The outlook for the manufacturing segment of the economy looks rosy, but now there is concern that there aren’t enough qualified candidates applying for all the new jobs that have been created, according to a new report.
The third annual Manufacturing RiskFactor Report compiled by the consulting group BDO found that 98% of leading manufacturers fear that there aren’t enough people to fill all the anticipated jobs that will be created.
An improved economy, better energy costs, and lower unemployment are all point to an increase in manufacturing in the coming years. But industry leaders continue to be concerned about their ability to fill their talent pipeline to achieve expansion goals.
The Aging of the Workforce
Part of this has to do with the aging of the workforce. According to the BDO analysis, by 2030 more than 20% of all US workers will be older than 65, compared to only 13% in 2010 and 9.8% in 1970.
According to the survey, 74% of manufacturers said they were worried about attracting, retaining and motivating key workers and managers. In 2014, this number was only 69% and in 2013 it was 62%.
Howard Sosoff, practice leader for manufacturing and distribution at BDO, said in the report that the survey results showed genuine concern among industry leaders.
“Growth in the economy and an increase in capital spending is excellent news for the manufacturing industry,” Sosoff said in the report. “But with greater opportunity comes greater challenges. Manufacturers will face intense competitions this year as they work to attract new orders and workers and expand their capabilities.”
What Companies Are Doing About It
To deal with this anticipated shortage of qualified manufacturing workers and managers, many companies are taking steps now to attract new talent.
Apprenticeship programs are being expanded, companies are partnering with community colleges and technical institutes, and businesses are using grassroots efforts to support science, technology, engineering and mathematics (STEM) education.
Many companies already are conducting self-audits to identify where growth can be expected and where the shortfall is between jobs and talent. This can then be used to map out a comprehensive blueprint for recruiting and onboarding workers for these areas.
Other Manufacturing Concerns
A lack of available talent wasn’t the only concern among manufacturers, according to the report. Other worries include:
- Environmental regulations, laws and liability (96%0
- Labor concerns such as underfunded pensions (98%)
- Risks associated with implementing corporate strategies (90%)
- Continued product innovation (85%)
- Not adequate access to capital or liquidity because of interest rates, credit markets, changes to credit rating, and other factors (89%)
- Less demand for current product lines (88%)
Reliance on Offshore Companies
One of the biggest worries was the ability of the supply chain to reliably deliver products from manufacturers to consumers. Another concern is that forecasting errors could lead to costly backlogs or shortages, or even potential interruptions.
Because manufacturers’ supply chains are often dependent on international companies, many industry leaders cited concerns about international operations risks, political incidents, and natural disasters that could cause transportation breakdowns and significant delays.
BDO is a consulting firm based in Delaware.