4 Staffing Challenges Manufacturing Faces in 2019
By Jessica Miller-Merrell ● March 6, 2019 at 4:53 PM
A tight talent marketplace means that recruiting employees is harder now than at any time during the past nine years, specifically in skilled labor industries like manufacturing. According to the Society for Human Resource Management’s Leading Indicators of National Employment (LINE) report, one-third of HR professionals in manufacturing have said that they can’t fill an open position. It’s a perfect storm of lack of skilled labor, retiring workers in the manufacturing sector, and the most serious recruiting challenge: manufacturing’s negative image among young people.
Economic experts expect the U.S. manufacturing industry to experience steady growth adding thousands of new jobs while also undergoing a large exodus of highly skilled, experience, and trained workers who are retiring. The two above mentioned along with a strong and growing economy are making hiring talent in manufacturing one of the biggest challenges businesses in the industry will fact in 2019.
Economic Factors Impacting Hiring & Recruiting in the Manufacturing Industry
Here are four areas that manufacturing HR and recruiting leaders should focus on in the coming year:
1) Skilled labor shortage. More than 75 percent of manufacturers report a moderate to severe shortage of skilled workers and a significant portion of the manufacturing workforce is nearing retirement age. Perhaps the most serious recruiting challenge is manufacturing’s negative image among young people.
Deloitte and the Manufacturing Institute issued its third report on the labor shortage three years ago — titled "The Skills Gap in U.S. Manufacturing: 2015 and Beyond." They report the gap between available skilled workers and available jobs is widening—due to economic expansion and retiring baby-boomers. Bottom line, 3.5 million manufacturing jobs will need to be filled by 2025, but a lack of skilled workers means two million of them will go unfilled without some radical changes.
According to a McKinsey survey, executives increasingly see investing in retraining and “upskilling” existing workers as an urgent business priority—and they also believe that this is an issue where corporations, not governments, must take the lead. Sixty-two percent of executives believe they will need to retrain or replace more than a quarter of their workforce between now and 2023 due to advancing automation and digitization.
Successful training requires first developing a granular map of how technology will change the skill requirements within your company. Once this is understood, the next step will be deciding whether to tap into new models of online and offline learning and training or partner with traditional educational providers with skilled labor programs like vocational schools.
2) Technology. The adoption and use of technology can be overwhelming for even the most savvy business leaders. However, tech adoption for recruiting is faster than many industries, since we live and die by data. It’s not difficult to prove out a use case for recruiting tech that works for you and your team, particularly when recruiting in manufacturing.
Increasing numbers of manufacturers are starting to use predictive analytics algorithms. It helps with every aspect of the manufacturing process, such as efficiency in sourcing and hiring, workforce productivity, employee engagement, and performance forecasts. Technology is the catalyst behind manufacturing’s ongoing transformation. Cloud technology, in particular, is proving essential for manufacturers seeking to eliminate old barriers and seize new and emerging opportunities. To put it simply, predictive analytics algorithms are using available data to predict and to improve manufacturing operations and processes which makes recruiting and hiring metrics an important part of your upcoming hiring strategy. Which leads me to...
3) Analytics, HR metrics, and data. There are so many ways to use analytics to improve staffing and recruiting for manufacturing. Cost per hire, candidate to hire ratio, source of hire, quality of hire and placement ratios are the top five, but with technology adoption, you can measure just about any facet of the staffing process.
Quantity metrics include time to fill, candidate to hire ratio, and for staffing agencies, placement ratio. Quality metrics are, obviously, quality of hire, but also numbers like job order to placement ratio when you’re measuring recruiter efficiency. For example, you can send a lot of promising candidates to your clients, but that doesn’t matter unless they get hired. This is a perfect illustration of comparing quantity metrics to quality metrics. One hundred sendouts in a month is a great quantity metric. Making zero placements as a result of those 100 sendouts is a terrible quality metric.
4) Tariffs. U.S. tariffs being imposed on other countries like China are impacting staffing needs in the coming year. This topic seems to be moving target as trade wars caused the stock market to fall sharply in the first weeks of 2019. What we know now: The U.S. and China called a cease-fire last month, agreeing to hold off on imposing more tariffs for 90 days while they negotiate a deal. The U.S. said that it will raise its 10% tariff on $200 billion worth of Chinese products to 25% if a deal is not reached by March 1. A further escalation of the trade war could put downward pressure on global capital markets, which have recently entered a correction.
This is definitely news you’ll want to stay on top of when considering predicting staffing needs for a shifting manufacturing sector that is impacted by global markets.
Topics: Talent Acquisition
Updated March 6, 2019