4 Things You Need to Know About Workforce Shortages & Increasing Manufacturing Costs

Workforce shortages are a significant problem facing manufacturers today. According to a recent survey by the National Association of Manufacturers, nearly 80% of respondents reported having difficulty finding qualified workers. This shortage has led to increased competition for workers, and as a result, wages have begun to rise. In addition, the shortage has forced manufacturers to invest more in training and development and new recruiting strategies.

As a result of these factors, manufacturing costs have risen significantly in recent years. The situation is only expected to worsen in the coming years as the baby boomers retire and the skilled workforce shrinks. Given these trends, it is clear that workforce shortages are a major driver of rising manufacturing costs.

Addressing the workforce shortage is critical to keeping manufacturing costs under control. Here are four things you need to know about the workforce shortage and its impact on manufacturing costs:

1. Manufacturing is Growing

The manufacturing industry is currently experiencing a period of solid growth. This demand is being driven by several factors, including population growth, increased disposable income, and new technologies that are driving the need for innovative products. As a result, many manufacturers are expanding their operations and hiring new workers. This trend is expected to continue in the coming years as the manufacturing industry continues to play a vital role in the global economy.

The manufacturing industry in the United States has shown significant growth. According to the National Association of Manufacturers, manufacturing employment has increased by nearly 1 million jobs since 2010. However, there is a shortage of workers to fill all the open positions available. In fact, the association estimates that there will be 2.4 million manufacturing jobs unfilled by 2028.

2. A Shrinking Workforce

The manufacturing industry is experiencing significant growth due to high demand. This has led to an explosive number of job openings in the industry as companies try to keep up. However, many openings are going unfilled due to the shrinking workface in the U.S. In order to combat this it’s important to understand the underlying factors:

1. Retiring Baby Boomers

To start, the baby boomer generation is defined as those born between 1946 and 1964. For decades, baby boomers have been the backbone of the manufacturing sector, but this demographic cohort is aging, and many are now retired or nearing retirement age. This trend is likely to continue in the coming years as more and more boomers retire. There are three reasons for this. First, manufacturing jobs are often physically demanding, and boomers are simply not as physically capable as they once were. Second, many boomers have been in manufacturing jobs for their entire careers and are ready for a change. Finally, boomer retirees will be replaced by younger workers who are often more educated and have more experience with new technology. This generational shift will significantly impact the manufacturing industry, and companies need to adapt to stay competitive.

2. Lack of Laborers Joining Workforce

As crucial workers vacate the workforce, more positions will be left unfilled, and hiring new talent to fill these key roles will become more pressing. Therefore, the second challenge facing the manufacturing sector is the lack of young people entering the workforce. Many young people are not interested in jobs in the manufacturing space. This is understandable given that the sector has often been associated with low-skill, low-pay jobs. However, the reality is that manufacturing has changed dramatically in recent years, and today it offers a wide range of career opportunities for skilled workers. To attract more young people to manufacturing careers, it is crucial to raise awareness about the sector and dispel some of the myths about what it is like to work in manufacturing. You can do this by showing them how they can use their skills and talents in a manufacturing setting. This makes the manufacturing industry more appealing, and young workers will be more likely to apply for these positions. By taking these steps, it will be possible to ensure that the manufacturing sector has a robust talent pipeline for years to come.

3. Declining Birth Rates

Finally, a significant demographic change affecting workforce shortages is declining birth rates. This means that fewer people are of working age, putting pressure on those who are working. This is compounded by the fact that people live longer and retire later. As a result, the pool of potential workers is getting smaller, while the number of individuals who are retired or close to retirement is continuously increasing. This has significant implications for public finances, as the percentage of the working-age population will need to support an increasingly large number of retirees. It also has implications for businesses, which will need to find ways to increase productivity to offset the impact of declining workforce numbers.

The shrinking workforce also has implications for the economy, as businesses will have a smaller pool of potential employees to choose from. As such, the government will have fewer workers to pay into Social Security and other entitlement programs. Therefore, the shrinking workforce could lead to higher taxes and reduced benefits for retirees. Ultimately, the shrinking workforce will have far-reaching consequences for the U.S. economy and society.

3. An Increase in Wages

The manufacturing industry is facing a unique challenge in the current economy. As stated, manufacturers have been struggling to find qualified workers due to demographic changes in the workforce. As a result, manufacturers are already feeling the pinch as they compete for talent. In order to attract and retain workers, many companies are being forced to offer higher wages and more attractive benefits packages. While this may seem like a good thing for employees, it actually puts a strain on the company’s budget because baby boomers are generally less expensive to employ than younger co-workers.

Ultimately, this is not an ideal solution for manufacturers that are struggling to keep costs down in an increasingly competitive marketplace. The situation is only expected to worsen in the coming years, so manufacturers will need to find creative solutions to address the talent shortage.

4. Skills Gap and Training Costs

The skills gap in manufacturing is a problem that will only become more pronounced in the years to come. Across the country, vocational programs are on the decline, and as a result, the skilled labor pool is shrinking. Once a mainstay of the American educational system, vocational programs have been gradually phased out in favor of a more traditional college-prep curriculum. A consequence of this is a decrease in the number of skilled workers available to fill high-demand jobs. In many cases, these jobs do not require a four-year degree, but they do require specialized training that can only be acquired through vocational programs. Therefore as a result, there are simply not enough skilled workers to fill these vital positions. This not only impacts the economy but also has a negative effect on social mobility and equality. The decline in vocational programs thus has far-reaching consequences that touch nearly every aspect of society.

To build upon this, as technology advances, the skills needed to operate modern manufacturing equipment is becoming increasingly complex. However because of the growing skills gap, the pool of workers who would normally fill these positions is shrinking. This leads to increased training costs for companies as they try to bring new workers up to speed. It also causes increased production costs as companies are forced to use less efficient methods due to the lack of skilled workers. In sum, the skills gap is a pressing challenge for manufacturers, and it will need to be addressed to maintain competitiveness in the global marketplace.

Where Do We Go From Here?

The manufacturing industry is facing a number of challenges that are putting upward pressure on costs. The talent shortage, the skills gap, and the decline in vocational programs are all significant problems that need to be addressed. However, there are some potential solutions to these problems.

1. Automating Manufacturing Processes

The current shortage of workers is causing many companies to re-evaluate their production processes. One solution that is gaining popularity is automation. Automation involves using machines to perform tasks that human workers would traditionally carry out. Although a significant initial investment is required to implement automation, it can ultimately help offset the cost increases caused by the workforce shortage. Additionally, automation can help to improve product quality and consistency, and it can also reduce production times. In effect, it is an increasingly viable option for companies struggling to maintain a sufficient workforce.

2. Investing in Training and Education Programs

As shown, the talent shortage, rising skills gap, and declining attendance in vocational programs are problems plaguing the manufacturing industry. One way companies can combat these issues is by partnering with local schools and community colleges to provide employees with the opportunity to gain the skills they need to be successful within their organization. This approach has several benefits. First, it helps ensure that employees have the skills necessary to be productive workforce members. This also helps to combat the rising skills gap affecting workforce shortages. Second, it helps to foster a sense of loyalty and commitment among employees, who appreciate the investment that their employer is making in their future. Finally, this approach can help reduce turnover rates, as employees are less likely to leave an organization if they feel that they have a clear path for career growth. By taking this approach, businesses can help address the talent shortage and position themselves for success in the years to come.

Another way to address the skills gap is to provide more on-the-job training opportunities or establish in-house training programs. This can be done by working with trade associations or by offering internships and apprenticeships. By offering internships and mentorship opportunities, businesses can give students the chance to gain hands-on experience in their desired field. Companies can also work with educators to help align their curricula with the needs of the workforce. As a result, students will graduate with the skills and knowledge businesses are looking for. By investing in future talent, companies can ensure that they will have the workers they need to compete in the global economy.

Preparing For the Future

As the economy continues to strengthen, businesses will face increasing challenges in finding and keeping quality employees. High demand for manufacturing development has led to an increase in job openings. However factors affecting the shrinking workface has made these key positions difficult to fill. In order to attract new talent and maintain productivity, business need to offer higher wages and invest in training as skilled workers become sparse. These added costs have hit manufacturers hard. Thankfully there are some solutions to these problems. Implementing automation processes and training programs can help to offset production costs and provide skilled workers. In all, understanding the underlying trends affecting workforce shortages will help you prepare for the future and adjust your hiring strategy accordingly.

If you are looking for a reliable and qualified workforce, Award Staffing is the perfect partner. We have a long history of providing quality employees to the manufacturing industry. Our team of experts can help you find the right employees for your organization to ensure your success. Contact us today to learn more about how we can help you address the workforce shortage and improve your bottom line.