Addressing Manufacturing’s Workforce Crisis: Hiring Creatively to Build for the Future

A version of this article originally ran on IndustryWeek in August 2023.

Manufacturers’ labor demand continues to outpace supply. The U.S. Bureau of Labor Statistics reported nearly 600,000 job openings across the industry in June 2023, and with many skilled employees at or nearing retirement age, the gap is only widening. As hiring challenges persist, manufacturers will need to get creative to fulfill their talent needs and build a workforce that sets them up for future success.

Manufacturing Obstacles in a Tight Labor Market

Amid historically low unemployment rates, 20% of middle-market CFOs say that talent shortages pose a significant threat to their company’s growth this year. Recent layoffs in some industries have created a larger pool of job seekers, but competition for qualified employees remains high.

When it comes to attracting talent, the manufacturing industry has a marketing challenge. Many students are not aware that technology has transformed the gritty factory floors of yesteryear into safe, modern-day spaces where highly skilled employees work in tandem with automation to produce goods. At the same time, factories are also competing with technology companies, among others, for both entry-level and more experienced, skilled workers. 

How Manufacturers Can Overcome Hiring Challenges

Manufacturers need to attract more qualified workers to their firms and the industry at large, especially those with the skills to work with new technologies to support sustainable future growth. 

Here are three ways the industry can mitigate labor force shortages:

1. Rethink recruiting

36% of manufacturing CFOs plan to increase their Industry 4.0 investments this year. The resulting opportunities include jobs like designing software that operates machinery and building robots for innovative technologies such as autonomous guided vehicles (AGV) that improve logistics by moving inventory around the factory floor independently. While outreach events like Manufacturing Day and Manufacturing Month are crucial opportunities for manufacturers to educate students and prospective employees about career possibilities in the industry, companies should not stop there. 

Students. It’s especially important to pique students’ interest in the industry before they make decisions about post-secondary education and what they may want to study. Companies can promote their manufacturing roles to middle school, high school and college students — as well as recent graduates interested in STEM disciplines — through tours and hands-on demonstrations year-round. Organizations can also work with local schools on career day events and offer vocational training programs, related classes and activities. 

WOTC talent. Many companies aren’t taking full advantage of the Work Opportunity Tax Credit (WOTC), which offers financial incentives to businesses to hire veterans, people with disabilities, those reentering the workforce after incarceration, people receiving supplemental benefits and teenagers looking for summer work. Expanding recruiting efforts can provide opportunities to often-overlooked talent pools, help alleviate workforce pressures and offer companies a way to offset hiring costs.

Retirees. If your company has already lost some of its workforce to retirement, incentivize retirees to come back. People 55 and older have the experience and knowledge that makes for a competitive skillset. Offering them a chance to return part- or full-time and earn a paycheck on top of collecting retirement benefits may also serve as a driver amid the evolving economy. Moreover, with Industry 4.0 transformation, there are a variety of roles retirees can perform remotely. While training retirees to work from home may require some investment in technology and upskilling, the additional talent may help alleviate some of the burdens of staffing the factory floor.

2. Create great culture.

In a tight labor market, competitive benefits are crucial for attracting and retaining top talent. While higher wages and benefits packages that provide paid time off (PTO), health insurance and retirement plans are fairly standard practice, manufacturers facing labor shortages need to go above and beyond. Benefits should reflect evolving workforce priorities, such as work-life balance and concerns about inflation. Companies should also consider researching current benefits offerings in the market to determine whether their benefits packages are competitive with those of industry peers. When recruiting for important positions, it may be worthwhile to create packages that exceed competitors’ offerings.

Competitive benefits packages may include incentives such as: 

  • Additional PTO
  • Review structure for wage increases, promotions or spot bonuses
  • Phantom equity, or shadow stock, which offers the benefit of owning company stock without the actual ownership or transfer of any shares
  • Company discount plans
  • Professional development stipends
  • Employee referral bonuses
  • Childcare services or reimbursement for working parents
  • Transportation programs for employees without regular access to public transit or a vehicle

Additionally, companies recruiting workers who live far from their facilities can offer relocation packages and make the moving process more seamless by helping new employees secure housing. 

3. Offer professional growth opportunities.

Retaining top talent is just as important as attracting new employees. When an employee leaves, the company loses future returns on its investment of time, resources and money in that individual’s growth and development. 36% of CFOs recently surveyed say they plan to reskill or upskill their workforce this year, which may help with retention. Investing in career-pathing exercises can help companies better understand employees’ goals and offer learning and development opportunities to reskill or upskill accordingly, which benefits both the organization and individual workers. Companies that enable their teams to envision upward mobility often have higher employee retention rates.

Growth opportunities can also incentivize employees who are considering leaving the organization, or even retiring, to stay with the company for longer and impart crucial institutional knowledge to younger colleagues, creating a smooth transition to the next generation of workers.

The road ahead

As labor shortages persist, manufacturers must find creative ways to attract workers at every level, from students taking the first steps in their careers to experienced leaders with the expertise to guide teams through uncertain times. 

It’s also important for manufacturers to align their workforce strategies with the long-term strategic vision for their businesses. For example, if a business wants to build out its business-to-consumer (B2C) capabilities, it should hire leaders with B2C experience that can champion initiatives and build teams with relevant experience. Taking these steps to align business and talent attraction and retainment strategies will help companies address short-term workforce gaps and build long-term resilience across the industry.