Labor Shortages in the Manufacturing Sector

The challenges that many industries have been experiencing since 2020 are nothing new to the manufacturing industry. With baby boomers exiting the industry and Generation Z and Millennials not considering skilled manufacturing jobs, the industry has been and will continue to face labor shortages. Management must start thinking differently to mitigate this looming threat to their companies. We will provide some ideas and solutions below to consider when addressing these issues in your company.

The fact is that 22% of existing skilled manufacturing workers will be retiring by the end of 2025. This could result in as many as 2 million to 3.5 million unfilled manufacturing jobs by 2025. Competition for skilled workers is fierce and the skills gap is growing bigger each year. More than half of manufacturers say they are experiencing obstacles in finding qualified candidates. The greatest impediments to recruiting young people are negative industry perceptions, such as, dirty, hot and grueling working conditions. Also, the general thinking among young people is that manufacturing jobs are low skilled and do not pay well. The reality is many of today’s manufacturing jobs are high tech, robotic driven and are performed in clean environments while providing highly competitive pay and benefits.

So, what can human resources do to attract and retain qualified skilled employees?

The following are some recommendations we suggest to our manufacturing clients:

  • Determine minimum qualifications and communicate them in job postings along with creating job descriptions that clearly explain the qualifications needed. This will assist candidates in understanding the job expectations and will allow you to screen candidates quickly and efficiently.
  • Expand your search to include more than just manufacturing graduates from technical and vocational schools. Look for trainable candidates who can learn complex processes and equipment.
  • More people want to work into their retirement years. Think about attracting and retaining Baby Boomers. These individuals have decades of experience needed by your company. They can also assist in training your young workforce.
  • Think strategically by helping to change perceptions about the industry. Fewer than 30% of Americans would encourage their children to look at a career in manufacturing even though they believe manufacturing is vital to the economy. Studies are starting to indicate that public awareness of the industry is growing by potential candidates. The more your company can change the perception of the industry the better. Your human resource recruiters should visit local high schools, community colleges and technical schools to speak to the skilled job opportunities and competitive pay and benefits. Invite students, parents and educators to visit your manufacturing facilities to show firsthand the changes occurring in the industry and the skilled jobs available with achievable competitive income potential.
  • Create a realistic job preview video showing actual work being performed by your employees and include positive and realistic testimonials by your people. You can include these videos on your website and post to the company and employee social media sites.
  • Invest in training to help retain your skilled work force. Help your employees understand the benefits of training and cross training available to them. Consider upskilling existing lower skilled employees.
  • Provide competitive salaries and benefits are a given when talking about attracting and retaining a talented skilled labor force. But 67% of most your employees, if surveyed, would tell you that incentives that recognize good work, volunteering opportunities, leadership training and social events can give your workplace a sense of community. Most Generation X and Millennials will ask and expect today’s employers to give back to the community by being a good corporate citizen and providing a friendly and learning culture.
  • Offer a clean, state of the art working environment with climate control, nice aesthetics, comfortable break rooms and plant features that reduce physical strain. Also, incorporate robotics and automation where possible.

We believe the above will provide solutions to attracting and retaining the workforce needed to meet your current production schedules and help you achieve your future growth plans.

About the Author(s)
Michael S. Pucciarelli is a Principal in the Princeton, New Jersey office of HBK CPAs & Consultants and Regional Director of HBK Manufacturing Solutions. Mike is certified with the National Association of Certified Valuators and Analysts (NACVA) and has also earned the Certified Valuation Analyst (CVA) qualification. Mike has been assisting for more than 30 years with their accounting, auditing, tax and consulting needs. Mike is a veteran business advisor and a seasoned public speaker.
Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.