The U.S. manufacturing sector is currently undergoing a boom, thanks to a strong economy and significant federal investment. In 2023 alone, the sector received $196 billion in federal funding for manufacturing construction, marking a 143% increase since 2019. This capital infusion, which continued into 2024 with an additional $32 billion, has been bolstered by programs like the $39 billion CHIPS Act for semiconductor manufacturing. However, for this capital influx to yield substantial economic benefits, manufacturing companies must address the critical workforce shortages and skills gaps that have increased since the pandemic.
Skills Shortages: A Drag on Growth
The manufacturing industry faces a dual challenge: significant labor shortages and a widening skills gap. As of January 2024, the U.S. Bureau of Labor Statistics reported 622,000 unfilled manufacturing job openings across the country. This shortage comes at a time when the overall labor force participation rate has fallen below 63%, a steep drop from the 67% rates of the 1990s. Despite efforts to rehire many of the 1.4 million workers laid off during the pandemic, manufacturing companies are struggling to fill roles, with many reporting high turnover and challenges in retaining new hires.
The workforce shortage is exacerbated by several factors, including an aging workforce, challenges attracting younger workers into manufacturing, and migration of experienced workers into other sectors after the pandemic. This is not a short-term issue; according to McKinsey, the industry could face a shortage of 1.5 to 2.5 million workers by 2030. As a result, it is becoming clear that manufacturers must expand the focus of workforce management to include advancing productivity per worker.
Supplementing Talent Strategies with Frontline Technology
Given the labor market challenges, adopting digital solutions on the frontline can be an effective component of implementing new talent strategies to attract, develop, and retain workers. Traditional methods of onboarding and training often take months for new workers to ramp up completely. With an excess of unfilled positions, accelerating time to productivity for frontline workers is critical.
Skills gaps that have emerged within the existing workforce as experienced workers leave the industry are also a drain on productivity. In addition, investments in digitalizing manufacturing operations add further pressure to reskill and upskill the workforce to operate the new advanced machinery and digital systems more effectively.
Another essential area of focus for talent strategy is addressing the expectations of younger workers regarding their work environment and resources. Manufacturing companies are facing mismatched expectations with new generations of talent, who have grown accustomed to using digital systems for every aspect of their lives. Supplementing talent strategies with frontline technologies that boost productivity can benefit manufacturers in several ways.
Accelerated Onboarding
Compressing the time to productivity for new workers is a major benefit of blending frontline technology with talent strategies. According to studies by ISG Research, organizations report that it typically takes six to nine months to fully onboard a new employee. However, with the use of digital tools, that timeframe can be reduced to three to six months, helping manufacturers get new hires up to speed more quickly. Digital tools can be used to provide new workers with easy access to training materials, personalized for their roles and levels of experience. A strong onboarding program not only improved retention by as much as 82%, but also improved productivity by 70% according to research done by Brandon Hall Group.
Upskilling and Ensuring Standardization
In addition to absorbing new workers, today’s manufacturing workforces are also seeing workers with less experience occupying roles that were once filled by more experienced personnel. Research done by SHRM reported that 55% of workers felt they did not have the training they needed to do their jobs effectively. Digital frontline technologies are a powerful addition to manufacturer talent management strategies for upskilling and reskilling the workforce.
Digital automation of processes such as inspections can reduce process time by up to 70% by using mobile devices to reduce data entry and paperwork according to PWC studies. Digital work instruction can provide on the spot guidance and embed training to ensure that standard processes are followed quickly and accurately. The same PWC study showed productivity increases of up to 30% from digitalizing work processes. Deloitte research into training showed that roughly 50% of workers preferred these on-the-spot micro-learning injections over standard classroom training.
Reducing Frustration and Non-Productive Time
Delays are not only productivity killers; they are also a source of frustration for frontline workers and can affect workforce retention. Frontline workers in over 50% of companies do not have easy access to company digital devices for communications, yet 62% of companies report that their workers need to access digital information or communications at least 5 times every 2 hours according to ISG Research. Not having the right technology tools to do their job effectively is a sentiment echoed by 36% of manufacturing workers according to a survey done by Microsoft. Not only can connecting workers with easy access to digital devices reduce the lost time and frustration that workers are experiencing, but it can enhance the ability of frontline teams to collaborate more quickly to address work and safe issues to further boost productivity.
A More Engaging and Attractive Work Experience
Manufacturing is often seen by younger workers as less appealing and exciting than other industries. Competition for these younger workers is fierce, and the talent strategies for manufacturers need to gear up to attract these workers. Frontline digital technologies help present a more modern, forward looking work environment to prospective employees. In the Microsoft study previously cited, 63% of frontline workers said they were excited by the work opportunities that new technologies could bring to their jobs and 46% valued receiving new technology tools over wellness and health benefits for improving their work experience.
Aligning Talent Strategies with Productivity Boosting Technology
As manufacturing companies begin to implement new talent strategies to attract, develop and retain workers, they should expand their focus to consider the integration of technology into their strategies. Frontline worker-specific technologies, such as digital automation and assistance on mobile devices, augmented reality (AR) systems, wearable technologies and AI, are transforming how work is performed on the factory floor. These tools help streamline operations, reduce errors, improve safety and ensure that tasks are completed more efficiently.
With U.S. manufacturing entering a new era of growth, companies must adapt to the realities of the limited availability of skilled labor and an evolving workforce demographic. By combining productivity-enhancing technologies with forward-thinking talent strategies, manufacturers are better prepared to overcome labor shortages and skills gaps. The integration of digital tools is crucial for improving both frontline worker training, as well as, productivity and operational efficiency, enabling the manufacturing sector to capitalize on its current momentum and ensure sustainable growth in the years to come.
