Since baby boomers began retiring in the mid-2000s, the skilled labor shortage has become increasingly apparent. A study in 2018 found that 64% of the U.S. manufacturing companies surveyed experience significant setbacks caused by the shortage of skilled workers. Another study by Deloitte, a research firm, estimates that 2 million U.S. manufacturing jobs will be vacant by 2025. The massive baby boomer generation exiting the workforce fuels this skills gap. As the generation retires, the impact of the shortage will continue or worsen for companies, especially if they don’t plan.
The Impact of the Skilled Labor Shortage
Most industrial companies are already feeling the effect of being short-staffed. If you haven’t experienced it yet, take a look at the number of skilled workers you have near retirement age. The dangerous misconception that you’ll be able to hire a replacement as needed leads to production losses and strain on staff. If you rely heavily on equipment, then struggling to replace mechanics will trickle down to maintenance backlog and an increase in downtime. Many companies do their best to get by with delegating tasks to other personnel, but they often aren’t properly trained.
The Deloitte survey found that 50% of manufacturers hire third-party contractors, and 60% count on employee overtime to meet demand. Both methods come at an increased cost to the company financially or otherwise. Employees given too many duties or performing work they aren’t trained for are more likely to be unhappy at work. If you want to empower your employees and have their support for the company goals, then maintaining a happy and healthy work environment will help.
The trickle-down effect of the skilled labor shortage adds up to a large financial impact. For one manufacturer, the projections estimate an 11% annual earnings loss. So, the cost of not having skilled workers in the positions needed for that manufacturer will be a total of $4.6 million.
Skilled Labor Shortage Solutions
Save Your Employees’ Time
If you need your current staff to do more with the time they have, then find ways to save them time on inefficient processes. Are you still operating with paper or spreadsheet-based processes? There are likely several hours of deciphering data, duplicate data entry, and reporting that you can eliminate with technology. Not only will your employees be more available to fill the skills gap, but also you will reap the huge benefits of software implementation.
Track Employee Training
Employee certifications or training should not just live in their employee file in the human resources department. Having a digital system that tracks employee training means you can quickly and easily identify who on staff has the skills you need to fill the gap. An employee may be forklift certified, but you weren’t hiring forklift operators when they joined the team. Redlist can help you forecast your available people and assets, as well as track their training.
Create a Career Development Program
Your current workforce is your most valuable asset, so don’t focus entirely on recruiting. Instead, create a career development program for your employees. Managers or team leaders can make recommendations for employees who would be a good fit for additional training. You can market it as an employee benefit as well because it is an opportunity to grow with your company. Finally, it should pair retiring employees with younger staff to train their successors. This step guarantees that the knowledge is passed on, including important details about your assets only they know from working on them.
Incorporate Community Outreach for Recruiting
You cannot expect skilled workers to be available when you need to hire them. However, you can partner with local high schools, vocational schools, and colleges to shape your future talent pipeline. Sharing the opportunities available through working with your company can encourage the next generation to choose skilled labor. You can also accomplish this by offering internships that allow young workers to experience your company culture and develop an interest in your industry. One of the companies surveyed has an extensive training and recruiting plan, which results in an employee turnover rate of 5%. This is an incredibly low turnover compared to the average of 23-30%.
Navigate the Skilled Labor Shortage by Planning Today
The skilled labor shortage is not a problem you can put off until later. You have to start planning for it now by optimizing employee time, training, career development, and a strong recruiting strategy. Redlist can help you navigate many aspects of this. It is a worthy investment, not just for solving the skilled labor shortage but to improve your overall business. Manufacturers providing exceptional workforce development and training consistently reach world-class manufacturing levels. This includes meeting 91-100% of their production goals, 80% machine availability, and a 10% gross profit at minimum. Investing in your workforce is an investment in your business, and is the key to planning for the skilled labor shortage.