U.S. Manufacturing talent shortage spurring innovative solutions in North America

U.S. Manufacturing talent shortage spurring innovative solutions in North America

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The manufacturing industry remains an essential part of the economy, but it's no secret that it's currently facing a considerable talent shortage. Companies are continually searching for skilled workers to fill vacant positions, facing numerous challenges that have hindered their recruiting efforts. The shortage of workers is a significant issue, and it's causing manufacturers to consider different solutions to address the gaps.

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U.S. Manufacturing Talent Shortage

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During the first trimester of 2023, unfilled jobs in the U.S. manufacturing industry (NAICS 31-33) hovered around 686,000 vacancies (BLS, June 2023).

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The National Association of Manufacturers predicts that the manufacturing skills gap could result in 2.1 million unfilled jobs by 2030, sourcing a study from Deloitte and The Manufacturing Institute. This could potentially cost the U.S. economy $1 trillion in 2030 alone due to lost output.

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Thought leaders put forth many reasons for the talent shortage in the U.S. manufacturing industry.

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·?????Skills gap – the manufacturing industry is increasingly demanding workers with specialized skills such as robotics, automation and programming.

·?????Negative perception – many young people and their parent see manufacturing as dangerous, dirty, and low-paying.

·?????Work-life balance – many manufacturing jobs require long hours, shift-work and overtime.

·?????Pay – manufacturing jobs have not kept pace with wages in other industries, especially in tech.

·?????Retirement – the manufacturing workforce is aging, and many experienced workers are retiring.

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The gap is expected to widen in coming years, posing a significant threat to the industry′s growth and sustainability.

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What are Manufacturers Doing about Talent Shortage?

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Due to this shortage, many manufacturing companies are now actively taking steps to attract more prospective employees to join their ranks. The industry considers a wide array of solutions to address this problem.

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·?????Automation One such solution is the implementation of innovative technologies to automate processes and reduce the need for manual labor. Automation can replace people in roles that are more repetitive, allowing companies to increase production and efficiency levels without necessarily increasing their labor force.

·?????Advanced Training More companies are investing in advanced training programs such as internships and apprenticeships. These programs provide opportunities for employees to learn and gain new skills, preparing them for manufacturing careers. Organizations like the National Institute of Metal-working Skills (NIMS) offer certification programs that provide employees with the necessary skills to take up manufacturing jobs. Creating these learning opportunities not only helps close the current talent gap but also creates a sustainable talent pipeline.

·?????Awareness Manufacturing companies are also partnering with local educational institutions to foster awareness about manufacturing. These companies promote the benefits of manufacturing careers, encouraging students at an earlier stage to pursue a career in this industry. Young people are inspired and are learning what career paths are available to them, providing manufacturers with a larger pool of potential employees for the future.

·?????Hiring Strategies Another solution to the talent shortage is to rethink hiring strategies. One example is creating more collaborative partnerships with American veterans, providing them with opportunities for career advancement, a group abundant in skill sets that match the industry needs.

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The lack of skilled labor across the United States manufacturing sector poses significant challenges for companies that require specialized talent. An approach that combines multiple solutions to resolve the issue of the talent gap revolutionizes the manufacturing industry's industrial machinery. Rather than continuing to be slowed down by the shortage, manufacturers can start to think creatively and implement various solutions that address the problem. This will open doors to new opportunities in the industry and support the overall growth of manufacturing.

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A North American Solution

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Another solution that has gained a lot of traction is nearshoring, leveraging the benefits of manufacturing in North America. Many manufacturers site lead times, supply chain disruption, geopolitical risks, agility, time zones, environmental compliance, and availability of suppliers as main reasons for reshoring operations and/or supply chains, among others.

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It is becoming increasingly important, especially in today’s globalized economy, to shorten supply chains and decrease logistics costs and impact. Many manufacturers don’t know where to start, and find themselves sometimes at odds between business decisions and public relations. Yet the USMCA supports this regional system of manufacturing production, leveraging the three countries’ individual comparative advantages to compete as a region on a global stage.

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North American solutions to talent shortage in manufacturing:

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·?????Consolidation – optimizing a manufacturing footprint must take into consideration a multitude of data points, including capabilities, efficiencies, timing, logistics, customers, compliance, talent, risk, materials and culture, to name only a few. This may include different facilities throughout North America, and consider future market input and goals as well. A solution like consolidation of operations can optimize the local resources needed in the production and back-office operations.

·?????Contract Manufacturing – organizations considering nearshoring their operations and supply chains to North America will often consider partial capabilities through Mexico through contract manufacturing, as an initial approach. Capabilities can ramp up or be built with a strategic partner relatively quickly. There are a range of contract, captive, and shelter models that provide different levels of fiscal incentives, workforce availability, speed-to-market, scalability, IP protection, and infrastructure readiness, among others.

·?????Contract Logistics – amidst shifting supply chains and an increased focus on agile manufacturing operations, contract logistics can provide the flexible support required. Outsourcing warehousing operations frees up production space, relying on a partner to acquire, store and transport resources – from raw materials to finished goods. Some companies, like Prodensa-Wisdom, provide minor assemblies as well. This solution provides many nearshoring companies a final assembly of their goods from abroad in Mexico before their subsequent importation to the United States.

·?????Partnership – there are a number of ways to optimize a shifting global footprint in manufacturing operations. Manufacturers seeking a proactive or strategic footprint and market solution may seek some kind of partnership or acquisition for the manufacturing of their products. With real estate availability a concern among many companies starting a manufacturing footprint through Mexico or the U.S.-Mexico border, acquisition can be strategic for a talent shortage solution.

·?????Inshoring – manufacturing services in the U.S. via a binational manufacturing company like Prodensa can provide one of the fastest routes to get up and operating your own manufacturing facility in Mexico. Companies seeking increased availability of a labor intensive workforce amidst talent shortage in the U.S. can utilize successful talent strategies of experts across the border, specialized in all aspects of administering a cross-border manufacturing facility and connecting it to current and regionalized supply chains.

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Whether reshoring manufacturing operations to North America, or seeking innovative solutions to solve critical talent shortage among U.S. manufacturing workforce, a strategy optimization is the place to start. Our experts provide decades of experience with a multitude of manufacturers looking to optimize their manufacturing footprint in North America.