The problem defined: Manufacturing faces a workforce shortage

The problem defined: Manufacturing faces a workforce shortage (Courtesy of Deloitte Insights) — At the heart of practically any production environment is the choreographed interplay between human and machine. Production lines hum with a symbiotic array of machines and the people that oversee their operations. Despite an influx of more than 2.7 million industrial robots in use worldwide—including fixed robotic arms, moving cobots, and autonomous-guided vehicles moving materials and finished goods—humans are still needed to help produce the vast majority of goods the industry makes worldwide. Throughout the executive interviews conducted during this year’s study, a resounding distress signal kept repeating itself: “We can’t find the people to do the work.” This sentiment is backed up with data: Seventy-seven percent of surveyed manufacturers anticipate there will be ongoing difficulties in attracting and retaining workers in 2021 and beyond. Unpacking this reality further reveals two important aspects that define the immediate shortages the industry faces—the challenge filling entry-level positions and the difficulty finding skilled talent.

Getting entry-level employees in the door

First, many manufacturers can’t fill entry-level production associate positions. These are the jobs that do not require technical know-how or industry knowledge, such as team assemblers, production work helpers, and hand-held tool cutters and trimmers. Rather, they require a person who has a basic level of “human capabilities,” such as following directions, willingness to learn, and follow-through. These entry-level positions could be filled by people recently displaced from other industries (hospitality, food services) or high school graduates, and starting wages in manufacturing are notably higher than local minimum wage levels (median wages for team assemblers is US$15.55, double the minimum federal wage of US$7.25 per hour). But applications are not pouring in for them.

“The manufacturing workforce conundrum”). And there is no indication whether this trend will reverse. In fact, US manufacturing executives surveyed believe that finding the right talent is now 36% harder than it was in 2018. As one executive worried, “Is there a point when we run out of production workers or a point when we have to consider moving to a different location?”

The manufacturing workforce conundrum: The uphill battle to get people back to work The pandemic outbreak initially erased ~1.4 million US manufacturing jobs, undoing more than a decade of manufacturing job gains. Though the industry was able to hire back 820,000 of these jobs by the end of 2020, the remaining 570,000 have not returned, although there currently stand close to 500,000 job openings.

An analysis of the fastest-growing manufacturing occupations during the next decade reveals that five out of six of these occupations require a skill set that spans human and technology aspects, but often does not require formal postsecondary education. The situation further highlights how manufacturers are not able to fill what can often be entry-level positions.

The rising challenge of filling skilled positions

The second aspect defining the current shortage is that manufacturers increasingly have difficulty filling middle-skill jobs. These jobs typically require some level of technical training or applied skills. Examples include computer numerical control (CNC) machinists, welders, and maintenance technicians. At the higher end of experience, some of these jobs require more specialized skills. Unlike the first category, these jobs cannot typically be filled immediately with someone from another industry or recently graduated from high school. Rather, they often require a hands-on, applied training program that can take between several months to more than a year. Some also require licensing and certification. Figure 3 highlights some of the critical middle-skill roles going unfilled today in manufacturing with projected job openings during 2019 ̶ 2029.

While both types of job shortages are placing significant pressure on many manufacturers—even as they face the ongoing challenges of maintaining operations during the pandemic—there is a third and larger challenge the industry faces over the next five to 10 years. As digital transformation in the manufacturing industry continues to develop, the skills needed to do the jobs in the smart factory will likely be different than skills used today. But today’s manufacturing workforce doesn’t possess many of these skills. And, without making changes to the skills composition of the workforce, manufacturers could leave up to 2.1 million jobs unfilled between 2020 and 2030, impacting everything from productivity to innovation and competitiveness to GDP (figure 4).