Top Labor Shortage Considerations for Manufacturers

By Kevin Rhode, on October 3rd, 2023

Like many other industries across the United States, the manufacturing and distribution industry is facing labor shortages across the board with an estimated 600,000+ jobs remaining open and unfilled across the country. As a result, addressing the underlying problems within this industry has never been more important.

A shortage in laborers can pose many risks for companies within this industry and it is crucial that it should be at the top of mind for manufacturers and distributors. Take a look at the drivers below and potential solutions for this issue:

  • Increased Product Demand
    • With an increase in demand for products comes an increase in demand for laborers. One way companies can attract more laborers is by accommodating the changing preferences of the average worker. It may be time to start considering flexible working hours and shifts if you haven’t already. If you don’t work to accommodate changing worker availability and preferences, then laborers will find another company that is.
  • Aging Existing Workforce
    • As the existing workforce gets older, it is crucial to have a plan in place to replace them. And not just replace them but replace their skillset. Companies should look to invest in training and apprenticeship programs to transfer knowledge and skills from experienced workers leaving the workforce to younger generations.
  • Skills Gap
    • A major component of the labor shortage for many industries is the lack of skilled laborers. Have you considered collaborating with local colleges and other educational institutions to develop tailored training programs? This can help equip workers with the appropriate base skills prior to even entering the workforce.
  • Automation Creating Need for Specialized Skillsets
    • Continued automation of various facets of productions lines has resulted in many companies letting go of unskilled workers while leaving new positions left unfilled. Companies should upskill existing workers whose jobs may be getting replaced to operate and maintain automation equipment or provide opportunities for them to transfer to other open roles in the company.
  • Geographic Disparities
    • Unfortunately, work is not distributed evenly throughout each region of the country. To combat this, companies can look into offering relocation incentives and establishing satellite manufacturing facilities, when feasible.
  • E-commerce Boom
    • With e-commerce driving an increase in manufacturing, it is likely your facility should consider investing in automation and robotics to handle routine tasks. This can serve to replace human labor on remedial and routine tasks, allowing for human workers to focus on more complex and value-added activities.
  • Competition
    • To differentiate themselves from competitors, companies should look to offer unique benefits, such as education assistance, flexible scheduling, and career development programs. This will help to not only attract new talent but retain existing employees.
  • Technological Advancements
    • It is no secret that our modern world is constantly introduced to technological change. While these advancements are often put in place to make life easier, we must still understand them and learn how to navigate them. In order to embrace all this technological change and help existing workers adapt, companies can provide ongoing training and certification programs.
  • Workplace Conditions
    • Again, if your facility is not focused on workplace conditions, laborers can find another facility that is. To enhance worker satisfaction and retention, you should consider workplace safety, ergonomic improvements, and better/fairer compensation.

These solutions aim to mitigate the worker shortages by addressing the underlying problems in both manufacturing and distribution sectors. Tailoring these solutions to specific company needs and local labor market conditions is essential for success.

If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.

This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.

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Written By

Kevin Rhode Mar23

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