In the consumer-driven world of manufacturing, companies within this broad industry face many risks. Manufacturing is a critical component of the American economy, producing goods for personal and commercial uses. From operational risks to liability exposures, all manufacturers must take the steps needed to identify potential risks and manage them accordingly. Utah manufacturers insurance is the foundation of risk management for manufacturing operations in the state, and similar insurance serves as the primary risk management tool for producers across the country. By understanding common risks, manufacturers can satisfy their role as an economic driver well into the future.
Driven by Demand: Global Manufacturers
Despite advances in technologies and ever-shifting political landscapes, manufacturing is a vital part of global commerce. Industry analysts indicate that manufacturing represents about 20% of the Gross Domestic Product (GDP) for each of the top 60 global economies. Outputs have increased in recent years as well, with approximate manufacturing growth of just under 4% annually.
The manufacturing industry is at the mercy of consumer purchasing; demand from both commercial and industrial entities drives production. From the smallest producer to sprawling manufacturing operations, these businesses must rely on consumer demand to serve as a bellwether for production. Uncertainties within consumer demands exposes manufacturers to certain risks, whether the market is growing rapidly or contracting due to economic circumstances. Utah manufacturers insurance is only one way that state producers address those risks.
Common Risks in Manufacturing
In the manufacturing industry, there are many risks, but several stand out as potentially impacting business continuity and income. Common manufacturing risks include:
- Employee-related injuries and illnesses
- Property damage/loss
- Natural disasters (floods, earthquakes, storm activity)
- Shrinking talent pools
- Political shifts
- Retaliatory tariffs
- Product liability
- Supply chain/distribution disruptions
- Reputational harm
- Advances in technology
Safety-oriented practices in manufacturing can effectively manage many of these risks and supplement the protections afforded by insurance. Utah manufacturers insurance is a valuable tool for commercial manufacturing operations in the state of Utah, providing coverage against many of these common risk exposures.
Looming Challenges and Risks Facing the Manufacturing Sector
Although the risks are as diverse as manufacturing itself, several of the most common risks stand out. Of concern in 2020 are:
- Tariff wars
- Shrinking talent pools
- Supply chain disruptions
- Technology and Cyber Liabilities
Managing these four looming challenges goes beyond implementing safety practices in the workplace, but rather require fundamental shifts in planning and process management to adequately overcome them.
The tariff wars started in the Trump administration harmed global manufacturers. Producers reliant on raw materials from imported sources scrambled to find economical solutions as costs rise. Many of the global trade partners of the U.S. imposed retaliatory tariffs, including the European Union, Mexico, Canada, and China. Manufacturers in Utah felt the pinch of tariffs, causing some firms to lay off workers. Utah manufacturers insurance provides broad coverage, but the challenges created by the tariff wars overwhelmed even the best policies.
Talent within manufacturing is shrinking. As America’s workforce is aging, fewer people are showing interest in pursuing manufacturing as a career. A study by Deloitte and the Manufacturing Institute in 2017 showed that approximately 3.5 million manufacturing jobs would be needed by 2025, as many as two million would go unfilled. It is imperative that manufacturers aggressively recruit new talent to prevent the talent gap from harming daily operations.
Disruptions or breaks in the supply chain have long been a looming risk in manufacturing. The coronavirus pandemic and the tariff wars only made these challenges more apparent. Manufacturers were unable to get key components from regional, national, or global suppliers, and operations were negatively affected even as consumer demands increased for certain goods. Substituting components in the face of supply chain disruptions created another critical risk exposure: product liability. Defective goods may result in significant regulatory penalties, not to mention legal claims from individuals harmed by such defective products. Utah manufacturers insurance provides great product liability protection for that state’s manufacturing operations. Producers in other states also have this tool to protect themselves from expensive risks.
Technology moves quickly, and new technologies often create new risk exposures. Automated manufacturing systems, including robotics, may displace workers, leading to further contraction of the talent pool. The complex computerized systems that handle production operations, including billing, shipping, and supply chain management add cyber risks. Each system can potentially serve as an entrance point for cyber criminals, resulting in data breaches or business interruption. Manufacturers are adding cyber liability coverages to their business policies; Utah manufacturers insurance often has cyber liability solutions available to help protect against this emerging risk.
Risks will continue to loom large over the manufacturing industry. By identifying these risks – both existing and emerging – and by ensuring insurance coverages are adequate, manufacturers can address consumer demands as products continue to roll off assembly lines.
About BTC Insurance Services
Founded in 2011, BTC Insurance Services has proudly served Utah businesses with comprehensive and custom-tailored insurance coverages for a decade. We pride ourselves on fostering long-term client relationships with a personalized and hands-on approach, and have established a reputation built on quality and transparency. For more information about our products and services, we invite you to contact one of our reputable agents today at (855) 944-3457, or send us a message here.