How to Handle the Growing Labor Shortage in Manufacturing

Manufacturing Day, October 4th, is a day to inspire the next generation of manufacturers and shine light on the skills shortage in the industry. 

Job openings in manufacturing have been growing at double-digit rates since mid-2017 and are nearing the historical peak recorded in 2001. While demand for labor increases, the skills gap in manufacturing may leave approximately 2.4 million positions unfilled between 2018 and 2028—a potential economic impact of 2.5 trillion, according to a recent Deloitte study

Why the shortage? 

Blue-collar jobs are currently the hardest to fill because more and more Americans are going to college and taking professional jobs while working-class baby boomers are retiring. So much so that nearly 27 percent of manufacturing workers are set to retire over the next 10 years, taking their specialized skills and institutional knowledge with them. What’s more, 80 percent of the workforce work in professional jobs, whereas only eight percent work in manufacturing.

Previous predictions raised concerns that new technologies, such as artificial intelligence and robots, would eliminate jobs, yet the opposite has happened with more jobs being created in order to oversee these technologies. This is partly attributed to the continued rise of e-commerce, placing strain on companies to fulfill and manufacture products to meet demand.  

Lastly, there’s a branding problem. While there is demand for skilled labor, people haven’t exactly rushed to enter blue-collar industries. This could be in part due to 1 in 3 parents stating they would encourage their children to pursue a manufacturing career, as 66 percent are worried about job security and only 50 percent feel the industry provides a good income. 

According to the National Association of Manufacturers, “the average manufacturing worker in the U.S. earned $81,289 annually, including pay and benefits, while the average worker in all nonfarm industries earned $63,830.”

So what can we do? Train for the skills of the future.

Adapting to technological advancements is nothing new. For over two centuries, the manufacturing industry has evolved tremendously: from automatic flour mills in 1785 to the industrial revolution in 1820 to the assembly line in automotive manufacturing in 1908, and so on. Today, according to Deloitte, “digital skills must marry human skills.” While 50 percent of manufacturers cited they have adopted automation, the top skills needed to with today’s technological boom are critical thinking, programming (for robots and automation), and data sciences.

Our current higher education system needs revisiting if the trend toward pushing young adults into traditional 4-year degree programs won’t wane. Just one-third of all jobs in the U.S. requiring a bachelor’s degree or greater, which means higher-ed needs to start developing a curriculum focused on developing talent for manufacturing, supply chain, and blue-collar jobs.

Early investments in talent pay dividends. 

The manufacturing industry was an early-adapter of apprenticeship and training programs, similar to how Workforce Opportunity Services manages the STEP (Service to Employment Program) program for United Rentals. The model requires companies to pay upfront for their employees’ job-related education and reap the benefits of developing a workforce: equipping its employees with the skills they need to positively impact the business on day one, while also reducing the risk of an on-the-job injury

According to Jim Nelson, vice president of external affairs at the Illinois Manufacturers’ Association, “Every job should have a pathway to a bachelor’s degree. But not every job starts there.” Learning and development don’t need to stop at the apprentice stage: companies offering tuition reimbursement for continuing education and technical skill development enables professional growth opportunities and could be a powerful retention tool. This opens entry-level positions for new folks entering the workforce or industry while creating opportunities for more senior talent to rise through the ranks.

It’s all in the benefits. 

Employers need to do more to entice workers to join the blue-collar labor market, and given current perceptions, that means sweetening the deal. According to Gad Levanon, The Conference Board’s chief economist for North America, “Companies looking to attract enough blue-collar workers will have to continue increasing wages, and as a result, possibly experience diminished profits.”

And since manufacturing is now competing for skilled tech talent, that means competing with the likes of high-tech companies, like Google and Facebook. Often these companies offer a solid financial package, flexible schedule, and generous vacation and sick time. Recruits are often enticed with stock purchase opportunities, free food, and even massages! While some manufacturers may offer such perks, few advertise that they do, which prevents their company from standing out among the competition.