people and everyone is still having a hard time finding them.
- People are still investing in their operations, with 32% proceeding in 2023, a slight decline vs. 2022. Automation is the focus of that investment trend.
Read more: How to Calculate Automation ROI
BostonTec: How Batch Picking Can Improve Efficiency and Employee Morale
BotonTec lays out the case for batch picking in order fulfillment operations in this article, but goes beyond the usual points on efficiency and throughput and into the ways it helps improve employee morale.
- Faster pick rates: Batch picking is much faster than picking from standard shelves and inventory positions.
- Efficiency gains: Because pickers collect items for multiple orders, transit time and repetitive tasks are reduced.
- Employee satisfaction: Batch picking reduces walking times (which we know are detrimental to productivity and accuracy), resulting in improved morale.
WERC’s 22nd Annual Texas Warehousing Resource Conference: August 22, 2023
We always attend the “best little warehouse show in Texas” in Grapevine, Texas and hope to see you there for a day of networking and education for warehousing professionals. The conference is a bargain at $25 for members and $35 for non-members. If features trends, techniques and solutions for profitable growth. Register today!
Reuters: The U.S. manufacturing boom has a real estate problem
The United States is undergoing one of its most robust manufacturing construction runs in a generation, with record spending on new plants year-after-year, but according to Reuters, there’s a problem: real estate, or a lack of it, for “megasite” facilities. According to Reuters, about half of all megasite manuacturing projects have been launched since 2018, with plenty more in the pipeline.
The scarcity of these large sites can be characterized in multiple ways:
- The need a lot of land – at least a thousand acres.
- Nearby transportation infrastructure (rail lines, water transport, interstate highways) is necessary and hard to find.
- They’re hungry for power and require large amounts of electricity.
- Skilled labor in sufficient quantity to staff the plant is needed for all these facilities.
It’s not only the massive manufacturing projects, either. Since the demand for prime industrial real estate is at a modern peak, competition for sites is intense for “shovel-ready” sites, which have been snapped up to a great degree. Since 2004, megasite projects have been in growth mode, with growth all along the way, even during the pandemic. 2022 saw 20 of these projects, compared to only two in 2004.
NAM manufacturing outlook
Chad Moutray, Chief Economics of the National Association of Manufacturers lays it all out in the Q2 2023 update:
This week’s @ShopFloorNAM Monday Economic Report – “NAM Survey: Outlook Dips in Q2, Workforce Remains Top Concern” https://t.co/KtczqyIgzJ pic.twitter.com/jG5uX26kbz
— Chad Moutray (@chadmoutray) June 12, 2023
- Skilled labor is the hard part: today, tomorrow and moving forward, labor availability is manufacturing’s chief challenge. Finding, hiring it, training it, retaining it.
- Capital expenditures are still on the rise, with about 84% of manufacturers reporting “as much as or more than” this time in 2022.
- Revenue is growing at about the same rate as price increases, but less than expected labor costs.
The big takeaway: Automation ROI is shortening, but you may have issues with capital availability.
Quick hits
- The National Association of Manufacturers released its Q2 outlook survey, which indicates some concerns, particularly with regulatory burden. 63% of manufacturers spend a minimum of 2,000 hours per year working on compliance. Other concerns include labor difficulties (74.4%), healthcare costs (53.1%) the business climate (52.1%) and rising materials costs (50.8%).
- Modern Machine Shop profiled Muratec’s automated packing solution, the Ledger A3. What’s unique about this mini-load system is its combination of high speeds and multidirectional, simultaneous carriage loading/unloading.
- Newcastle (the maker of some cool mobile warehouse power solutions) writes about inflation’s impact on the supply chain. As you’d expect: higher & labor materials costs, less working capital availability, and demand impacts.
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.