27 January 2025
The manufacturing sector has always been the backbone of economic growth, producing the goods we rely on and contributing significantly to employment worldwide. However, in recent years, it has faced mounting challenges due to labour and skills shortages. These shortages are not just temporary setbacks; they are shaping the future of manufacturing and could have long-lasting effects on productivity and innovation. In this article, we will explore the causes of these shortages, their impact on the industry, and the steps that can be taken to mitigate them.
The labour and skills shortages in manufacturing are not isolated issues but multifaceted with broader social, economic, and technological changes. Here are the key factors at play:
One of the most significant contributors to the labour shortage in manufacturing is the aging workforce. Many workers in this sector are nearing retirement, and there aren’t enough younger workers entering the field to replace them. Nearly 25% of skilled manufacturing workers are over the age of 55, and with few younger individuals pursuing manufacturing careers, the sector faces a potential mass loss of experience.
While the demand for manufacturing jobs remains strong, the skills required to fill these roles have evolved significantly. Modern manufacturing in increasingly relying on advanced technologies like robotics, automation and AI, which require specialised technical knowledge. Unfortunately, many job seekers lack the necessary skills to operate and maintain these new systems. This has made it difficult for manufacturers to find workers who are adequately prepared for the demands of the job.
Historically, there has been a societal preference for white-collar jobs, and a perception that manufacturing jobs are less prestigious or rewarding. This cultural stigma has made it harder for the manufacturing sector to attract young talent. The misconception that these jobs are low-skilled or dangerous is further compounded by a lack of understanding about how the sector has evolved in the digital age.
Trade tensions, political uncertainty, and shifting global supply chains are all contributing factors that make manufacturing a more challenging environment. With frequent supply chain disruptions and fluctuating demand, manufacturers are under pressure to adapt quickly. The unpredictability of the global economy also makes it harder to plan for labour needs, further complicating efforts to attract and retain skilled workers.
The pandemic exacerbated existing labour shortages. In the wake of lockdowns and disruptions, many workers left the workforce or chose to retire early. Additionally, travel restrictions and health concerns prevented the flow of skilled labour, further straining the market. In 2022 in the US, more than 50 million workers quit their jobs, following the 47.8 million who did so in 2021. In 2023, this trend gradually subsided, with 30.5 million workers resigning as of August.
The pandemic also accelerated the adoption of automation, which in some cases has exacerbated the need for new types of skills while simultaneously displacing workers who have yet to adapt.
The combined effect of labour and skills shortages is being felt across the manufacturing sector in several ways:
Without a sufficient workforce to meet demand, many manufacturers are experiencing production delays and bottlenecks. This reduces their overall productivity and efficiency, making it harder to meet deadlines, satisfy customer orders, and maintain profitability. In some cases, companies are being forced to scale back operations or even close plants temporarily due to insufficient labour.
As companies compete for a limited pool of skilled workers, wages for labour are rising. While this may seem like a positive development for workers, it places significant strain on manufacturers, especially small and medium-sized enterprises (SMEs) that may not have the resources to compete with larger corporations offering higher salaries and more benefits. This can lead to increased production costs, which may be passed on to consumers, raising prices in the broader economy.
A lack of skilled workers doesn’t just affect manufacturers directly, it also has a ripple effect across the entire supply chain. Suppliers of raw materials, logistics providers, and subcontractors are all facing similar challenges, leading to delays, increased costs, and potential disruptions that affect the timeliness of deliveries. With a fragmented and overstretched workforce, the reliability of the entire supply chain becomes more unpredictable.
Manufacturing is becoming increasingly reliant on innovation and the integration of cutting-edge technologies like automation and the Internet of Things (IoT). However, without a skilled workforce, companies struggle to implement and maintain these technologies. As a result, manufacturers who are unable to keep pace with technological advancements risk falling behind competitors, both locally and globally.
With fewer experienced workers available, the remaining employees are often overburdened and stretched thin. This can lead to burnout, increased stress, and higher risks of workplace accidents. Moreover, the lack of experienced mentors and trainers for new workers means that safety protocols may be compromised, further jeopardising the health and safety of the workforce.
While the challenges are significant, there are several strategies being undertaken to address labour and skills shortages in manufacturing.
Attracting a more diverse workforce can help alleviate some of the labour shortages. By promoting inclusive hiring practices and creating environments that are welcoming to individuals from various backgrounds, manufacturers can expand their talent pool. Programs aimed at encouraging women, minorities, and younger workers to enter the manufacturing sector are gaining momentum.
To attract younger workers, manufacturers are working to change the narrative surrounding blue-collar jobs. By showcasing the potential for career growth, high-tech innovation, and job stability in the sector, companies hope to position manufacturing as a viable, desirable career path. This includes promoting apprenticeships, career advancement opportunities, and offering better work-life balance and benefits to employees.
Many manufacturers are partnering with educational institutions, technical schools, and vocational training programs to bridge the skills gap. By offering apprenticeships, internships, and hands-on training, manufacturers are helping to cultivate a new generation of skilled workers. In some cases, manufacturers are also providing internal training programs to upskill their current workforce.
When staff are improperly trained, they can make mistakes, such as when operating machinery or installing parts. This then results in expensive corrections having to be made.
Investing in employee training ensures that workplace procedures are followed correctly, and knowledge gaps are reduced. By using an innovative software solution like invisu, employees can access interactive learning and testing with walkarounds of the working environment that relay precise and correct information. This training improves employee engagement and morale. It also enables specialist knowledge to be shared with the next generation of skilled workers which is especially useful with an aging workforce.
Manufacturers are increasingly adopting digital platforms and advanced technologies that enable remote work, flexible hours, and virtual collaboration. While not all manufacturing tasks can be done remotely, the administrative, planning, and design components of the sector are being transformed, making it easier to attract workers who may prefer non-traditional work arrangements.
To compensate for the lack of human labour, many manufacturers are turning to automation and robotics. While this can reduce the number of employees needed for certain tasks, it also requires a highly skilled workforce to design, implement, and maintain these systems.
The labour and skills shortages currently plaguing the manufacturing sector are undeniably challenging, but they also offer an opportunity to rethink how the industry operates. By investing in education, embracing new technologies, and reshaping perceptions of the sector, manufacturers can navigate these obstacles and emerge stronger. With the right strategies in place, the manufacturing sector can continue to thrive, ensuring that it remains a key driver of economic growth and innovation for years to come.
Invisu is currently assisting manufacturing companies across the UK and globally to manage their entire lifecycle of equipment from assembly through to decommissioning, whilst simultaneously providing advice and guidance on cost savings that can be made company wide.
The invisu software ensures equipment is correctly and consistently maintained by helping to prevent unplanned downtime before it occurs and provide rapid intervention at the point of need upon the occurrence of production stoppages. Uniquely, invisu also assists with sharing best practice across the workforce and transferring skills and valuable knowledge between employees.
If your company is looking to cut unnecessary costs and increase profits, please get in touch. Our team can visit your site on a consultancy basis to evaluate where issues are occurring, where improvements can be made, and advise on the best solutions available to keep your facility running at maximum capacity.
Sources: US Chamber of Commerce