Combining mechanical engineering, electronics, and computer science, mechatronics is categorised by a complex interplay of skills and technology. As such, this field requires a unique set of skills that only a limited pool of workers possess, making it highly susceptible to disruptions caused by workforce shortages and rising operational costs. Not to mention the industry-wide increase in production costs.
Here’s the impact of these shrinking skills and growing expenses on OEMs, and the strategies they can take to keep their mechatronics projects running smoothly.
The impact of skills shortages and rising costs in mechatronic manufacturing
The shortage of specialised talent is an increasingly critical issue in mechatronic manufacturing. According to a Deloitte and The Manufacturing Institute report, the U.S. alone could face a shortfall of 2.1 million manufacturing jobs by 2030, with advanced fields like mechatronics seeing some of the highest gaps in skills availability.
Finding engineers skilled in robotics, embedded systems, and machine learning is particularly challenging. As technology advances, the gap only widens, putting additional strain on existing workforces and potentially exacerbating the shortage cycle.
Rising costs are compounding the problem
To make matters worse, rising costs are compounding the problem. Inflation rates in recent years have led to higher costs for raw materials, logistics, and energy. For example, according to the Institute for Supply Chain Management, commodity and energy prices have spiked 25% in the last four years. At the same time, supply chain disruptions have increased shipping costs and lead times.
Pressures on talent and costs often result in project delays and compromised quality, which is a major concern for mechatronics projects that require high precision. These delays can extend development cycles, raise costs, and erode customer satisfaction. In a field where reliability is crucial, even minor quality issues can lead to recalls, increased warranty claims, and reputational damage.
4 ways to protect your mechatronic projects
Without proactive strategies to mitigate these challenges, OEMs risk reduced profitability, decreased competitive edge, and lower customer retention rates. As mechatronics projects become more integral to industries like automation, medical devices, and transportation, the need for practical solutions to these issues becomes paramount.
Here are four strategies to protect your mechatronic projects amidst falling skills availability and rising production costs.
1. Leverage technology to mitigate workforce challenges and save costs
- Automation: Automation is essential for manufacturers facing workforce challenges, as it reduces dependency on manual labour by streamlining repetitive tasks. In mechatronic projects, automation is used in testing, assembly, and data analysis, enabling consistent quality and efficient production workflows. Automated assembly lines, for instance, can operate continuously and with minimal supervision, which not only helps meet production targets but also reduces the risk of human error.
- AI and Machine Learning: AI and ML are becoming valuable tools for predictive maintenance and quality assurance in mechatronics. For example, an AI algorithm can analyse sensor data to detect subtle shifts in machine performance, signalling the need for preventive action. Additionally, ML models can identify patterns associated with quality issues, allowing operators to address root causes before they impact the final output.
- Digital Twins and Simulation: Digital twins and simulation technologies are powerful tools for virtual testing and troubleshooting that streamline production while reducing the need for on-site technical expertise. A digital twin allows engineers to test and refine processes in a risk-free environment, simulating real-world conditions before implementation. This accelerates development cycles by enabling engineers to make changes in the virtual model rather than the physical system, reducing time and cost.
2. Review your cost management strategies
Reviewing and optimising your cost strategies can help you maintain financial stability and improve project outcomes. Focusing on areas like material and process optimisation, adjusting fixed and variable costs, and building resilient supplier partnerships can help mitigate the impact of cost pressures, keeping your mechatronic projects on budget without compromising quality.
Material and process optimisation
Implementing cost-saving strategies in materials and processes is crucial for managing rising costs. Lean manufacturing, for example, minimises waste by optimising every production stage, leading to significant savings. Exploring alternative materials, such as substituting aluminium for specific steel components, can also reduce costs without sacrificing quality.
Additionally, investing in energy-efficient machinery and adopting power-saving practices can lower operational costs as energy prices rise. Together, these strategies enhance resilience in production while maintaining quality and reliability.
Fixed vs. variable costs
Assessing and strategically managing fixed and variable costs is a practical way for companies to gain more control over expenses, particularly when project demands fluctuate. Fixed costs, like facility maintenance and salaries, stay constant, while variable costs—such as materials and labour—can fluctuate with production levels.
Shifting some expenses to variable models can enhance budget flexibility. For instance, partnering with third-party logistics can turn warehousing costs variable, allowing companies to adjust expenses in real-time and remain agile in response to market changes.
Supplier partnerships
Building strong partnerships with suppliers is essential for securing reliable access to materials at favourable prices, especially during periods of volatility. Collaborating closely with suppliers can yield benefits like volume discounts and priority access during disruptions. Long-term relationships enhance alignment on quality standards and delivery expectations, reducing risks of delays or quality issues. Regular communication about market trends allows for proactive adjustments to pricing and inventory, ultimately stabilising material costs and making it easier to predict expenses.
3. Implement robust risk management
Protecting your mechatronic projects from unexpected disruptions, especially in today’s unpredictable market, requires proactive risk management. Focusing on supply chain diversification, contingency planning, and rigorous compliance and quality standards can strengthen your resilience and maintain consistent project progress.
Supply chain diversification: Diversifying suppliers and materials is key to reducing reliance on single sources and minimising vulnerability to disruptions. Companies that work with multiple suppliers gain flexibility and can switch suppliers or materials if one source faces delays, shortages, or price hikes. This approach also protects against geopolitical risks, natural disasters, or economic shifts that might impact specific suppliers or regions.
Contingency planning: Effective contingency planning in production scheduling and workforce management helps ensure minimal disruption when sudden changes occur. A well-designed plan includes alternate workflows, backup equipment, and flexible workforce arrangements that can be quickly activated. By anticipating bottlenecks and having response plans ready, you can keep projects on schedule and reduce the impact of unforeseen challenges.
Compliance and quality management: Embedding compliance and quality checks into every stage of the manufacturing process helps maintain end-to-end accountability and reduces risk. Achieving and maintaining certifications like ISO9001 ensures rigorous quality standards are met while tracking and documenting each step, which adds transparency. This commitment to quality helps avoid costly recalls and reputation damage, reinforcing trust with customers and stakeholders by consistently delivering reliable, compliant products.
4. Consider outsourcing
Outsourcing to a specialised manufacturing partner, like ESCATEC, can be a strategic solution for companies facing skills shortages, rising costs, and growing project complexity. By partnering with a trusted external manufacturer, OEMs can focus more resources on core business functions while ensuring their production process remains in capable hands.
The benefits of outsourcing are numerous:
- You gain access to a high level of technical expertise and talent without investing in extensive in-house training and recruitment.
- You can scale up or down with greater flexibility, as an external partner is often equipped to handle fluctuations in project demands effortlessly.
- A manufacturing partner with established facilities, streamlined processes, and well-managed supply chains lets you leverage economies of scale, resulting in more stable and predictable costs.
- Outsourcing reduces the need for capital investment in specialised equipment and infrastructure, allowing you to invest these resources elsewhere.
- A high-quality partner will have robust quality management practices and a commitment to compliance, demonstrated by ISO certifications like ISO9001 and ISO13485.
- Outsourced partners with established quality assurance processes mitigate the risks of recalls and product failures, protecting your brand reputation and customer satisfaction.
- A reliable partner provides strong risk management and accountability for each project. Their established quality control and improvement protocols allow them to identify and resolve potential issues early, protecting production timelines and quality standards.
Outsourcing offers predictable cost structures and lower capital expenditures, which can help OEMs strengthen their financial foundations and manage growth sustainably. Additionally, the partner's dedication to risk management ensures continuity and reliability in OEMs’ supply chains, even during industry or global disruptions, while ongoing collaboration ensures products consistently meet industry and regulatory standards.
Conclusion
While the growing skills gap and increasing production costs can challenge mechatronic project success, proactive, hands-on OEMs who embrace technology, manage their costs, and prioritise flexible risk management are well-positioned to keep their mechatronic efforts on point.
For companies looking to protect their projects even further without taking on the full operational burden, outsourcing to a dedicated, skilled partner can be a robust, flexible solution. A manufacturing partner with the right expertise and infrastructure can be invaluable for navigating workforce shortages, containing rising costs, and maintaining high standards of quality and reliability.
To learn more about how outsourcing can help secure your projects and drive growth, download our executive guide to outsourcing or reach out to discuss a potential partnership today.
