The recently released 2024 Deloitte and MI Talent Study revealed a significant gap between the American manufacturing sector’s project growth capacity and the available workforce. Not only is the industry broadly dealing with a skills gap, but there simply aren’t enough applicants for the job creation under way.
That thesis is underscored throughout the report via three prevailing trends:
- Increased Need for Workers: As the industry grows, there is a demand for a wide range of workers, from entry-level associates to skilled production workers and engineers.
- Changing Skill Requirements: Manufacturing now requires a mix of technical manufacturing skills, digital skills, and soft skills.
- Shortage of Applicants: There aren’t enough candidates applying for both skilled and unskilled positions, making it essential for manufacturers to retain their current employees.
Whatever your perspective on the broader health of manufacturing in the U.S., hiring is a major issue. From the top of the C-suite on down, this pressure is felt in businesses large and small. Over 65% of respondents in the National Association of Manufacturers’ (NAM) Q1 2024 outlook survey cited attracting and retaining talent as their biggest business challenge.
Workforce issues have been a top concern for manufacturers since late 2017. Job openings soared, but the number of available workers began to dwindle. Factors like a declining population growth rate, more retirements, and lower labor force participation contribute to this problem. Those factors are, of course, compounding as time goes on.
Quit rates have recently improved, but employee turnover broadly remains high. Consider the simple fact that the workforce is changing, much as the rest of American society changes. This labor gap is partly due to increased caretaking responsibilities and different expectations from younger workers like millennials and Gen Z.
The ongoing applicant shortage could limit manufacturers’ ability to benefit fully from recent investments. Businesses must work harder to attract qualified applicants, and that’s just the start of the challenge.
The industry may need about 3.8 million new employees between 2024 and 2033, according to the report, with up to half of these jobs potentially remaining unfilled if the skills and applicant gaps aren’t addressed.
Let’s get into it.
Root Causes of Workforce Challenges
Demographic Shifts
Several demographic factors contribute to the workforce challenges in manufacturing. A declining population growth rate and increasing retirements reduce the labor force participation rate. Additionally, the shift in employee expectations, particularly among millennials and Gen Z, who value flexibility and work-life balance, presents challenges for traditional manufacturing roles.
Those traditional manufacturing roles, often characterized by rigid schedules and repetitive tasks, are less appealing to these younger workers. This shift in expectations forces manufacturers to rethink job structures and workplace policies to attract and retain young talent.
Economic Factors
Currently, the labor market is exceptionally tight, meaning there are more job openings than unemployed individuals.
This imbalance creates stiff competition for workers across all sectors, including manufacturing. Companies must offer competitive wages, benefits, and working conditions to attract candidates, which can strain financial resources, particularly for smaller manufacturers.
Despite some improvement in quit rates approaching pre-pandemic levels, turnover remains high in the manufacturing sector. This high turnover can be attributed to various factors, including job dissatisfaction, better opportunities in other sectors, and the demanding nature of manufacturing work. High turnover rates lead to increased recruitment and training costs, and they disrupt production schedules.
Caregiving Responsibilities
Increased caregiving responsibilities, which have become more prominent since the pandemic, impact the availability of working-age individuals, particularly women, to participate in the labor force. This further strains the supply of potential candidates for manufacturing roles.
To address these challenges, manufacturers may need to consider more flexible work arrangements where possible, such as flexible shift patterns, part-time roles, or job sharing. Providing on-site childcare or eldercare support could also help alleviate some of the caregiving burdens and make manufacturing jobs more attractive to those with caregiving responsibilities. (More on this below.)
Strategies for Addressing Workforce Challenges
Enhancing Recruitment Efforts
As younger people age into the workforce, manufacturing businesses must tur their recruitment efforts toward those relevant trends mentioned earlier. Use social media and digital job boards, for starters, to reach a broader audience. Highlight the modern, high-tech aspects of manufacturing to attract younger candidates. A sound content marketing strategy can help your business reel in interested candidates with the right skills and mindset for the job.
Collaborate with schools, colleges, and vocational training centers to create a pipeline of skilled workers. Offer internships, apprenticeships, and co-op programs to provide students with hands-on experience.
Upskilling and Reskilling Programs
That skills gap isn’t going away without a proactive effort from the existing business community. Consider developing a comprehensive suite of training programs to upskill current employees. Focus on both technical skills and digital literacy to prepare workers for advanced manufacturing roles.
Encourage a culture of continuous improvement and lifelong learning. Provide access to online courses, workshops, and certification programs to help employees stay updated with industry trends.
Filter this attitude throughout the upper levels of management, and make sure to keep these efforts in motion even as that skills gap shrinks.
Improving Retention Strategies
Foster an inclusive and supportive work environment: This is a tentpole demand from younger workers. Recognize and reward employee contributions, and provide opportunities for career advancement.
Where possible, offer flexible work schedules to accommodate employees’ personal needs. This can help attract and retain workers who require a better work-life balance.
Remember: Retention is the flip side of recruitment. These broader economic trends shaping the manufacturing sector right now will not necessarily go away, so the better your retention, the stronger your business.
Leveraging Technology for Efficiency
And speaking of trends that won’t go away: The implementation of cutting-edge communication and business technologies should be top of mind. How are your teams incorporating new tools to get the job done more efficiently (and attract the right people to the job in the first place)? Use automation and AI to streamline production processes. This can help offset labor shortages by improving efficiency and reducing the dependency on manual labor.
Ensure robust cybersecurity protocols to protect the digital infrastructure and data integrity, thereby building trust in digital transformation initiatives.
Conclusion
The manufacturing sector’s growth presents both opportunities and challenges.
By addressing the skills and applicant gaps through targeted recruitment, comprehensive training, and improved retention strategies, manufacturers can build a resilient and capable workforce.
Adapting to the evolving labor market dynamics and leveraging technology will be key to sustaining growth and maintaining competitiveness in the global market. As the industry continues to evolve, proactive measures to attract, retain, and develop talent will be essential for long-term success.