Manufacturers can do a number of things to recruit workers — such as offering appropriate pay, ensuring a good work culture and working to change blue-collar stereotypes — as employee shortages continue
The labor shortage isn’t looming — it’s already here, and it’s hitting the manufacturing sector especially hard.
Labor shortages in manufacturing have “basically been an ongoing problem for 20 years,” says Stanley Chao, president of All In Consulting in Rancho Palos Verdes, California. However, he adds, because many companies had been offshoring work to China and other countries, the significance hadn’t been apparent — until recently.
Chao has conducted projects for companies hoping to start manufacturing operations in the United States. In one case, he says: “We needed 1,000 seamstresses to sew athletic wear. Based on my analysis, we could maybe hire 200 — not nearly enough.” These shortages aren’t just impacting new or expanding manufacturers — it’s impacting all of them.
In addition, filling open jobs isn’t about getting just anyone in the position, says Rodney De Iorio, a blue-collar business coach and the co-founder of De Iorio Coaching in Milwaukee. “It’s about getting the right people in there. Of course, you want to make sure the individual has the minimum hard skills and education to do the job, but you also want to make sure the candidate has the personality, soft skills, work ethic and values that match your company.”
These expectations make the task even more daunting.
Causes of the labor shortage
Much has been reported in the media lately about the presumed negative impact of expanded federal benefits on employees’ interest in returning to work or seeking employment. An argument can be made that human nature would likely cause employees who could earn more not working to decide not to work.
But it’s not just potentially misaligned incentives that are keeping some people from returning to the workplace and creating hiring challenges for manufacturers. Other issues also are at play: “Workers fearing contracting Covid-19 at work. The expanded federal benefits to the unemployed. Individuals remaining out of the labor force because of expanded responsibilities at home — e.g., child care, at-home schooling or caring for the elderly. And employees finding new opportunities in different, growing sectors,” says R. Andrew Butters, assistant professor of business economics and public policy at the Indiana University Kelley School of Business in Bloomington, Indiana. The truth, he says, “is that probably all of these are contributing.”
The results of a recent American Staffing Association survey, based on input from 2,055 U.S. adults, bears this out. Its research indicates that one overriding issue may simply be the fear of returning to the physical workplace. A majority of respondents (57%) indicated that the fear of catching Covid-19 at work or during a commute was the top barrier keeping them from wanting to return to the workplace. The next most common barrier: simply preferring to work from home, which was cited by 35% of respondents.
“Adding further complications to the scarcity of qualified talent since Covid-19 is the more general employment trend — the rise of remote work,” says Scott Plumstead, director of national search, supply chain, operations and logistics for Atrium Staffing, headquartered in New York.
“According to The Wall Street Journal and a survey conducted this month, many people would be willing to change jobs if it allows for more flexible employment,” Plumstead says. “In fact, half of workers in one survey said they would consider quitting their jobs if they couldn’t work from home.”
Most manufacturing positions, of course, require staff to be physically present. There aren’t many options available to accommodate a desire for working from home, for whatever reasons employees may have for wanting to do so.
What options and opportunities do manufacturers have to find, attract and retain the talent they need?
Potential solutions to the talent shortage can be found close to home (steps manufacturers can take to attract and retain talent) and further afield (steps the government could take, or opportunities driven through collaboration with key stakeholders).
To a certain degree, Butters says, some of the issues facing manufacturers and others in the war for talent may be ebbing. “Many schools, child care facilities and retirement communities have opened or plan to open soon,” he says. Some states already have taken steps to reinstate job search requirements for those receiving unemployment, or have deferred federal supplements to unemployment insurance. Other states that have not opted out will see federal expansions expire later this summer. And, as the vaccines continue to be rolled out, restrictions on various types of interactions are easing.
“All of these trends should lead the labor market and the broader economy to begin to settle into its new normal,” Butters suggests.
Still, there are additional steps that can and should be taken by manufacturers and others seeking to address the impacts of the current labor shortage at both the micro and macro level.
The micro level
The first consideration for manufacturers is what they can do themselves, says Ethan Karp, head of the nonprofit Manufacturing Advocacy and Growth Network in Cleveland. He points to three key areas where companies have the opportunity to take steps to address the talent shortage: wages, culture and employee referrals.
From a wage standpoint, Karp says, “if you’re not paying $15 an hour, I think you’re behind the times.” Two years ago, “most companies were thinking about how they could do that and many didn’t make the change, but now most have,” he says. That means manufacturers are likely competing against others that do offer a $15 an hour starting wage.
Karp calls this the “Amazon effect.” Amazon wages, he says, “are $15 an hour and higher — as high as in the low $20s for starting wages — to go move boxes around.” That’s what you’re competing against. “The very first thing that a company needs to look at is to truly evaluate how their wages compare and whether they need to, and can afford to, raise those frontline wages,” he says.
Butters agrees, also pointing out that “competitors may not be in the manufacturing sector but in others like logistic, warehousing or storage.” In addition to wages, he says, companies should try to be “creative with shifts and more flexible arrangements on how hours are allocated to make those individuals still on the border of the labor force engage again.”
Benefits are an important piece of the package when it comes to positioning a company as a great place to work. Non-monetary perks also can inspire job candidate interest and employee loyalty. Culture plays a critical role here.
“If you don’t have an environment that keeps people, you’re missing out on the biggest area of focus, which is keeping your own people,” Karp says. “It’s important to be critical and honestly evaluate whether you have a good company to work for and what sorts of changes might make it better.” What you see today may be decidedly different from what you may have seen a year ago.
“Especially since the pandemic, employees are hyper-aware of what they want from work,” Plumstead says. “Workplace priorities for the majority of today’s candidates are communication, modern leadership skills and freedom to balance responsibilities at work without sacrificing commitments at home.” In addition, he says, “with change management and corporate social responsibility as top business priorities in 2021, companies can also set themselves apart from the competition by incorporating these initiatives into recruitment marketing strategies.”
While hiring talent is top of mind for many manufacturers, retaining talent is just as essential to workforce success, Plumstead says. “Employees are expected to take more significant risks in their careers post-pandemic. It’s a critical time to ensure workers feel respected and valued.”
And, of course, finding sources for potential employees is often the first thing manufacturers think about when addressing a talent shortage.
From a recruitment standpoint, Butters recommends being creative and flexible. “Tapping less traditional employee and social networks to find unemployed workers will be crucial,” he says.
One source that offers great potential, Karp says, is existing employees. “One of your best channels to find people is going to be your own employees — their referrals, their friends, even their testimonials,” he says.
Despite some opportunities available to manufacturers to address the talent shortage, this isn’t simple, or short-term, work. It’s also not work that can be tackled alone. While manufacturers may not be able to drive some of these potential solutions, they can take steps to become part of the process.
The macro level
In the long term, Chao says, the manufacturing sector needs to work to become “popular again.” Young people, he says, are encouraged to pursue career paths that do not include manufacturing. Chao says he is a case in point. Educated as an electrical engineer with the hopes of going into electronics manufacturing, he says, “I was lured away to get an MBA and head to Wall Street to make millions. I was literally persuaded not to go into the manufacturing industry, a dying business.”
What will it take to begin repositioning manufacturing as a desirable career choice? Chao says:
- Universities need better manufacturing curriculum.
- Companies could consider paying for young employees to enter manufacturing trade schools.
- Federal and state governments could offer grants and scholarships for students to learn about manufacturing, quality control, logistics, etc.
Sector partnerships also represent opportunity, Karp says. These are manufacturers who come together to tackle tough issues like:
- How do we go after new populations?
- How do we get our educational institutions and all of those public workforce dollars that are going into training people working for us?
- What do we need to do to work with local organizations to make it easier to get people into manufacturing?
These types of partnerships, Karp says, “require blood, sweat and tears from a committed group.” But, he says, there’s potential for benefit, as well. “I can tell you that those committed group members get the first pickings of any program that is successful. The companies that put their energy into this will be the major benefactors first.”
Another important initiative is working to change manufacturing stereotypes, Chao says. “There’s a perception that manufacturing is a dirty and boring job.” That’s not the case. Potential employees need to better understand the opportunities that manufacturing careers can hold for them.
De Iorio agrees. “The reputation of blue-collar work in the U.S. is at an all-time low,” he says, pointing to Deloitte research indicating that less than 30% of parents said they would encourage their children to pursue a career in manufacturing. These jobs, he says, “are often considered to be dead end or to lack opportunities for financial success, when the exact opposite is true.”
But perceptions represent reality when they result in sentiment that drives away talented job candidates — a reality that will take concerted effort from many camps to reframe.
Companies can play a role here themselves, De Iorio suggests. “Companies need to work within their communities to provide examples of the opportunities in manufacturing,” he says. “This includes speaking to young students in middle and high schools, providing apprenticeship programs for young workers and offering continuing education to current employees.”
What the future holds
Some initiatives may be short-term, while others may take some time before their potential is realized.
“If recruiting high-quality employees at competitive wages continues to be difficult, I’d expect employers to also look into adjusting their business models,” Butters says. “Building plants at different locations in the United States or abroad, as well as investing in more automation are all possible,” he says. Because these types of initiatives involve much higher capital investments, he doesn’t expect to see them in the near term. Still, he says, “they’ll be more likely in the future if the reshuffling of the labor market turns out to be more permanent than many expect.”
Technology and automation also are channels that continue to advance, providing a potential vehicle for employers to minimize the need for human labor in certain settings.
“Those who have not already adopted automation for administrative and repetitive tasks or robotics for production and low-wage work in the manufacturing sector may want to consider supplementing their workforce with these tools,” Plumstead suggests, pointing out that technology shouldn’t be viewed as a replacement for people, as it often is, but as a way to expand their potential impact.
“With the help of technology, employers can offer the type of work and compensation that skilled workers are seeking, and their workforce can develop new skills, invest in strategic thinking, create more innovative processes, and advance their trade,” Plumstead says.
The United States is at a 50-year low for qualified blue-collar workers, De Iorio notes. “If things continue the way they are, the labor situation in U.S. manufacturing will continue to decline,” he says. But it’s not too late to turn the manufacturing talent shortage around.
“U.S. manufacturing could take a turn for the better if companies work to counter the industry’s current reputation,” De Iorio says. “Young workers don’t want their entire lives to be their jobs, but they also want to be able to afford to live. Manufacturing has the opportunity to be the solution to the next generation of workers.”