US manufacturers are entering a new chapter of operational transformation, driven by a trio of powerful and interconnected risks: labor shortages, shifting supply chains due to tariffs, and rapid advancements in automation and artificial intelligence.
According to new research by Nationwide, the vast majority of US manufacturers remain optimistic despite macroeconomic headwinds, with eight in 10 expecting positive business performance over the next 12 months.
However, as they increasingly pivot toward domestic sourcing and automation to mitigate external pressures, firms are also encountering new exposures that demand careful risk management. Eighty-two percent of manufacturers in Nationwide’s survey said they are actively seeking strategic guidance from their insurance agents and brokers.
Erika Melander (pictured), head of Nationwide’s national manufacturing practice, said that manufacturers are leaning into opportunity, and they’re looking for partners who can keep pace.
“These manufacturing facilities are changing every day, whether it be new employees, new equipment, new customers, or new vendors,” Melander told Insurance Business. “They need to ensure that they have plans in place that are adapting to those changes regularly.”
One of the survey’s more striking findings is the surge in reshoring activity. Thirty-five percent of manufacturers have already switched to US-based suppliers, according to Nationwide’s data, and at least half are seriously considering it.
While intended to reduce dependence on unstable global supply chains, the shift to domestic sourcing has introduced new layers of risk, including reduced diversity, localized disruptions, and new cost structures.
“Many manufacturers assumed that post-COVID supply chain adjustments had already been made, but what surprised me was how many are still actively exploring US sourcing options,” said Melander.
Despite intentions to stabilize operations, 45% of manufacturers in Nationwide’s survey said US suppliers still can’t meet all their needs. Meanwhile, 87% remain concerned that shifting trade policies will create new delays and pricing instability, especially in raw materials.
In response, insurance agents and brokers are seeing heightened demand for contingency planning tools such as business interruption coverage and supply chain risk modelling.
While supply chain strategy is evolving, the workforce challenge is proving more stubborn. Sixty-four percent of manufacturers report difficulty attracting and retaining skilled workers. Thirty-four percent say upskilling staff is a major hurdle, while nearly 30% struggle to find candidates with critical technical abilities.
This talent gap has direct implications for workplace safety and productivity. “It’s essential that the employees manufacturers do have are kept safe and engaged,” said Melander. “That’s critical for maintaining continuity when labor is already stretched thin.”
To ease these pressures, many companies are investing in automation. Nationwide’s data shows that 91% are implementing inventory management systems, 83% are adopting Internet of Things (IoT) technology, and 82% are using robotics to streamline production.
While automation offers a clear path to efficiency, Melander warned that many companies may not have the internal skillsets required for seamless integration.
“If you don’t have the talent to implement automation strategically, it can create new kinds of disruption,” she said. “That’s where agents can step in, to help clients understand how their risk profile is evolving and where they need new layers of protection.”
With so much in flux, insurance agents and brokers can be key navigators for clients in the manufacturing sector.
Melander highlighted three core areas where agents and brokers can make the biggest difference:
“I think manufacturers are in a place where they’re conditioned to understanding that disruption is the nature of the business, so they expect the unexpected will happen,” Melander said.
“As far as coverage is concerned – what they can control – it’s about making sure that they have adequate coverage in place, certainly the limits that they have, and then making sure that they have access to tools and resources that will help keep them ahead of the curve when it comes to some of these disruptions.”
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