In spite of growing optimism in global manufacturing about revenue growth, the industry is facing a labor shortage. In their recent quarterly economic survey, the National Association of Manufacturers (NAM) predicts a shortfall of almost eight million workers by 2030, bringing with it potential revenue losses as high as $600 billion.
The primary causes of this workforce crisis are retiring baby boomers who take their skills and experience with them, not enough younger workers to replace them and a manufacturing skills gap in which many young workers lack the required science, technology, engineering and math skills needed to fill all those manufacturing jobs.
In this article, we look at some of the ways that manufacturers are trying to solve the workforce crisis.
Strategies for Addressing the Workforce Crisis
Manufacturers are well aware of the labor shortage they face and are beginning to take positive steps to address the crisis. They are:
- Introducing learning and development programs to increase skills.
- Increasing flexibility in the hiring process, especially in areas like years of experience and willingness to train promising workers with little or no experience.
- Incorporating knowledge transfer programs to allow retiring baby boomers to pass their knowledge and skills to younger workers.
- Increasing wages and offering competitive benefits and signing bonuses.
- Implementing automated technologies such as Cloud ERP to attract more young workers with digital skills.
Learning and Development Programs
One of the most effective methods of bringing more workers into manufacturing is to develop training programs in partnership with local community colleges or trade schools. Learning and development programs let manufacturers move past limited job search techniques like job fairs and automated online applicant searches to target students who already have an interest in and aptitude for manufacturing.
Some companies have set up regular tours for students interested in learning about manufacturing. Other firms have established internships and job shadowing to attract trade school students. Still others have begun to offer testing opportunities at local school libraries.
Andrew Gilbert, Director of Operations at Caretta Workspace in Lewis Center, Ohio has embraced up-front education as a way to develop the skilled manufacturing workers they need. “We partner with local trade programs and high-school shop classes to get in front of candidates before they even graduate.”
Of course, apprenticeships are very effective in training young workers in manufacturing. Bryan Mullett, CEO of Bradley Corporation in Menomonee Falls, Wisconsin says, “We teamed up with non-profit group GPS Education Partners to launch an in-house manufacturing school and apprenticeship program at its headquarters with the idea of ultimately hiring the trained students upon graduation. Twenty-five local high-school juniors and seniors attend academic and skilled trades classes at its headquarters every morning and work as paid apprentices in its plant and some other plants in the area every afternoon.”
In addition to partnering with schools, many manufacturers are creating their own in-house training programs. This is a great way to continue to develop the skills of newly hired workers no matter where they come from. Many successful companies have implemented their own training programs for any employee who wants to learn specialized skills.
This kind of investment benefits everybody: the company develops its own highly skilled workers who in turn can mentor more new workers, and employees feel an increased sense of accomplishment, pride and commitment to the company.
MC Assembly, a manufacturer based in Melbourne, Florida, has implemented its own in-house training programs. “On the first day we start new hires with a safety and quality training,” said Brian Kingston, the company’s HR director. "On-the-job training follows safety and quality training. New hires are identified on the production floor with a different colored smock and are assigned a mentor. Once the supervisor and mentor believe the employee is ready to be on their own, our quality manager will assess their skill and what they learned, and confirm the employee is ready to perform the job on their own.”
With continuing low unemployment in the US, manufacturers are losing qualified workers to other industries. To compete with more glamorous jobs in high tech and software companies, manufacturing firms are finding it necessary to become more flexible in their hiring processes.
Hiring flexibility means placing a higher priority on aptitude and potential than traditional and often arbitrary considerations like years of experience. The traditional hiring approach is simply not addressing the labor shortage in the industry.
Manufacturers are learning that it’s in their interest to hire workers with potential who can then be trained on the job, instead of always demanding that job candidates have all the required skills on day one. In fact, successful companies already know that aptitude to learn is almost as important as already possessing the required job skills. Young workers who show high aptitude for learning can prove to be great contributors to a company’s future success.
Hiring flexibility also means streamlining what can be a lengthy (and for everyone involved, often onerous) hiring process. Building material manufacturer Oldcastle in Rochester, New York agrees. According to Corey Listar, Director of Staffing Operations for the company, “Making the application process as simple as possible is very important. We evaluated our process and continue to do so in order to balance that line between simplicity and compliance and getting enough details to determine if an interview is appropriate. Also, we recently enabled the ability to apply via any device.”
Increased Wages, Benefits and Signing Bonuses
It’s clear that members of the millennial generation do not see manufacturing jobs as desirable. It’s a challenge to the manufacturing industry to change this perception. Along with being flexible in their hiring process, manufacturers have figured out that increasing wages and offering signing bonuses also helps attracts these younger workers, especially when the most talented applicants have plenty of job opportunities.
In their 2019 National Manufacturing Outlook and Insights survey of 350 manufacturing firms, Leading Edge Alliance found that 59% of respondents planned to increase spending on employee wages. In the same survey, 62% of respondents said that increasing wages and benefits was the most effective method in increasing hiring.
One manufacturing firm that agrees is Gold Medal Products in Cincinnati, Ohio. Graig Oaks, VP of Human Resources for the company says, “If we want to attract and retain the best workers, we have to continue investing in our employees with competitive pay and benefits. Gold Medal provides employees with competitive pay and an outstanding comprehensive employee benefits package.” Their benefits include medical, dental, vision and life insurance, short- and long-term disability insurance, and generous 401(k) matching and profit-sharing.”
One of the biggest drivers of the workforce crisis is the fact that baby boomers are retiring in increasing numbers. In the manufacturing industry, these workers have amassed decades of experience and skills. When they leave, they take these skills with them.
Manufacturers are starting to implement knowledge transfer programs to try to pass this wealth of knowledge from older workers to younger, less experienced workers. They wisely see this as a competitive advantage. Knowledge transfer programs can involve the creation of short-term project opportunities for retirees paired with younger workers or bringing back retirees to participate in training programs.
These programs can also be combined with other training programs. But the main point here is that successful knowledge transfer programs will help manufacturers retain the value of the most experienced employees while passing that knowledge on to younger employees.
Younger workers grew up in the digital age. They are accustomed to immediate access to information, communicating with their peers via social media, and most of all are most comfortable using digital technology like mobile devices and web-based software. They expect these technologies to be present in their jobs. If these technologies are not available in manufacturing, these young workers will seek jobs elsewhere. Older systems and manual processes in manufacturing will simply not attract young people with the skills, aptitude and preference for high-tech jobs.
The manufacturing industry itself in the process of moving from manual processes and older technologies like on-premise ERP to modern Cloud ERP, the Internet of Things (IoT) and advanced analytics. Not only has it become imperative for manufacturers to hire people with the skills to help with this transition, but it also important to have a digital strategy in place to attract these workers.
The manufacturing industry is turning more and more to automated technologies that require more workers with skills like creativity, critical thinking, design and innovation. Companies who are implementing Cloud ERP systems and other advanced technologies will find it easier to hire millennials who have those skills and want to use them on the job.
In their recent skills gap study, Deloitte and The Manufacturing Institute found that 26% of manufacturers are investing in productivity-enhancing technologies and nearly 60% said that they also plan to implement more automation over the next few years. One big reason behind this plan is to help address the workforce crisis in the industry.
The looming workforce crisis in manufacturing is a growing threat to the future of the industry. But as we have seen, smart companies are beginning to address the problem. Retiring baby boomers, lack of available young people to replace them, and a skills gap need not be the end of the story.
Training programs, both in partnership with schools and in-house, and knowledge transfer programs are helping to develop the skills needed in the industry and pass skills from older to younger workers. A more flexible hiring process as well as attractive pay and benefits packages also help to attract younger workers.
Finally, implementing modern digital technologies like Cloud ERP can not only attract young people who are comfortable working in the digital world but also help increase productivity, efficiency and drive growth in the manufacturing industry.