The labor market for manufacturing industries has been rough for North American companies and workers alike over the past year. Here’s a breakdown of past challenges and opportunities to come in the new year.
North American Manufacturing Labor Shortages in 2023
State of American Industry
The American manufacturing industry has been on the precipice of recession multiple times over the past few years. Particularly, November 2023 numbers revealed a massive dip in available jobs, shown in this statista graph of month-over-month changes in labor supply.
There are many reasons industries are underperforming, ranging from an aging workforce to cheaper offshore production to a slowing domestic economy that stunts consumer demand for US-made products.
State of Canadian Industry
The Canadian manufacturing market has dealt with similar difficulties to America’s predicament.
NGen, which is a Canadian industry-led non-profit organization for advanced manufacturing interests, held the N3 summit in early February 2024, during which digital transformation strategies were discussed.
“When it comes to talent acquisition and retention, namely, finding top-end talent that is interested in manufacturing, and has technical expertise and training within those fields [is becoming sparser],” reports Canadian Manufacturing in their coverage of the event.
Current Job Market Concerns for 2024
Deloitte states, “In 2024, manufacturers are expected to face economic uncertainty, the ongoing shortage of skilled labor, lingering and targeted supply chain disruptions, and new challenges spurred by the need for product innovation to meet company-set net-zero emissions goals.”
None of this is new or surprising, but the heightened focus on net-zero does put pressure on manufacturers to pursue growth while simultaneously lowering emissions.
American Response to Manufacturing Jobs
The US Bureau of Labor Statistics revealed that 23,000 new jobs were added to the manufacturing market in January 2024.
The Alliance for American Manufacturing is pleased with the announcement, saying, “Friday’s jobs numbers really highlight the opportunity the United States has to create potentially hundreds of thousands of well-paid factory jobs in the next few years. Doing so will require a commitment from policymakers to get the job done.”
The increase in jobs is a good sign, although the promise of these new positions must be backed up by policy in order for manufacturers and workers to see these realized improvements.
Canadian Response to Manufacturing Jobs
The effects of the current labor shortage will be felt most strongly in the automotive and electric vehicle sectors as EV production initiatives continue. Canada has pledged major increases in investment for electric and hybrid vehicles for several years.
Meanwhile, the province of Ontario reports 18,900 job vacancies within the manufacturing industry, and in contrast, has confirmed approximately 7,000 new manufacturing jobs.
Similar to the United States, Canada must follow through with public investment in manufacturing sectors – as well as training and education paths within manufacturing professions – in order to cover the gaps left by a rapidly aging population.
Recommended Strategies for Addressing Labour Concerns
The National Association of Manufacturers (NAM) compiled responses in a Q4 outlook on manufacturing going into 2024. The responses were overwhelmingly united: “More than 71% of manufacturers cited the inability to attract and retain employees as their top primary challenge [for 2024]”.
It could be dire, but there are concrete ways for manufacturers to adapt to this new reality of scarce specialized labor.
Looming Deadline for Capturing Retirees’ Tribal Knowledge
According to the aforementioned Deloitte report, “In 2022, nearly one-third of the manufacturing workforce was over 55 years of age.” It’s a stunning statistic, and reflects the urgency of capturing embedded knowledge for further generations of the workforce.
By leveraging digital tools and technology, companies can capture the specialized knowledge of the most experienced section of the workforce.
A good way to anticipate lost knowledge from retirees is to capture that same knowledge while your employees are still active contributors to your workforce.
Engage these employees by inviting them to provide critical insight into your production processes. They can also be a positive influence in developing your workforce by assisting in creating training resources for fresh hires. This kind of tribal knowledge is invaluable and will let your workforce progress leaps ahead of the competition.
Deloitte recommends the following strategies for successful digital transformation in combating labor shortages:
- “Improve operational efficiency, reduce costs, and increase revenue by leveraging a smart factory approach; [and]
- “Improve supply chain visibility, resilience, and performance by leveraging digital tools”
In other words, we all know how critical digital transformation has been in the era of Industry 5.0 since the development of Smart Tools in the modern factory.
Building on this, recognize the importance of upgrading your base technologies now instead of later, so that standard operating procedures and best practices don’t begin to drain out of your daily operations due to lack of digital standardization.
Upskilling Opportunities for Talent Acquisition
Says Deloitte, “Manufacturers should also think about ways to create new opportunities for upskilling existing employees. For example, companies could free up three additional hours a day per person by adapting digitization and automation and offer more training sessions to workers during those freed-up hours.”
This suggestion to free up hours for training is a decent one, but you could do much better by combining production line work with skilled training by incorporating comprehensive digital work instructions that are easily accessible to each user.
Pro Tip: The most prolific manufacturer of seats for industrial vehicles and work equipment, Seats Inc., is a perfect example of how adding standardized work instructions trained new hires without downtime or decrease in productivity.
There may well be fewer talented manufacturing workers overall in the future, so investing in these digital tools and individual worker’s skillsets is paramount to maintaining efficiency.
