NJ Manufacturers Bounce Back

On Oct 10, 2024

By: Anthony Vecchione, Contributing Writer

Regulatory burdens make it hard to do business in the Garden State, but New Jersey manufacturers have taken steps to address barriers, while they remain optimistic about the future in a post-COVID environment.

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New Jersey manufacturers learned valuable lessons associated with the supply chain disruptions and other challenges connected with COVID-19. For starters, developing a disaster recovery program and continuity plan with partners is essential. According to Peter Connolly, center director and CEO of the New Jersey Manufacturing Extension Program (NJMEP), the best time to prepare for these challenges is during non-crisis periods to ensure robustness and resilience.

Supply Chain Resilience

When it comes to building a robust supply chain, some New Jersey manufacturers contend that policy makers both on the state and federal level have to make things easier for manufacturers to do business.

“The regulatory burdens are really overwhelming, and companies want to comply, but there are times when the regulatory burdens don’t make sense,” says Dennis Hart, executive director, Chemistry Council of New Jersey.

Hart points out that there has to be a need on the state level to meet with companies and find out what are the barriers to expanding manufacturing.

Meanwhile, to build robust supply chains amidst global disruptions, industry experts point out that businesses need to start with transparency. 

“Manufacturers often lose track of their supply chain after a few tiers,” says NJMEP’s Connolly. “Without a clear understanding of where raw materials and critical components come from, businesses cannot build any kind of resiliency into their supply chain.”

Connolly says that relying on a single supplier for critical materials, components, or services sets a business up for disaster. “Manufacturers must have backup suppliers that have been tested and verified to withstand global disruptions.”

Regulatory Challenges

The high cost of electricity is just one example of why companies may be reluctant to do business in the Garden State.

“Right now, our manufacturers pay on average 50% more for electricity than not only their competitors, but other sister companies in other states and other countries, and it is hard to get capital from headquarters to expand a New Jersy facility when it costs so much for electricity,” says CCNJ’s Hart.

Hart places part of the blame on the fact that there is no Department of Commerce in New Jersey, saying, “There needs to be a state agency to review the impact and costs and necessity of new regulations.”

Hart acknowledges that Choose New Jersey and the New Jersey Economic Development Authority do a great job of trying to bring new companies into the state, but once you are here there is no place for existing companies to go to.

When discussing changing regulations, the Cybersecurity Maturity Model Certification (CMMC) comes to mind, Connolly says. This update is causing significant concerns, especially for manufacturers in the defense industrial base who must comply to maintain high-value contracts, Connolly asserts.

He maintains that smaller manufacturers are struggling to comply since it is not a cheap process. However, working with local manufacturing extension partners like NJMEP or any local MEP – since there’s one in every state – will make that task much more palatable. 

Reshoring Initiatives

When considering supply chain resiliency, having a supplier network closer to home is always easier to monitor and strengthen. 

Connolly suggests that when a manufacturer is on the same continent as its critical business partners, it is much easier to manage or anticipate disruptions compared to overseas partners.

“Additionally, the funding support from the CHIPS Act is playing a major role in strengthening semiconductor manufacturing here in the states,” Connolly says.

While it can sometimes be more expensive to produce a product locally, Connolly contends that when you consider logistics costs, the ability to maintain and oversee quality, and the speed of doing business within similar time zones, domestic manufacturing becomes much more cost-effective. 

“This holistic view of costs is prompting many businesses to reconsider and bring their manufacturing operations back to domestic markets,” Connolly says.

Workforce Development

New Jersey does a good job when it comes to workforce development, however, some experts believe that a lot more can be done in order to keep highly educated students here in the state. 

“We, as a state, spend a lot of money on education and the kids go to college out of state and they don’t come back,” Hart says. “The county colleges are very important to manufacturing. We need the county colleges to produce operators for the chemical industry, and line supervisors in the pharma industry.

“It is difficult for our chemical companies to attract senior operator positions because the cost of living is so high here,” he continues.

An incentive program like a property tax break would be one way to lure people back to the state, Hart says.

NJMEP, which specializes in workforce development for New Jersey, has general training and consulting services, which are affordable and cover nearly every aspect of modern manufacturing.

It also has two programs that address the workforce issue directly.

The NJ Defense Manufacturing Community Consortium (NJDMCC) is a two-part program. The first part focuses on assembling a group of manufacturing businesses that want to break into the Department of Defense supply chain. These manufacturers are also interested in hiring veterans. Currently, more than 100 manufacturing businesses are part of this consortium.

The second part of the NJDMCC aims to alleviate workforce challenges by training veterans and soon-to-be veterans, providing them with nationally recognized credentials at no cost. Training includes welding certifications, CNC training, basic assembly, quality control, logistics, supply chain management, safety, and OSHA certifications, among others. 

Additionally, NJMEP, the New Jersey Business & Industry Association, and the state’s community colleges are in the midst of a New Jersey Manufacturing Skills Initiative in which 250 participants are being trained for manufacturing jobs.

The Future

Despite obstacles and challenges, industry experts believe that the future of manufacturing in New Jersey remains strong. 

“I think we can have a very bright future,” Hart says. “It is going to take the current administration and future administrations to sit down with manufacturers and recognize that manufacturing builds the middle class in this state. It builds wealth and it adds to local economies.”

To access more business news, visit NJB News Now.

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