Global and regional economies alike are facing a plethora of economic challenges. Some of these are inherently negative, such as inflation and the persistent threat of a looming recession.
Others are not necessarily bad but still require pivots and adjustments. Supply chains, for instance, are restructuring after the pandemic. New technologies like ChatGPT are challenging the way we go about our daily work.
Despite high inflation and even higher interest rates, the labor market remains tight as well, with workers being in high demand. This challenge has confounded analysts and left employers, including those in manufacturing, scrambling to fill employment gaps.
For many manufacturers, the solution to this labor shortage isn’t about searching for new talent, but rather improving retention and skill sets for existing workers.
Two years ago, Deloitte and The Manufacturing Institute released projections estimating that the growing manufacturing skills gap could result in as many as 2.1 million unfilled jobs by 2030. The study added that of the 1.4 million jobs lost during the pandemic, the industry had only recovered 63% a year later.
The remaining half a million vacancies set back the industry’s labor force growth by a decade or more. What does this look like on paper? It could equate to a potential missed opportunity cost of $1 trillion in 2030 alone.
The crisis can’t be entirely blamed on the pandemic, either. There are multiple issues at the root of the problem. The mass retirement of Baby Boomers is shifting demographics. Many workers are re-evaluating their priorities as well. The manufacturing industry has also struggled with stigmas and misconceptions regarding its viability as a career path.
This has led not just to a lack of workers, but a failure to find enough skilled workers. There are many potential solutions to this problem. Using technology is one option, for instance. Sourcing temporary contracted workers is another.
For many manufacturers, though, the short-term solution is already in-house. They need to hold on to the workforce that they already have.
The solution to the labor shortage begins with stemming the bleeding. Most companies hemorrhaged workers in the early days of the pandemic.
Now that the worst of that event is behind us, manufacturers are investing in retaining their current workforce. By keeping employees’ skill sets up-to-date, manufacturers ensure that their workforces remain effective and loyal as they seek to build a solid foundation for the future.
Bosch is one example of this. The company has pledged to invest a billion euros in the next half-decade specifically on reskilling workers. This retraining will focus on cutting-edge technologies, such as EVs, AI, and Industry 4.0.
BMW is another manufacturer pivoting hard into the upskilling and reskilling gospel. In 2021, the car manufacturer announced the construction of a 68,000-square-foot training center in South Carolina. A year later, the $20 million facility was already open and ready for business.
Compensation is another important factor here. The Bureau of Labor Statistics reports that manufacturing compensation costs increased by 4.2% in the twelve months preceding March 2023. In February of that year, Toyota and Honda announced the biggest pay raise for their workers in decades. Everywhere you look, manufacturers are investing in retaining their current workforce through reskilling and increasing their compensation.
So, what does all of this mean for the C-suite? How do these dramatic shifts and the long-term employment perspective in the manufacturing industry impact how things are done at the top of the organizational chart?
The trickle-up effect of a manufacturing shortage is a factor that impacts multiple positions across the C-suite. CFOs, for instance, must remain in the loop to ensure that the increased cost is viable. COOs and CHROs are other prime examples. Companies should recruit and empower HR executives who can effectively execute upskilling programs.
“The trickle-up aspect of a manufacturing shortage is a factor that impacts multiple positions across the C-suite.”
At Stanton Chase, we’re aware of the stress and strain that the employee crisis is putting on manufacturers. We have worked with many clients within the industry to help them build leadership teams with the vision and resilience to address these ongoing concerns.
If your company is facing an employment crisis on the warehouse floor, it’s important to take action now. This starts with ensuring that you have the best executives in place, both now and in the future, to help your company remain a viable and superior option for employees. With the right leadership, you can effectively boost retention, reskill workers, and attract fresh talent as it becomes available in the future.
Rick Steel has over 40 years of experience in corporate human resources and executive search. He has extensive search experience in the recruitment of senior level to C-Suite executives across a wide range of industries, including manufacturing, retail, food, consumer products, and high technology. His clients have ranged from start-up ventures to Fortune 100 companies, with a special emphasis on the functional areas of marketing, sales, human resources, manufacturing, and general management. In addition, Rick is certified in Hogan’s three core personality-based assessments.
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