Six economic trends that you need to knowOctober 31, 2022
Upstate SC Alliance publishes new strategic plan to address economic macrotrends and boost region’s competitiveness
As we find ourselves in unique economic times within a shifting business landscape, the Upstate SC Alliance has responded by researching macroeconomic trends and developing a robust strategic plan to address those trends in our region.
The Alliance facilitated meetings with more than 50 Upstate leaders from business, government, academic and not-for-profit sectors. In these meetings, participants discussed disruptive industry trends and sparked conversations from multiple perspectives. Participants included local economic developers, Upstate SC Alliance Executive Committee & Board Members, private sector investors, and statewide industry partners such as the Department of Commerce, the S.C. Automotive Council, S.C. Aerospace, SCBIO, and the Council on Competitiveness. After gaining input from these industry leaders, the Upstate SC Alliance refined their findings and distilled them into the six economic macrotrends below.
These trends have shaped the Upstate Alliance’s internal goals and vision for the next five years and will also inform businesses and communities as they determine site locations and strive to remain competitive in future markets:
1. Post-pandemic communications are fundamentally altered
The past two years has seen a global shift to digital content, less in-person interaction, and increased technological savviness. These cultural changes have altered the way content is designed, delivered, and digested. For example, the pandemic has accelerated a pattern of decreased attention spans, with many people gravitating toward shorter-form content and engaging in more multi-tasking. Customers are also seeking more individualized communications, as the “one channel reaches all” approach continues to wane in efficiency. In order to remain competitive, businesses and economic leaders must embrace digital communications and reach their audiences in ways that are relevant to them.
2. Industry 4.0 is changing the nature of manufacturing and industrial services
We are in the midst of a significant transformation regarding the way we manufacture products. This transition is termed “Industry 4.0,” which represents the digitization of manufacturing, more automation, big data, cloud computing, autonomous systems, the Internet of Things, and data management. These developments are merging to change how products are made, and ultimately how we will live.
The Upstate region has a strong history in automation, and it is imperative that we continue to build, tout and recruit deeper technology integration capabilities — not only embracing but leading Industry 4.0 efforts to drive efficient manufacturing. These efforts ease talent strain while simultaneously creating higher-caliber opportunities for workers.
3. Environmental, Social & Governance and Diversity, Equity & Inclusion are rising in prominence
“Environmental, social and governance” (ESG) is a driving force in corporate strategy and an increased factor in business location decision-making, requiring a strong regional response to environmental and social priorities. ESG reporting also includes diversity, equity and inclusion (DEI), and will require collaborative strategies at multiple levels of government as well as among the private sector.
McKinsey reports that: “More than 90% of S&P 500 companies now publish ESG reports in some form, as do approximately 70% of Russell 1000 companies. In many jurisdictions, reporting ESG elements is either mandatory, or is under active consideration.”
Today, manufacturers are more likely than ever to direct resources and rigor into advancing environmental sustainability in their processes, as well as when considering materials and product life cycle, or “circularity.”
Similarly, DEI has risen to the forefront of the manufacturing industry, with firms of all sizes taking the National Association of Manufacturers’ Pledge for Action. They are moving quickly to build workforce management strategies that expand diversity, foster inclusive cultures and upskill their workforce for tomorrow.
4. Workforce and talent are critical site location factors
The large scale of workforce transitions set off by COVID-19 increased the urgency for businesses and policymakers to support additional training and education programs for workers. According to a study by Deloitte and The Manufacturing Institute, there is a projected shortfall of 2.1 million skilled jobs by 2030, and the report instructs that “manufacturers should create pathways to tomorrow’s jobs today.”
The Upstate must focus on talent attraction, retention, and skill-building in order to provide needed pipelines for existing and incoming industries.
5. Growth creates pressure throughout the region
The Upstate is growing — there is no doubt about it. By 2035, our region’s population is projected to reach more than 1.76 million, an increase of more than 66% since 1990, according to the South Carolina Revenue and Fiscal Affairs Office.
The issue, however, is how and where we are accommodating that growth. Site selectors are already asking questions about housing availability and affordability, commute times, and resiliency to weather incidents like flooding. Thankfully, the Upstate houses a number of organizations at city, county and regional levels that are dedicated to addressing these issues in the region.
The Upstate must continue to address growth pressures regarding land use, housing availability, and infrastructure in order to maintain the competitive business environment and livable communities that we currently enjoy.
6. Change is a constant in global markets, influencing decisions about global value chains
Tariffs, inflation, geopolitical instability, and supply chain disruptions have forced global markets to continue to adapt and adjust their processes.
Harvard Business Review shares:
“The U.S.-China trade war and the supply and demand shocks brought on by Covid-19 are forcing manufacturers everywhere to reassess their supply chains.” The report continues, “For the foreseeable future, they will face pressure to increase domestic production, grow employment in their home countries, reduce their dependence on risky sources, and rethink strategies of lean inventories and just-in-time replenishment, which can be crippling when material shortages arise.”
Meanwhile, Fortune counters that, during the pandemic:
“…scientists cooperated across borders to invent treatments and vaccines at a pace unprecedented in world history. Even as we hunkered down in our own countries, international Internet traffic soared; trade and capital flows are rebounding beyond our expectations. And while there have been serious manufacturing and shipping disruptions, we should pause to reflect on how surprisingly well global trade still works.”
When making key decisions, regional economic leaders must take into consideration the current state of global supply chains and the ever-present potential for change.
Ultimately, the Upstate SC Alliance’s goal is to see a 10-county Upstate SC region where business thrives, and where people can prosper through access to a diverse array of career opportunities.
“To achieve that,” said Upstate SC Alliance’s President & CEO John Lummus, “we must chart, embrace, and adapt to shifts in the global business landscape — movement of goods, economic downturns, the impacts of climate change, talent factors — and how each of these coalesce within a shifting industrial and business environment.”
Through analyzing these six trends and building our own internal plan of work from them, we seek to continue to anticipate industry needs, assist in future site location projects, and maintain the economic competitiveness of Upstate South Carolina.