New Survey Finds Pandemic-fueled Labor Shortages Intensify Talent Crisis in Manufacturing

Today's post comes to us from the executive director of The Workforce Institute, Dr. Chris Mullen, Ph.D., SHRM-SCP, SPHR.

We've got some interesting new research that finds that although many manufacturers are emerging from the COVID-19 pandemic on solid footing – with more than half achieving year-over-year growth (54%) – a mounting skilled-labor shortage threatens to delay the sector's full recovery. 

Featuring year-over-year comparisons to a similar study completed by The Workforce Institute before the pandemic took hold, the 2021 research explores linkages between understaffing, overtime, employee burnout, absence, and turnover, as well as strategies bolstered by people-centric technology and used by manufacturers throughout the COVID-19 pandemic to overcome these barriers to business success.

A few key findings:

The Manufacturing Talent Gap Grows Wider

• Before the pandemic – a period when many manufacturers were already grossly understaffed – 38% of manufacturers had trouble finding candidates with the right skills. Today, that number has jumped to more than half (54%).
• The research shows that multinationals are facing greater struggles than their U.S.-only counterparts: Almost 3 in 5 multinational manufacturers cited difficulty acquiring skilled talent (58%) compared to just half of U.S.-only manufacturers (49%), while 49% vs. 38% reported difficulty retaining skilled employees.

Understaffing is a Significant Problem 

• In March 2021, manufacturing production lines were understaffed a quarter of the time (24%).

• Between January and March 2021, more than 2 in 3 hiring managers let employees go due to poor attendance (68%), just as 1 in 10 said managers had to adjust labor schedules every day to account for unplanned absences (13%).
• Turnover is up 15% over the prior year: Nearly 3 in 5 manufacturers (59%) experienced ”œhigher-than-average” turnover from March 2020 to March 2021 compared to 44% from March 2019 to March 2020.
• All together, these obstacles are hitting manufacturers' bottom line in the form of productivity losses (37%) and overtime pay (34%) as well as costs related to employee burnout (28%), employee turnover (27%), and recruiting (23%).

Investing in the Workforce to Close the Talent Gap

• Four in 5 manufacturers (81%) say investing in the workforce is currently a key component of their digital transformation strategy, and just as many say their frontline managers already have the right tools and resources to help employees advance along their career path.
• Employee cross-training has become a greater focus for nearly 3 in 4 manufacturers (73%), and 1 in 3 now offer mentorship programs as a way to encourage knowledge-sharing between seasoned workers and newer employees (up 7% over the prior year).

Workforce Institute board member John Frehse weighed in on the findings, noting, ”œAs shockwaves continue to reverberate through the supply chain, employees are being asked to be more agile than ever. As exhausted as we all are right now, there is no better time to assess what has happened, develop the right labor strategies to protect the emotional well-being of employees, and make our companies more resilient for the next big disruption. It is not a question of if it will happen again, but when.”

Check out John's recent post on Panic in the Supply Chain.

You can also read the full report here: The Resilience of Manufacturing: Strengthening People Operations and Bridging the Talent Gap Amid Crisis.