Anyone in HR or talent acquisition knows there’s been a labor shortage in the U.S. since 2020. The COVID-19 pandemic caused a spike in unemployment, with 30 million people out of work —1.4 million in the manufacturing industry alone. By 2022, unemployment had recovered to pre-pandemic levels in most sectors.
Despite the improvements, industries like manufacturing still need help finding and keeping skilled workers. 71% of manufacturers reported that attracting and retaining employees is their biggest challenge this year.
But what’s causing this persistent worker shortage?
To find out, we’re taking a closer look at three top trends that will impact your recruiting team in 2024:
- Increased use and rapid development of AI and automation
- An uptick in retirees leaving the workforce and the new generation of workers
- The need for new and different skills in manufacturing jobs
Keep reading to learn more about these trends and how they affect recruitment. We’ll also share a few strategies for adjusting your talent acquisition approach to stay on top of the trends and meet your hiring goals in 2024.
What’s Driving Manufacturing’s 2.1 Million-Worker Shortage
Although the pandemic isn’t the sole reason for today’s top manufacturing workforce challenge, it was certainly a catalyst. Lockdowns and business closures set off supply chain disruptions that led to a 43% decline in output and a 38% drop in hours worked — the biggest since World War II — and manufacturers were forced to lay off their employees. Some of the 1.4 million workers who lost their jobs left permanently, whether they retired early, began working in a different industry, or left the workforce for other reasons.
In the years since, manufacturing has had an impressive recovery. The industry has added nearly 800,000 jobs since 2021, and its 3% unemployment rate is the lowest in decades. According to the National Association of Manufacturers (NAM) Manufacturers’ Outlook Survey, companies’ optimism about their future is rising.
Even with positive growth, manufacturing still anticipates a long struggle with the talent shortage. Despite the addition of so many jobs, almost 550,000 are vacant, and research from Deloitte and The Manufacturing Institute indicates that that will increase. An estimated four million manufacturing employees are needed by 2030 —but without better recruitment, we can expect to be short 2.1 million workers.
Now, let’s get into the current trends impacting the labor shortage and how to tailor your recruiting strategies in response.
3 Key Workforce Trends Affecting Manufacturing in 2024
What does it mean to take a responsible approach to AI? Learn more about itand see how ClearCompany is developing our own AI products responsibly in our two-part series:
1. Artificial Intelligence (AI)
Few other industries are feeling the impact of digital transformation as deeply as manufacturers. 83% of manufacturers say that the “smart factory,” powered by technologies including AI, 5G, the Internet of Things (IoT), data analytics, and cloud computing, will transform the way products are made in five years.
AI, in particular, is having a moment as it permeates the entire world of work. 96% of manufacturers plan to increase their AI investments by 2030. That’s with good reason —robotics and predictive analytics enable streamlined processes, increased productivity, and more effective sustainability initiatives.
2. The New Generation of Workers
The manufacturing sector isn’t the first choice for the newest generation of workers. Just 14% of Gen Zers say they’d consider a career in industrial work. They expect low pay, a lack of work-life balance, and unsafe working conditions. Their disinterest has resulted in a rapidly aging workforce — about 51% of manufacturing jobs are held by employees ages 45-65 or older.
As retirements ramp up, many companies are looking for ways to retain these older workers as well as recruit the next generation.
3. The Need for New Skills
Aging workers, combined with the rapid evolution and expansion of technology in manufacturing facilities, have created the skills gaps that make hiring so difficult. With the predicted increase in the worker shortage, it could more accurately be called a skills chasm. Although many firms use said technology to fill these skills gaps, it doesn’t make up for a lack of workers. According to Kevin McCall, managing director of AI from Launch Consulting Group, “AI and robotics…have made minor contributions to filling the labor gap.”
6 Ways to Attract and Retain Manufacturing Talent
Now that you know what’s impacting the current state of the manufacturing workforce, let’s look at new ways to attract and retain talent.
1. Use Generative AI in Recruiting
Generative AI creates brand-new materials based on your prompts, and it can be a huge time-saver for manufacturing recruiters. Here are some of the hiring tasks you can streamline with generative AI:
- Creating compelling, accurate job descriptions and getting open roles posted quickly
- Engaging visitors to your career site via a chatbot that can answer questions and prompt them to apply for jobs that fit their skills
- Sourcing a large pool of diverse, qualified top talent
- Building a list of best-fit candidates to help you prioritize outreach
- Writing and sending personalized texts and emails to your candidates fast
- Composing job offer letters so you can speed up hiring and win top talent
With the need for so many new skills and the slow trickle of younger workers joining the manufacturing workforce, companies are investing in their existing workforce. Upskilling has both short- and long-term benefits for manufacturing workforce development. It helps to retain your existing employees while preparing your firm for the future of manufacturing.
Unsurprisingly, 70% of manufacturers say they’ve already begun introducing new internal training programs to upskill their workforce. And it’s working, too —75% say upskilling improves productivity, promotion opportunities, and employee morale.
3. Promote Manufacturing Careers to Younger Students
Younger workers’ disinterest is largely attributed to misconceptions about what it’s like to work in manufacturing. Many younger workers assume they’ll be working long hours doing dangerous work for little pay. On the contrary, many industrial positions are well-paid, with an average annual salary of nearly $100,000. Tech advancements are increasing safety and reducing the physical toll on workers.
Some manufacturers are partnering with middle and high schools to combat these misconceptions and recruit young workers. These outreach programs often include training opportunities, equipping students with the skills necessary for a manufacturing career early on.
4. Form Hands-On Training Partnerships
In addition to new training opportunities for younger students, your firm can open the door for adults to enter the industry with hands-on training partnerships. You can reach these workers by partnering with community colleges and vocational schools. The benefits are twofold — you’ll give students access to career options they may not have been aware of and set them up to start a job right when they graduate. Plus, educational institutions better understand which skills are in high demand and can develop courses to meet that demand.
Another option for hands-on training is apprenticeship programs. Apprenticeships have the added benefit of harnessing and passing on the knowledge of more experienced workers. They’re also a proven retention driver —91% of employees stay at the company after completing an apprenticeship.
5. Rewards for Retention
For manufacturing operations to run smoothly now and for years to come, you need engaged employees who follow safety rules, meet their goals, and are interested in learning. You also need to retain your people to avoid the six or more months it takes to train a new hire and to save costs. In manufacturing,turnover costs about 21% of an employee’s salary.
Strategies for performance management in manufacturing, including rewards and job perks, can help increase retention. Research suggests that the best approach for manufacturing firms is to have a flexible reward system. Giving employees the freedom to choose a reward they prefer is a better incentive than a one-size-fits-all approach. Explore options for rewards to find out what your people prefer.
Incentives you can try include:
- Schedule flexibility, including four-day workweeks and the ability to switch shifts
- Financial incentives like bonuses and profit-sharing
- Smaller rewards more frequently, e.g., weekly lunches when targets are met
- Paid time off
Future Outlook: Manufacturing Software for 2024 and Beyond
It’s clear that the current HR challenges in manufacturing aren’t going to disappear overnight. To recruit top talent and assemble a skilled workforce, you need the right tools — including cutting-edge talent management technology. With the right manufacturing HR software, you can find, hire, train, engage, and retain valuable talent even in a difficult labor market.
Get the tools you need to build and maintain a resilient manufacturing workforce when you choose ClearCompany Talent Management. Our full-platform solution has everything you need to stay on top of the trends and navigate the complexities of manufacturing workforce management:
- Use automated tools to quickly and easily organize candidates for the correct skills and managerial level
- Decrease your time-to-hire for hard-to-fill positions with mobile sites and referral management
- Hire and onboard employees in multiple locations with our cloud-based, paperless system
- Build repeatable, scalable processes that complement your company’s current workflows
- Use performance management to align workers’ daily tasks to company goals
- Empower every employee to do their best work and realize their full potential
Get a demo of ClearCompany Talent Management and see why we’re the HR software of choice for manufacturing companies. Sign up today.