Manufacturers are facing pressing talent issues today—but they shouldn’t forget to plan for tomorrow
This article was originally featured in the June/July 2022 issue of the Manufacturing Leadership Journal. ©2022 Manufacturing Leadership Council, a division of the National Association of Manufacturers. All Rights Reserved.
It’d be hard to blame today’s manufacturers for thinking short term. As demand continues to surge—despite inflationary pressures, supply chain challenges, and the war in Ukraine—manufacturing executives are understandably focused on filling orders and seizing opportunities to rebound from a turbulent two years.
The ongoing talent shortage plays a critical role here, of course. According to a recent study, nearly half of manufacturing executives are turning down business opportunities due to a lack of workers. While employment in the manufacturing sector is nearing its pre-pandemic levels, turnover remains high and keeping up with demand remains a challenge. Problems facing the industry before the pandemic—be it an aging workforce, younger generations’ expectations around flexibility, or the widening skills gap—have only been exacerbated.
Yet while manufacturers might be tempted to simply do whatever they can to get enough workers to meet the needs of today, they shouldn’t sacrifice investments needed to obtain and develop the right workers to meet the needs of tomorrow. Failing to do so will limit their ability to grow and derive value from investments in an increasingly digital operating model—and will mean passing up quick wins that will come by embracing long-term strategies.
On the bright side, it’s a good time to make these changes. Volatility and disruption aside, profits remain high, providing ample capital for investment. New technologies and the industry’s ability to produce essential PPE, ventilators, and other critical goods during the pandemic has also shifted negative public perceptions. Sixty-four percent of consumers now view manufacturing as innovative, up from 39% five years ago.
Manufacturers need to think beyond the challenges of 2022 and invest in the workforce of 2030.
These eight steps can help them do just that.
Here’s a concept that seems simple but is actually quite layered: Companies can’t assess what talent they’ll need down the line without understanding who they’re set to become. To answer this question, begin by understanding the industry you operate in, the type of products your company produces, who you want to be as an employer, and your current and future customer base.
For instance, a small manufacturer of watches that delivers direct to customers will have different needs than a high-end OEM. Understanding what resonates with your customers and what their future preferences will be—through customer surveys or other feedback mechanisms—can help lay the groundwork for designing your 2030 production line.
Doing so successfully, however, is as much a product of your employer strategy as your customer strategy. Manufacturers are comfortable with strategic plans and budgets, but less so with defining, communicating, and establishing a culture that intentionally attempts to attract and retain talent. They’ll need to apply the same amount of energy into developing their culture, as they do to cultivate and care for their customers, if they want to be successful in the years to come.
In any case, it’s important to remember that M4.0 will increase demand for new roles such as automation technicians, engineers, data scientists, IT/OT analysts, security experts, and IoT solutions architects. These roles use new and different skill sets that typically haven’t existed (at least not in large numbers) in traditional operations. New technologies will also evolve existing roles such as operators who must now understand how to interpret data and use it to prevent issues before they occur.
Starting with a maturity assessment—which defines where your organization is today relative to where you want it to be and identifies the skills needed to get there—will help. From there, a journey map can highlight key progression steps, with measurable outcomes along the way.
After establishing a 2030 vision for your company and workforce, segment roles by the type of experience needed. Then determine how to attract or create that experience at your organization.
In hiring for roles where experience is not needed, broaden your scope, reduce criteria, and look to non-traditional sources of talent. That could entail diversifying your talent pipeline and collaborating with nonprofits, local governments, academic institutions, and others to find new workers. In Northeast Ohio, for example, MAGNET—a nonprofit supporting manufacturers in the region—has developed programs that invite inner-city high school students to take college courses in manufacturing and work paid internships, as well as a program that aims to help justice-served individuals re-enter the workforce. Numerous other sector partnerships around the country serve similar purposes.
Additionally, given the scarcity of emerging technology skills, it may be easier to hire people for certain roles who have the right soft skills and then train them in the necessary technical skills. With new technologies continually emerging, hiring people who can learn quickly and understand how those technologies integrate with current business functionality will allow you to use internal resources rather than recruiting or hiring consultants every time you add to the M4.0 landscape.
In other cases, it may make more sense to “rent” talent rather than making a long-term investment—hiring a third party to provide and/or manage certain capabilities rather than absorbing the high labor cost that may be necessary for certain in-demand capabilities.
No matter the approach, it’s worth investing more effort into your employee value proposition. Help prospective and existing employees see the big picture: why their skills are important, how elevating those skills can increase their value to the company, and what opportunities exist for career progression.
The world of work has irrevocably changed, with workers—especially younger ones—demanding more flexibility, work-life balance, and incentives for returning to a physical workplace.
This shift necessitates a transition away from the concept of lean/low-cost workers and toward one that more strategically looks at workforce planning, aligning all aspects that go into your business’s overarching vision to build your future workforce with intention.
To do so successfully, manufacturing leaders will need to determine the behaviors needed to achieve their strategic vision and how to govern in ways that drive those behaviors and accelerate value. We’ve identified nine critical drivers that predict and change business outcomes, including:
Putting these drivers together into one action plan will help organizations create an integrated operations management (IOM) framework that gives workers the space to learn, grow, and engage their minds, and also empower them to develop their own processes. This might entail, for instance, giving workers clear accountability measures and pushing them to own those measures and make decisions accordingly. Layering oversight and coaching atop these performance management and problem-solving methodologies can ensure these decisions are appropriate and that workers’ skillsets are continually improving.
Every manufacturer has continuous education or learning and development functions. But many have gone stale.
That will need to change to meet the skills needs of 2030: According to a recent study, only 50% of production employees feel ready to take on advanced roles, and 60% of skills shortages are due to insufficient STEM education and vocational training.
But there are initiatives that can address this shortage. Examples include partnering with vocational training and high schools to provide more apprenticeship and internship opportunities, sponsoring AI and robotics labs in schools, rotational management development programs (like those at GE or Honeywell), and adopting a German-style apprenticeship model in which students spend much of their time gaining hands-on experience.
Industry partnerships with community colleges are especially critical to this endeavor. But manufacturers have to take these partnerships a step further and guide these programs in ways that develop the right future skills and attract students earlier. For instance, Oakland Community College in Michigan, in partnership with HURCO, built an advanced training center and lab to not only educate students with state-of-the-art technologies but also expose them to industry applications and opportunities. In Ohio, Cuyahoga Community College’s Manufacturing Technology Center of Excellence brings its mobile training unit in a 53-foot-long trailer right to the doorsteps of local companies and schools.
Once employees are on the factory floor, they’ll need the right tools and training to hit the ground running and grow in their careers. Digital tools can help, from tablets that can digitize work instruction and standard operating procedures, to wearables that can provide alerts that reduce on-the-job injuries, to augmented reality (AR) that can help train workers and provide work instruction and remote assistance. Lockheed Martin, for example, uses cameras to project images on an aircraft wing to show workers where rivets need to be placed.
Still, there’s a balance to be had in integrating these new technologies to develop talent. While the technologies could play a role in attracting a younger workforce, organizations should be careful to deploy them in ways that support workers’ capabilities. For instance, a 2022 study showed that while using AR helps workers pick up instructions more quickly, it can also set them back should it be taken away later on.
Behlen Manufacturing in Nebraska surveyed hundreds of high school students about what they’re looking for in a job. The answers? Balance and flexibility, good relationships with leaders and co-workers, community engagement, being valued and heard, and growth opportunities. Salary was way down on their list.
In other words, employee expectations—especially among younger generations—are changing. Nearly 40% of new manufacturing talent have different career/job expectations than previous generations. Thinking ahead to 2030, manufacturers must be prepared to attract and retain talent from this cohort.
While manufacturers aren’t tech companies who can give their employees everything they want—after all, most factory workers will still have to show up on site—they do need to demonstrate they understand this new world of work and be open to some change, particularly around flexibility. A few initiatives they should consider include:
Manufacturers have historically been intimately tied to their local communities. For example, Hershey, Pennsylvania, was built by The Hershey Company, and numerous other cities around the country have similar origin stories.
To develop the workforce of the future, manufacturers must return to this community-based ethos, particularly given lingering perceptions of the industry as dirty and unsafe. Their particular focus should be engaging students in high school or earlier, whether that’s through hands-on tours, local events (e.g., manufacturing day), or sponsoring robotics clubs and/or local teams. Manufacturers should also deputize (and incentivize) key employees to volunteer, speak at community development organizations, recreation centers, libraries, and other community centers. At the baseline, they’ll need to develop an active social media presence and brand campaigns on the channels that best target young people and their parents.
Jack Schron Jr., CEO of Jergens, Inc., who decided to keep his family’s business local in Cleveland, rather than one of the many other states that wanted his business, is a prime example of this approach. Building a new HQ in the city jumpstarted a virtuous cycle: soon a food bank was built next door, then the Cleveland Clinic moved in nearby, then a Social Security office.
The site also laid the foundation for Schron’s engagement with the local community, including an effort to clean up brownfield sites; hosting inner-city students for tours, internships, and apprenticeship programs; and creating a first-of-its-kind program for local special-needs students. This longtime investment in his community engenders a culture that drives employee retention: 77 employees have been with Jergens for more than 25 years.
It’s challenging, time-consuming, and even distracting to implement large-scale workforce change. That’s why as manufacturers think ahead to 2030, they should consider ways to experiment with modernized workforce concepts on a smaller scale to see how they work.
For example, a Shell factory in New Orleans gutted an entire floor of its office building and designed a new space for cross-functional teams to drive collaboration. These large, open spaces where teams were grouped by purpose and not traditional function empowered a highly collaborative culture, where work shifted away from roles and toward being part of a project team.
Done well, these initiatives can build ownership and culture around a shared mission, while also helping your organization learn how to best engage workers and develop skills. They also create environments where people can innovate and have fun, which in turn enables a sense of pride, responsibility, and accountability—the opposite of the common manufacturing mindset of clock in, clock out, and go home.
A central facet of improving any aspect of your business is to measure and incentivize it. This starts by identifying the change outcomes you want to make, who will be responsible for making it, the behaviors needed to drive it, and how (and with what frequency) you’ll measure the results. Along the way, leadership will need to be engaged in prioritizing various changes as well.
There are numerous approaches an organization can take here, from quarterly or annual surveys to a one-question survey placed in the company break room that can check the pulse on pressing topics and provide instant feedback.
Of course, you will need to have defined targets to track against, not only for current labor planning and progression, but also for the M4.0 journey ahead.
If the first half of 2022 is any indication, manufacturers have another roller coaster year ahead. Yet while numerous challenges remain or will emerge, it’s also an exciting moment for the industry: Factory orders are rising, technology and innovation is burgeoning, and public perceptions are improving.
To keep this momentum going, however, manufacturers must keep one eye on the future, especially when it comes to their talent. Unfulfilled manufacturing jobs are forecasted to rise to more than 2 million open positions by 2030, resulting in $1 trillion USD in lost GDP. To prevent these losses, industry leaders would do well to bring the digital, M4.0 mindset they apply to the factory floor to workforce planning, while also advancing a long-term, iterative approach.
If done right, you’ll not only see an immediate positive impact, but move towards the workforce needed for the company you want to be in 2030.
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