However, it’s easy to minimize the impact that pandemic-induced manufacturing disruptions had on the global economy since 2020.
There is a strong case to be made that the past few years of pandemic woes and their ongoing repercussions have had a long-term weakening influence on manufacturing and supply chains. This has created a domino effect that is impacting entire industries, and the problem starts at the top of the org chart.
It isn’t new to say that COVID blew up the supply chain. But what does that really mean?
On the surface, the explanation is pretty straightforward. Pandemic restrictions, workforce disruptions, and transporation/logistics issues meant a lot of companies found their supply chains in disarray—especially those that traced their origin to Asia.
China’s path through the pandemic, in particular, was a challenging one. From its infamous zero-COVID policy to its current ongoing struggles with ballooning government debt, housing challenges, and deflation, China has struggled in recent years. It continues to lead Asia—and the rest of the world, for that matter—through a challenging time, economically speaking, much of which started during the pandemic.
While this is the basic supply chain and manufacturing “excuse” that you often hear, the situation is more complicated if you peel back the curtain a bit. After all, if that was the only problem, shouldn’t a resurgence in demand and a lifting of COVID policies have resolved the issue?
But there’s more going on behind the scenes. One of the most alarming trends that the persistent struggles in manufacturing reveal is a severe shortage of workers and experienced management leadership.
In July of 2023, Business Insider reported that US factories were struggling to find workers despite a booming rebound in manufacturing (largely due to reshoring chip-making and other factory activities). The National Association of Manufacturers also projects a shortage of no less than 2.1 million manufacturing jobs by 2030.
The chronic shortage of labor stretches right to the top of the manufacturing world. In fact, I believe it’s here that the biggest issues stem from.
Pandemic pressure forced out a significant portion of baby boomers. According to one report, over three million Boomers retired early due to the global catastrophe. These were individuals operating in executive leadership positions at the time, and now that they are gone, there’s a skill gap that they have left in their wake.
As manufacturing has rebounded, it has exacerbated the need for talent. This need isn’t new. On the contrary, the Bureau of Labor Statistics reported in 2019 that employment numbers in the industry had been in decline for 40 years.
However, within this stable decline, there was still a natural upcycling of talent into the top tiers of organizations. As older folks retired, there was usually someone with at least enough skill to take their places. Then the pandemic hit and pushed an inordinate number of senior executives out of the game, exposing and exacerbating the problem overnight.
Now we’re seeing the stark impact of decades of downplaying manufacturing as a desirable, sought-after career destination. Countless technically-minded younger individuals haven’t gone into the field, opting for service-based alternatives instead. This has put a premium on manufacturing leadership than we’ve ever seen before, in particular in the supply chain and finance functions.
Now we’re seeing the stark impact of decades of downplaying manufacturing as a desirable, sought-after career destination.
This new war over supply chain management talent isn’t exclusive to manufacturing. It is a need that has arisen across many industries, especially in trades such as construction and engineering.
Whether it’s building or manufacturing, though, the problem is the same. Companies are left with few options except to spar over the severely limited talent pool until the industry adjusts and more talent can be trained to fill the skill gaps (or some other solution, such as automation or AI, can fill their place).
In this current environment, it is critical for organizations to thoroughly evaluate the effectiveness of their leadership team and determine how to develop a pipeline of future leaders.
Ken Nimitz is the Global Vice Chair of Finance for Stanton Chase and a Managing Partner at Stanton Chase Nashville and Atlanta. He is an accomplished retained executive search and leadership advisory professional, specializing in the industrial, manufacturing, and private equity sectors. Ken’s technical background, coupled with his operational and leadership proficiencies, gives him a unique perspective for selecting high-performing C-level executives who are well-matched to an organization’s leadership needs.
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