Manufacturing Labor: The Crisis Still Continues

The year 2022 was anything but typical.  Or boring.  Or easy for businesses of all types, especially manufacturing businesses.  Just when we’re seeing the end of the tunnel with COVID, “Supply Chain” and “Inflation” became household words.  But what about manufacturing labor, the #1 problem reported by the National Association of Manufacturers just prior to the initial COVID breakout?  Unfortunately, I have to report we are still in the hole. 

Supply chain issues briefly topped the NAM charts, but in the latest survey from December 2022, Attracting and Retaining a Quality Workforce is once again #1. 

In January 2020, the Bureau of Labor & Statistics reported 480,000 open jobs in the manufacturing sector.  By January 2022 that number had INCREASED to just over 1,000,000 open manufacturing jobs.  Fortunately, that total has dropped, but only to 750,000, still 50% higher than pre-pandemic. The Great Resignation is not the whole story: 

Shrinking Manufacturing Workforce

In 2019, Deloitte found 27% of the manufacturing workforce was 55 years or older, and the Boomers continue to retire at the rate of approximately 10,000 per day.  Unfortunately, younger generations show very limited interest in working in manufacturing.  In short, Boomers are leaving manufacturing faster than younger generations are entering.  And this is complicated further by the skills gap.  Deloitte in a 2021 analysis reported 36% of new entrants to the job market had no interest in industry, and 38% had misaligned expectations.  And this is on top of a lack of STEM education and effective job training programs.

COVID’s Impact

COVID has encouraged the Boomer manufacturing workforce to retire at an even faster rate.  A Pew Research Center analysis showed that unlike previous recessions, retirements accelerated after the COVID.  An additional 1.7 million Boomers retired in 2020 compared to 2019, and the Federal Reserve Bank of St. Louis reported that number continued to climb in 2021 to a total of 3 million additional Boomer retirements.

 Unemployment?

In February 2020, the Bureau of Labor Statistics reported US unemployment at 3.5%, which quickly ballooned to 14.7% by April 2020.  The latest reports show the unemployment rate has hit 3.4% in January 2023, the lowest in 50 years. A key issue is the Labor Force Participation rate, which measures those working or seeking work in the job market.  BLS reports the Labor Force Participation rate remains stalled at 62.3% for December 2022, down from a pre-pandemic rate of 63.3%.  A 1% differential may seem minor, but it equates to a drop in the workforce of approximately 1 million workers.

There is job growth, just not in manufacturing.  In December 2022, manufacturing added 8,000 jobs, only 3.6% of the total jobs added.  It’s clear manufacturing is struggling to attract younger workers.

Long Term

The demographics of the manufacturing labor situation are not pretty, and the challenges will continue.  Deloitte Insights projects a gap of 2.1 million unfilled manufacturing jobs by 2030 due to a combination of skills gap and the stagnant workforce.

What to do?

Increasing interest in STEM topics in schools is a sound initiative to introduce students to the core technologies, and to build awareness of career opportunities.  Job training programs, including 2-year manufacturing technology programs will also shrink the skills gap and expand the manufacturing workforce.  But these are long term efforts, taking years to put in place and generate significant results.

So, what options do manufacturers have for the short term and into 2030?  Consider collaborative robots (cobots) as your primary automation building block and start to automate your manufacturing operations. 

Why Collaborative Robots?

  1. Low installed cost enables even the smallest shop to automate.  Unlike traditional automation, collaborative solutions have successfully stripped costs out of every phase of a typical project.  It is common now to see complete systems in machine tending, welding and palletizing deployed for less than $100,000, often less than $85,000.
  2. Collaborative robots enable Incremental Automation.  Unlike the traditional all-or-nothing approach, the ability to safely deploy collaborative robots side by side with skilled operators allows a single station, machine or process to be automated.  Automate one cell, generate ROI, and then proceed to incrementally automate more operations.
  3. Collaborative robots are quick to deploy (see #1 above) and quick to re-deploy, making them perfect for high mix / low volume operations.
  4. Best-in-class collaborative robots are easy to program, and do not require dedicated teams of engineers and programmers.

Now, where to start?

  1. Fill the gaps.  If you are struggling to hire welders, machine operators, pack line workers or other roles, invest in cobots to fill the voids left by the manufacturing labor crisis.  The installation of a $85,000 collaborative robot tending a machine tool addresses both the labor shortage and the low machine utilization – a double improvement to the bottom line.
  2. Automate DDD applications – Dull, Dirty, Dangerous.  These positions are the most difficult to hire and automating them will improve job satisfaction and worker morale.
  3. Make manufacturing attractive.  See #2 above and recognize that the hesitancy of younger generations to enter manufacturing careers is directly proportional to their view of DDD jobs.  Collaborative robot automation can change the overall image of your manufacturing floor and make it easier to recruit qualified candidates.
  4. Automate the simple, repetitive, dull tasks.  Move skilled workers into higher value assignments.
  5. Leverage collaborative robot flexibility.  Look for areas where automating high mix / low volume processes can increase capacity and reduce costs.

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