Domestic Manufacturing Is Saving with MSP Technology

The U.S. manufacturing sector faces numerous challenges, including persistent labor shortages, rising input costs, and ongoing supply chain disruptions. While some sectors anticipate growth, overall activity remains below pre-pandemic levels, and rising costs are squeezing profit margins. 

1. Labor Shortages and Workforce Development:

• Retirement of Baby Boomers - A significant portion of the manufacturing workforce is nearing retirement, creating a need for skilled replacements. 

• Attracting Younger Workers - Millennials and Gen Z may be less interested in manufacturing careers, despite competitive pay and benefits. 

• Skilled Labor Gap - Many manufacturers struggle to find workers with the skills needed for modern manufacturing, including those needed to operate and maintain automated systems and robotics. 

• Upgrading Skills - Companies need to invest in training and upskilling workers to bridge the skills gap. 

2. Rising Costs and Inflation:

• Raw Material Prices: Increases in the price of essential materials like steel, aluminum, and semiconductors are impacting profitability. 

• Energy Costs: Fluctuations in global energy prices, particularly oil and gas, are adding to production expenses. 

• Wages: Rising wages are another factor contributing to higher production costs. 

• Supply Chain Disruption: Ongoing disruptions in supply chains and logistics further contribute to cost increases. 

• Inflation: Higher inflation rates impact both direct costs and supplier pricing. 

3. Supply Chain and Logistics:

• Transportation Costs - Rising transportation costs, including trucking rates and international shipping, are adding to production expenses. 

• Supplier Bottlenecks - Manufacturers face challenges with obtaining materials and components from suppliers. 

• Logistical Inefficiencies - Inefficiencies in logistics and transportation can lead to delays and increased costs. 

4. Regulatory Compliance:

• Compliance Costs - Manufacturers face a significant burden of federal, state, and local regulations, which can increase production costs. 

5. Trade and Economic Factors:

• Tariffs - New tariffs on imported steel and aluminum, like those reinstated in 2025, can add to production costs for manufacturers. 

• Trade Policies - Trade policies and exchange rates can make domestic manufacturing less competitive. 

6. Infrastructure Challenges:

• Outdated Infrastructure - U.S. infrastructure, including electric grids, transportation corridors, and data networks, may not be adequate to support a resurgence in domestic manufacturing. 

Potential Area of Savings/Benefit:

Manufacturers are gaining savings and better data and information by outsourcing to a domestic Managed Services Provider (“MSP”). Sagin combines the services of an MSP with the strategic and leading business intelligence of a professional services firm. While also being located domestically in a stable work environment with advanced security protocols. Technology outsourcing can yield a 18-32% cost benefit in technology operating costs and provide better reliability and quality of support even to those manufacturers in remote rural areas.

Using a domestic technology MSP can achieve the following benefits:

• Overall lower cost model (18-32%)

• Rapid deployment of resources to support operations even in remote/rural areas

• Consistent data security and cyber protection

• Stronger business continuity plans

• Increased speed and access to data and intel

• Continuity and stability of supporting labor

• Greater access to skilled and knowledgeable labor

Learn how Skolnik, a Midwest industrial packaging manufacturer, has leverage technology arbitrage in this video link. This model creates a more effective and efficient organization to be stronger through more challenging times.

Looking Ahead:

• While challenges persist, there are still opportunities to make improvements. 

• Companies that adapt to changing conditions, diversify their supply chains, invest in automation, and address workforce development challenges will be better positioned for success. 

• Applying a technology MSP approach to operations will help improve performance and trim costs.

To learn more about Sagin’s Manufacturing MSP technology model, visit us at www.saginllc.com or email info@saginllc.com.