In 2020, manufacturing (like every other industry) has felt the effects of the COVID-19 pandemic. Among the many consequences of the crisis is a record increase in unemployment in countries belonging to the Organization for Economic Co-operation and Development.
But despite this rise in the number of people looking for work, skills shortages will continue to be a challenge for manufacturing firms, because there will still be gaps between the capabilities businesses need and what is available in the labor market. Businesses are struggling with a 'blue-collar drought', with roles becoming increasingly technical and demanding, but fewer people choosing to pursue education and training in sectors like manufacturing.
Several trends are increasing the scale of this skills gap. These include an aging and retiring workforce, the impact of robotization and a tight labor market.
Here are some of the biggest recruitment challenges manufacturing businesses are facing right now, and some tips on how you can overcome them.
challenges in recruiting a skilled workforce in manufacturing
1. an image problem
For many people, the perception of manufacturing is unappealing. Perhaps even more concerning are the observations from Seema Pajula, vice chairman and US Industries and Insights Leader for Deloitte, who stated prospective younger employees view manufacturing as “boring, outdated and not creative”. In a Deloitte survey, 45% of respondents cited “negative perceptions towards the manufacturing industry” as a cause for projected job vacancies. This makes uneasy reading for HR managers in the sector.
If you’re female, working in manufacturing could be even less appealing, as it is still a very male-dominated industry. A global study by the World Economic Forum showed that women make up only 20% of the manufacturing and production workforce.
The potential economic impact of this is enormous, with unfilled positions expected to create productivity losses of up to $2.5 trillion by 2028, according to Deloitte. Companies must work together with industry bodies to become more attractive to women and young people.
So how can the sector appeal to young people, who represent the future of the industry? To this younger generation, inclusivity, and environmental and social conscience are far more important than they were to previous generations. The way you present your values, company and people must appeal to this younger generation.
Apprenticeships in which young people gain skills and experience through on-the-job training and undertake local trade-based education are one method of offering young people a route into a career in manufacturing. But to recruit the most talented young people, the perception of the industry has to change for the better.
2. the impact of automation and robotization
Historically, there has always been a fear that new technology will mean fewer jobs. The reality is that new technologies often create different opportunities. A study by Deloitte in 2015 showed that over the preceding 144 years, technology had created more jobs than it had destroyed.
Another Deloitte analysis highlighted that when used in the right way, automation can achieve a positive impact on productivity, employee engagement and customer value. The study cited Amazon as an example of how a company can use automation to scale warehousing and quickly ship goods during peak periods, while reducing the amount of time needed to train employees.
The use of automation and robotization should be central to modernizing the image of the manufacturing sector. In the future, you are likely to see the types of roles you recruit for change and require different skills as technology advances.
3. aging and retiring workforce
In the U.S. nearly a quarter of the manufacturing workforce is over the age of 55, while in the UK, manufacturing is one of four industries (along with health, retail and education) that collectively account for nearly half of all 50+ workers in the economy. You are probably well aware that one of the reasons the sector is facing a shortage of workers is the high number of people who have recently retired or are approaching retirement age. Older workers should be viewed positively, with the Wall Street Journal reporting that in the eurozone, workers aged 55-74 accounted for 85% of employment growth between 2012 and 2018, according to the Organisation for Economic Cooperation and Development.
You must make the most of an aging workforce and limit the loss of expertise and knowledge when experienced workers retire. In our guide: Overcoming the Skills Shortage, you can find out how BMW managed to improve productivity by 7% by taking key steps to accommodate their aging workforce.
4. impact of political and socio-economic changes
The COVID-19 crisis is one of the biggest obstacles the manufacturing sector has had to overcome in recent memory. The pandemic has forced companies to find new ways to work so they can meet demand and stay in business, while facing unprecedented HR challenges and trying to keep their staff safe. Workforce gaps created by unavoidable layoffs and sickness absence have necessitated a new approach to recruitment, with the expanding contingent workforce proving to be a valuable source of talent for many firms.
Political changes such as Brexit are also continuing to have a significant effect on the manufacturing industry. In the UK, government data shows a growing number of EU nationals began leaving after the Brexit vote. Tighter border controls and travel restrictions created by developments like Brexit and COVID-19 could also limit opportunities to recruit from overseas.
For any HR manager, a reduced number of skilled workers can pose a challenge. When developing your recruitment strategy, it’s important to consider how you could be more innovative, particularly for contingent talent.
5. the need for manufacturers to upskill
Upskilling your workforce is essential to overcome the skills gap. Industry Week reported that 29% of manufacturing workers believe their skill set is now redundant or will be in the next couple of years, while 38% believe this will be the case in the next 4 to 5 years.
Despite this, most manufacturers are not upskilling or investing in education to assist with employee retention. In fact, a recent survey from Tooling U-SME, ‘The True Cost of Turnover’ showed that only 36% of manufacturing companies budget for employee development, yet two in five companies have an annual staff turnover of at least 20%. So what can you do to combat these challenges?
Optimizing your flexible workforce is essential. By developing a strategy to take full advantage of flexible and contingent talent, you will be taking control of the factors you can influence and putting your company in the best position for the future. With so many manufacturing workers believing their skills will be redundant in the next five years, it’s critical to overcome the skills gap.
You can learn more by reading Randstad's guide to tackling talent shortages in manufacturing.