The Great Employee Shortage

Help Wanted Sign | Labor Shortage | Rea CPA

Over the last few months, I’ve talked to manufacturing companies about the struggles they face within their field, and above all, one of the biggest threats across the board: a lack of talented workers. The labor shortage nationwide has certainly affected business owner’s ability to seek and retain talent, but for business owners in the manufacturing sector the struggle to find and retain talent is especially dire. As the economy fights to recover from the COVID-19 pandemic, many manufacturing companies are facing concerns about how they will fill vacant job roles in order to meet production demands.

Why the Decline In Talented Workers?

Manufacturers are facing a battle on two fronts: not just the struggle of talent acquisition and retention, but a market that is quickly turning to robots and automation. Even before the pandemic, manufacturers were facing an ongoing labor shortage. Even back in 2018, Deloitte estimated that by 2028, 2.4 million positions would go unfilled in the manufacturing sector, costing companies more than $2.5 trillion.

An aging population is also a problem for the manufacturing industry. A recent report from the U.S. Bureau of Labor and Statistics found the aging workforce is retiring faster than the positions can be refilled. The population of younger Americans is significantly smaller than the population of older workers, and more motivated than previous generations to negotiate with employers for better terms of employment.

So, What’s the Solution To Fill Vacant Positions?

As automation technology continues to expand, and the manufacturing labor shortage continues to tighten its grip on companies, automation can be an appealing option. The World Economic Forum estimates that just by next year, 42% of the time spent on manufacturing tasks will be automated using robots. While many have been hesitant to accept automation in the workforce, the sweeping implementation of automation in manufacturing can actually help companies and workers. The use of automation in three key industries including manufacturing will contribute $15.7 trillion to the global economy by 2030, according to a PWC study. So, what are manufacturers to do?

First, think about your business strategy, and accept that the labor shortage in manufacturing isn’t going away any time soon.

  • Consider automation strategies. Utilizing automation in your business can save you time and money and alleviate some labor shortage concerns. Consider what can be automated and invest in it as a safeguard to your bottom line.
  • Understand how the company and the industry affect the local and regional population and talk to various groups of people about issues and concerns they may have, as well as the many benefits manufacturing companies provide.
  • Provide training and career development programs to young employees entering the industry and develop a map for their long-term success within the company.
  • Abandon high-stress deadlines in lieu of better employee engagement practices. This will result in an increase in short- and long-term productivity as well as greater employee commitment to the company.
  • Pay closer attention to wage distribution and how the manufacturing company stacks up against other industries. Sometimes, it might feel like the decrease in skilled workers is strictly a result of limited workers, though it is more likely that workers are less inclined to take a manufacturing job because the wages offered are as competitive as in other industries.

As the current workforce retires and labor shortages increase on-net, getting ahead of trends in the manufacturing industry is key. Any planning that can be done now will only solidify the manufacturing industry’s ability to fill positions in the long-term. If you’re a manufacturer who is currently facing staffing and talent issues and you want more information about how to tackle this issue, contact Rea & Associates today to talk with one of our talented manufacturing experts.

By: Ben Froese, CPA (New Philadephia office)