Talent, especially in the manufacturing sector, does not grow on trees. A recent survey by the British Chambers of Commerce (BCC) reports at least 78 per cent of firms in multiple sectors spanning construction, production and manufacturing, and logistics sectors are facing “significant issues” recruiting new staff.
In the UK, there are some 1.3 million unfilled jobs in the economy, and fewer people in the workforce than before the pandemic. In the US, the UKG Workforce Activity Report reveals that, post pandemic, nearly two in three manufacturers (63%) are “struggling” to fill critical labor gaps. In this blog I’ll look at the factors driving the crisis, the impact of failing to retain skills, and ways that new connected worker technology can help to reduce workforce attrition whilst improving safety and efficiency on the shopfloor.
The talent crisis is not new, and is becoming more complex…
Manufacturers have been suffering from a chronic talent crisis for some time, and there are several factors at play…
Ageing talent
The shopfloor workforce is ageing. As Baby Boomers – many of them skilled manufacturing workers — approach retirement age, there is currently simply not a sufficient influx of younger workers to replace them. We have a generational gap that has created an acute, and worrying, dearth of experienced younger talent.
The numbers illustrate the problem. According to 2022 data from the Bureau of Labor Statistics, the median age of manufacturing workers in the U.S. is 44.3 years, compared to 42.3 years for all workers. Crucially, 2023 Lightcast labor market data reveals that over 51% of manufacturing jobs are currently held by people between the ages of 45 to 65+.
The image thing
There’s no escaping the fact that in recent years manufacturing has had an image problem. Manufacturing jobs have often been stigmatized as low-skill, dirty, and physically demanding. This perception has discouraged younger generations from pursuing careers in manufacturing, leading to a lack of interest in the field. It is unsurprising, therefore, that manufacturing is facing competition from other industries. Both during and post pandemic, the rise of the tech industry and the allure and salary of jobs in fields like IT and software development have drawn talent away from the shopfloor. According to Deloitte, US manufacturing is expected to have 2.1 million unfilled jobs by 2030.
From offshored to reshored
Over the past few decades, many manufacturing jobs were offshored to countries with lower labor costs. While this may have financially benefited companies in the short term, it has led to a decline in the domestic manufacturing workforce and, essentially, the loss of skills. But now, in light of a recent reshoring movement, manufacturers face the challenge of quickly rebuilding their essential workforce, made even harder by the wider labor crisis affecting industries at large.
Digital transformation needs skills
With the adoption of automation, robotics, and other digital technologies, the skills required in modern manufacturing have evolved significantly. Many current workers don’t (yet) have the necessary experience to operate and maintain these new systems, let alone deal with the data that is being generated. According to a recent study IFS conducted with IDC, 48% of manufacturing organizations report that the lack of digital skills is a top technology challenge, which is preventing companies from advancing their digital initiatives and driving business transformation. (Source: IDC / IFS Global Future of Manufacturing Survey, November 2022, n=160)
The workforce mindset has changed
The pandemic saw working practices fundamentally change. Work from home options in other sectors opened up new expectations of flexible working which are difficult, if not impossible, to accommodate on the factory floor. To compound the problem, the current cost-of-living crisis is constraining manufacturers’ cash flow at a time when competition for top talent is pushing up wage growth to record levels.
Younger generations, in particular, tend to prioritize their needs. They expect more flexibility, a better work-life balance, but also work that is meaningful and fulfilling. As digital natives, they also have a far stronger affinity towards the usage of digital technology, including in the workplace.
The net result of this new mindset is an attrition dilemma in the manufacturing industry. Individuals facing unfavorable working conditions, the prospect of a higher salary in another company, and a lack of professional training and personal development, are far more ready to switch employers. Talent is now not only difficult to attract, but it’s also difficult to retain.
Skills retention is hurting the most
It’s pretty clear that employee churn is the biggest challenge in the war for talent. The average attrition rate across manufacturing and services industries increased sequentially to 8.27 per cent in the October-December 2022 quarter, with overall employee turnover for the manufacturing sector in 2022 estimated at 39%. This relatively high employee churn rate has several wide reaching consequences.
For example, high turnover can significantly disrupt shop floor productivity, including production schedules and workflows. What’s more, new hires may not be as efficient or experienced as departing employees, resulting in lower productivity and potential quality issues. According to the Times, productivity in the manufacturing sector, which accounts for about a tenth of the economy, has slowed from 7 per cent before the 2008 financial crisis to less than 2 per cent afterwards, and this has played a “significant role” in dragging down economy-wide productivity.
Experienced employees often possess years of valuable knowledge about the manufacturing process, equipment, and quality control. When they leave, this “institutional knowledge” can be lost, making it challenging for the organization to maintain quality standards and operational efficiency.
The recruitment and training of manufacturing employees can become costly and time-consuming. High attrition rates mean that companies must invest more resources in finding and onboarding new employees, diverting resources away from other areas that add business value.
Finally, experienced workers are often more adept at maintaining safety protocols and handling emergencies. The shop floor can be hazardous, and a high turnover of staff can increase the risk of workplace accidents and injuries.
SOURCE: Maggie Slowik. (2024,February 27). The fight for talent: why manufacturers must transform the worker experience to thrive. Ifs Blog. https://blog.ifs.com/2024/02/the-fight-for-talent-why-manufacturers-must-transform-the-worker-experience-to-thrive
