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Addressing the manufacturing labor shortage

Julie Whitney

Being a long-time business partner in the manufacturing community, I’m more than just an advocate for manufacturing. I am also a beneficiary. Manufacturing feeds my family. In fact, I’ve benefitted from manufacturing my entire life. My father had a successful 50 year career in manufacturing. My father-in-law owned a job shop that my husband grew up in. So, of course, my husband is also a machinist and has been in a shop as long as he can remember. They even used to let me work in the shop from time to time. I’m no stranger to deburring parts! I’ve had the great privilege to get to support manufacturers throughout my 20 years career in banking. What I love about my job is the opportunity to write success stories with my customers. In fact, an all-time favorite customer, who is also a cherished mentor, refers to these stories as books. He jokes about how “we’ve written many books” together over the years! To be able to work side-by-side with them and help pave the way financially for them to accomplish their goals is extremely rewarding to me. So, to say I support manufacturing is an understatement. I live manufacturing! And right now, manufacturers are in the midst of a challenge. A lack of skilled talent trained to meet the demands of current manufacturing job requirements looms large. And it’s keeping my manufacturing friends up at night.

Labor Shortage & Impact on Growth

When I speak with manufacturers, their predominant worry is the growing skills gap, and rightly so. According to a recent report by the Manufacturing Institute and Deloitte, 80 percent of manufacturers reported a moderate or serious shortage of qualified applicants for skilled and highly-skilled production positions. The number of unfilled jobs in the manufacturing sector is estimated to increase in the coming years.

To put this into perspective, Deloitte expects 4.8 million new manufacturing jobs to be created in the next decade but more than half will remain unfilled because of skills shortage. This lack of skilled talent could cost the industry $454 billion in manufacturing GDP by 2028. With manufacturers unable to maintain or increase production levels to satisfy customer demands due to unfilled manufacturing jobs, this unprecedented workforce shortage is seen as the main impediment to a company’s future growth.

This shortage is expected to worsen with baby boomers retiring in the coming years. Their current labor participation rate is predicted to fall from 80% to below 40% by 2022. And the manufacturing sector will be heavily hit by this reduced labor participation as an estimated 2.7 million skilled manufacturing workers will be retiring over the next decade.

Thinking Outside the Box

Manufacturers are getting involved in workforce development in new and unique ways. They are partnering with high schools and middle schools to encourage kids to pursue tech trades, and developing a pipeline of skilled talent ready to take on manufacturing jobs. Others have turned to developing in-house courses, on-the-job training, and apprenticeship programs.

Organizations such as the National Association of Manufacturers and Enterprise Minnesota are promoting manufacturing jobs as high-paying careers. The average manufacturing worker earns about 25% more in pay and benefits than the average worker in other sectors. Pay in the sector has also been increasing steadily, from $17.50 per hour to $21.50 per hour over the last decade. Since manufacturing jobs increasingly require technical knowledge to operate and program machines, the association is also positioning manufacturing careers as fulfilling, hands-on and high-tech to appeal to millennials.

In addition, attractive technical school tuition fees often leave graduates debt-fee. Often times, manufacturers are also willing to finance potential candidates’ cost of tuition or certifications. With employment options being so strong, a technical school graduate with training in machine tool technology can start making money right away.

On paper, all these seem like good and obvious solutions, but years of working with manufacturers have taught me that these efforts to shift mindsets are a generational undertaking. Manufacturers could consider investing in training programs and help current employees move ahead of the technology curve, but many may not have the luxury of waiting for training programs or workplace policies to catch up.

Manufacturers need solutions now

One of the ways to overcome labor shortage is advanced technology. Investing in robotics and automation has multiple benefits from improving the precision of manufacturing tasks and workplace safety to reducing inefficiencies. For instance, automation can translate schematics into production, identify and track missing parts and tools, and handle or assemble small parts. These are tasks that often demand a lot of time, mental energy, or manual labor from workers but can be easily improved with automation.

I’ve personally witnessed automation create impressive capacity and solve some really big workforce challenges. Here are a few that come to mind:

  • A growing business in a rural community, that despite employing just about everybody in town, couldn’t attract workforce fast enough to keep up with growth. The business was able to grow revenue and improve margins by employing a robotic inventory system that worked around the clock, and has never forgotten where a piece of inventory was last stored.
  • A defense contractor who invested in a 24/7 robotic handling system. The cell utilized a robotic quality control that tested each and every part. Together, they had the intelligence to move to the next job in queue if a human was needed to solve a part failure. The cell worked unmanned, producing parts even over the weekend.
  • Many of my manufacturing customers utilize handling systems to load and offload parts. With automation, they can put their human resources to better use, allowing their talented teams to set up runs versus load and unload machines.

What is the right solution to our current manufacturing labor shortage? The answer is likely all of the above strategies. But for manufacturers who feel that time isn’t on their side or those who desire to be proactive, automation and robotics will be part of the best and quickest solution to the labor shortage.

Julie Whitney

About Julie Whitney

With over 20 years of financial experience in business development, risk management, financial and industry analysis and accounting, Julie has held positions as a senior auditor at Clifton Larson Allen and Commercial Relationship Manager at U.S. Bank. Julie’s passion for manufacturing started when she worked at American Manufacturing, a manufacturing company in St. Joseph (MN), while paying her way through college. Since then, she has worked extensively with manufacturers as a commercial lender and has been fortunate enough to see her customers through all business life cycles and unprecedented economic times. Showing her commitment to the long-term growth of the industry, she currently serves on the board of Enterprise MN, a federal MEP organization that provides training and advocacy for Minnesota manufacturers. She is also on the board of MinnDak Manufacturers Association, serving Fargo Moorhead region manufacturers. She also has a deep passion for her community, having served on the Board of Directors for the Junior Achievement, Rotary Club of St. Cloud, Big Brothers and Big Sisters as well as the United Way of Central Minnesota. A graduate of accounting from St Cloud State University, Julie is trained in Pimley and Pimley, Omega Performance, Lean Principles and Macro Management Essentials. She enjoys spending time with family, socializing, cooking, traveling, upland game hunting as well as watching high school and college sports in her free time. Julie brings an outsider perspective to her discussions with manufacturers. She uses her unique background and professional experiences in finance to identify headwinds, issues and opportunities relevant to manufacturers. )

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