Labor Shortages Continue to Plague U.S. Manufacturers

Finding qualified workers in the manufacturing field can be a difficult task to tackle. While every industry has its hurdles to jump during the employment process, manufacturing jobs can be especially difficult for an employer to fill. 

Not only do you need to locate trustworthy, reliable employees as a business in general, but those people also need to meet a certain technical skillset to even qualify for employment, let alone be successful in the position. 

It’s these very difficulties that plague U.S. manufacturers today as facilities continue to struggle to fill open positions with the right workers. 

This topic is so relevant with manufacturers today, in fact, that it was recently chosen as the subject of an industry wide survey done by Sikich Industry Pulse: Manufacturing and Distribution. Needless to say, their results were pretty interesting… 

A Little Background

Before we dive into the results of this recent survey, you might be wondering who Sikich LLP is? (We know we were!) 

Well, who better to inform us of their qualifications to conduct such a survey than Sikich LLP themselves? 

From their website: Sikich LLP is a global company specializing in technology-enabled professional services. Now with more than 1,600 employees, Sikich draws on a diverse portfolio of technology solutions to deliver transformative digital strategies and ranks as on one of the largest CPA firms in the United States. From corporations and not-for-profits to state and local governments and federal agencies, Sikich clients utilize a broad spectrum of services and products to help them improve performance and achieve long-term strategic goals.” 

Sikich surveys manufacturers and distributors multiple times throughout the year on a range of business topics to create industry benchmark data. 

In March of this year, Sikich surveyed more than 130 executives from manufacturing and distribution companies across sectors including industrial equipment, wholesale and distribution, metal fabrication, food and beverage, apparel, footwear and textiles, and transportation, the results of which we’re taking a look at today. 

Now that we have a better understanding of who Sikich LLP is and the data they’re offering, let’s take a look at the results of their survey. 

The Results are In...

Sikich’s recent survey of several manufacturers across the country is a great gauge for those interested in seeing how industry peers are feeling about the state of manufacturing today. 

Ranging from topics such as the geopolitical climate to overall industry expectations, the survey was able to collect the opinions of several qualified individuals in the field, allowing us to analyze and reflect on the results. 

The general consensus of the survey results finds that many industry leaders are finding themselves a bit concerned about the immediate health of the industry as they continue to have to battle challenges such as increasing interest rates and labor shortages. 

What was found was that, despite today’s unfavorable economic conditions, customer demand has actually been up for many manufacturers across the country. A good problem to have, for sure if the supplier can keep up! 

… And that is one of the major problems. Not enough manpower to keep up with the overall industry demand. 

Of those surveyed, 26% cited labor shortages as a major concern they’re currently facing. 

This is a serious problem when we also find that 43% of survey respondents report a consistent or increased customer demand, with 34% noting improvements to the supply chain. This, compared to the numbers seen from an October 2022 survey in which 43% of manufacturers reported supply chain issues, is a drastic improvement in the industry proving once again that overall industry health and demand is not necessarily the problem here, but, rather, internal issues (perhaps brought on by external sources) that continue to get in the way of our overall success. 

One such issue, the survey found, is that many businesses in the industry, faced with dwindling employment numbers, have actually had to increase employee wages to better meet labor needs and support employees through the recent economic downturn. 

… And by “many” businesses, we mean more than half (53%) of those surveyed, who reported increasing company wages by 5% to 8% to 9% or MORE over the past 12 months alone. Many of which noting said wage increases were significantly higher than previous increases over the entirety of the past 5 years! 

Discussing his beliefs on the topic, Sikich partner-in-charge of manufacturing and distribution services, Jerry Murphy said, “While manufacturers are working through turbulent economic conditions, customer demand remains consistent-putting an even bigger strain on labor challenges. Manufacturers that invest in talent strategy differentiators today will be able to meet customer demand and weather the economic storm, setting themselves up for long-term success.” 

Preparing for the Future

As we’ve seen above, the entirety of the manufacturing industry is currently struggling with a multitude of issues that have gotten in the way of the sector taking off over the past few years. 

In this very survey, only 20% of manufacturers reported being able to fill an open position within their facility in less than 30 days. 

… And with expenses continuing to rise and qualified labor continuing to fall, many are at a loss for words on how to best tackle these pending issues. 

One could argue, however, that, if we were able to kill two birds with one stone, a domino effect might begin to take place, ultimately leading to an industry wide rejuvenation! 

Folks, we believe that “stone” is digital transformation. 

By investing in digitally transforming your facility today, you are taking the necessary steps to prepare yourself and your factory for the challenges of tomorrow. 

Don’t just take our word for it, though… To reiterate the quote above, “Manufacturers that invest in talent strategy differentiators today will be able to meet customer demand and weather the economic storm, setting themselves up for long-term success.”  

This is becoming an industry—wide consensus that all of us will have to face sooner or later. And those that choose “later” will more than likely find themselves already falling behind their competitors. 

While investing in digital transformation can be a costly venture, when comparing it to continuously increasing labor costs due to skyrocketing interest rates and today’s overall poor economic health, you can clearly see an investment in digital transformation today is MUCH cheaper than the alternative. 

… And, even if an employer was able to pay triple the salary of their competitor’s capabilities, that doesn’t solve the issue of an overall lack of qualified employees in the employment pool. 

Digital transformation tackles both of those issues. 

A facility that has undergone a complete digital overhaul will no longer need to worry about labor costs and labor shortages because they’ve taken the necessary steps to prepare themselves for such situations. 

As for meeting increased customer demand, you’ll find that, by investing in digital transformation, your facility will be better equipped and more dependable to handle and deliver our hoped-for surge in business. 

With overall expenses down, a lower dependence on a workforce that basically no longer exists, new inventory flowing, and profits soaring, almost all of the industry issues noted above slowly begin to resolve themselves and we find ourselves – once again – leading the world in manufacturing capabilities.  

That’s good for the economy, that’s good for the country, and that’s good for you! 

The Wrap Up

Digital transformation isn’t here to take anybody’s job… Rather, it is about creating more rewarding positions that include built-in training to guide new-hires to being an effective part of the company team. Rather, digital transformation is here to replace an employee that, unfortunately, no longer exists! 

And by investing in a digital overhaul of your facility, you’ll be creating new jobs and widening your net for potential employees, allowing for prospects with talents in different areas of expertise to step in and aligning your company’s overall business strategy to better meet the demands of the years to come. 

 P.S. If you’re interested in learning more about digitally transforming your facility, we’d love to hear from you… 

Feel free to reach out to Rain Engineering’s team of qualified manufacturing experts today to take that first step towards securing your business’s future.