Growth in US manufacturing confronts labour shortfalls as three-quarters struggle to fill positions and 62% say turnover has increased
Fifty-seven percent report a year-on-year increase in unfilled jobs, while the average cost to replace increasingly skilled manufacturing posts is $20,000-40,000 says survey
While US manufacturing is in rude health, the need to source labour is creating headaches, as a survey from the UKG Workforce Institute has found that most manufacturers are facing an intense search for skilled employees and higher turnover than in past years.
According to the research, “rises in production capacity, revenue, and shift work, highlight a positive outlook for the US manufacturing sector in the second half of 2023,” but that had been accompanied by a broad rise in a variety of metrics indicating limited labour availability, difficulty hiring and falling retention rates.
Seventy-six percent of the 300 manufacturing HR leaders surveyed said that they found it difficult to fill key roles. Compared to last year, 66% find it harder to now fill openings and 57% had more unfilled positions.
Meanwhile, 62% are seeing more employee turnover, and 54% reported annual turnover rates above 20%.
The cost of these departures and moving in new hires is highly expensive, with the average cost to replace a skilled frontline worker sitting at $20,000 to $40,000.
The trend largely seems to be driven by internal competition for workers, as individuals are less leaving the manufacturing sector and more hopping from employer to employer to get better conditions. According to Great Place To Work, more employees in manufacturing plan to be at their jobs in the next six months than in other sectors, with the rate coming in at four-in-five workers.
This sits within a context of a long-term trend to resituate capacity, particularly for high-end manufacturing, inside the US, which is creating an investment boom. The US Census Bureau measured a 106% increase in construction spending within the manufacturing sector since November 2021, for example.
Despite the intense competition, the survey noted that many were making limited efforts to widen their potential recruitment pool and retain contracted workers.
Only 39% said that diverse hiring is a “high priority” and a mere quarter said that they are proactively recruiting women, while 68% felt that they were failing to give frontline-employees adequate supporting mobile technology and 80% agreed that they prioritised their corporate employees in their culture over hourly team members, who are the ones largely work manufacturing lines.
Organisations will need to rectify these structural issues, as the National Manufacturing Association warned that their could be a 2.1 million position gap between available supply and required positions by 2030 if left unaddressed.