9 Things You Need to Know About the Manufacturing Skills Shortage
According to a 2018 study by the Manufacturing Institute and Deloitte, by 2028, there will be more than 2 million unfilled manufacturing positions, a looming crisis commonly referred to as the “manufacturing skills gap”.
Outdated stereotypes surrounding the manufacturing industry are partly to blame, say experts. In addition, rapid technological innovations and resultant changes in the sector have culminated in an ever-increasing gap between the skills of current manufacturing workforces and those needed by employers. If this deficit is not addressed, industry experts warn we could start to see supply shortages, cost increases, and chain breakdowns.
Here are nine key facts about the worker shortage.
1. Since 1980, the manufacturing labor force has shrunk by 7.5 million workers
Despite the fact that today’s manufacturing output is more than 5% greater than in 2000, with the sector experiencing steady growth for decades, there continue to be fewer workers available.
As baby boomers exited the workforce, insufficient numbers of recruits entered the industry to fill the gaps. Retiring workers were often skilled, with decades of experience under their belts. It is more challenging for employers to find replacements with a similar level of expertise and knowledge.
2. Fewer young adults are pursuing manufacturing careers
For decades, the sector has received negative press, with many parents steering their children toward white-collar roles instead. Although many individuals associate factories with the industrial grind of the past, in reality, advancements have transformed the industry, with the introduction of automation, robotics, and other groundbreaking technologies. Today, technically minded, forward thinking, innovative operators, engineers, and technicians can flourish in this sector.
3. In the US each year, 600,000 manufacturing jobs go unfilled
The situation is similar in Europe, with one Financial Times article reporting that CEOs of some of Europe’s largest manufacturing companies had warned of a deficit of 500,000 engineers by 2025.
4. The skills gap costs manufacturers around 11% of annual earnings
Most companies spend more than $800,000 each year on recruitment fees, with the skills gap reducing talent pools significantly. Employers increasingly struggle to fill open roles due to significant shortages of qualified candidates. With workplaces evolving in response to technological innovations, employers are finding it more difficult to find applicants with the background experience needed to fill changing roles.
5. In the US, just 5% of college degrees are in technology and engineering
Though more qualified workers are desperately needed, only a small number of postsecondary students prepare for manufacturing work.
Post-boomer generations are smaller, reducing the talent pool. Unfortunately, many companies have failed to adapt infrastructures and policies to meet the evolving needs of a new generation of workers. For example, benefits packages may not include childcare options, or sufficient family leave time
6. 70% of employers pay increased overtime costs due to skill shortages
To make up for the deficit in skilled workers, companies have to ask existing staff to work longer hours, with some workers regularly putting in a 60-hour week. These costs not only eat into profits, but cause strain on both sides. According to a survey by the Wall Street Journal, in many cases, even contingent workers are asked to work overtime.
7. 49% of UK employers struggle to fill blue-collar roles
According to workforce management software company Quinyx, almost half of employers experience difficulties with recruitment and retention of blue-collar workers. Produced in partnership with Development Economics and Censuswide, the report suggested businesses with a workforce of more than 250 were more likely to face challenges compared to smaller organizations. Seventeen percent of employers cited a lack of flexibility within the workplace as a deciding factor for many workers who quit their jobs.
8. Blue-collar workers may be in short supply, but their prospects are bright
Blue-collar roles are not disappearing, contrary to popular belief. In reality, there are serious labor shortages in manufacturing, despite the fact that the industry continues to demonstrate steady growth.
9. White-collar posts are easier to fill in the United States today
According to a report from the Conference Board, it is easier to recruit white-collar staff than blue-collar workers in America today, reversing a trend in the US jobs market that goes back decades.
Blue-collar labor shortages are the result of converging educational, demographic, and economic trends, the report states. As the Conference Board’s Chief Economist of North America, Gad Levanon, indicates, companies struggling to recruit sufficient numbers of blue-collar workers are forced to increase wages, culminating in a reduction of profits.
Conversely, he points out the picture is somewhat rosier for blue-collar workers themselves, making them much more likely to secure a job they are satisfied with, and providing the added benefit of rapid wage growth.
