With its combination of long-standing practices and constantly evolving technology, the manufacturing sector is always one to watch when it comes to the labor market. What’s on the horizon for this critical industry? Let’s take a closer look at some important trends.
Manufacturing and the Labor Market
As recently as July 2022, the Federal Reserve “Beige Book” reported a “modest to moderate” increase in employment rates, but also noted weaker demand among some industries, including manufacturing and construction. In general, the state of manufacturing varies from region to region: areas like Philadelphia and Chicago reported slight declines in the manufacturing sector, while others, such as Atlanta and Minneapolis, reported growth.
This isn’t new in 2022, however. Today’s manufacturing sector requires a unique intersection of skills, which are then continuously built upon and improved as processes and technology advance. Back in 2018, a Deloitte study predicted that the ongoing “skills gap” in manufacturing could result in approximately 2.4 million empty positions in the decade between 2018 and 2028, with a potential economic impact of $2.5 trillion. A combination of digital skills and people-oriented skills should be the focus for the near future.
Along with the skills gap, manufacturing faces new challenges with more recent workplace shifts, such as the overall uptick in remote and hybrid work. Many manufacturing positions have historically been in-person and shift-based, which may not appeal to workers now looking for jobs where they can apply their skills in more flexible settings. It’s a competitive labor market out there for companies looking to attract and retain talent, and that’s true of any industry, manufacturing included.
Recession or No Recession?
In the most basic of terms, a recession is a period during which spending drops significantly and economic activity slows overall. More specifically, a “textbook” recession occurs when there are two successive quarters of negative GDP growth. The Federal Reserve Beige Book notes that “Several Districts reported growing signs of a slowdown in demand, and contacts in five Districts noted concerns over an increased risk of a recession.”
So, is a recession coming to the US? The first quarter saw a GDP decrease of 1.5%, according to the Bureau of Economic Analysis. Inflation continues to rise, and attempts to combat it, such as raising federal interest rates, also run recession risks. Whether an “official” recession happens or not, manufacturing can be prepared by looking to turn challenges into opportunities.
Talent Opportunities in Manufacturing
It’s not all doom and gloom in the manufacturing world! A recent jobs report from the Bureau of Labor Statistics revealed that the US added 29,000 manufacturing jobs in June and that the sector has returned to its pre-pandemic levels of employment. Workers are returning; it just has taken some time, and it probably will look a little bit different going forward.
The greatest opportunity at this point is for manufacturers to create a workplace that truly stands out. Forbes recently spoke to several manufacturing executives, who offered some insights into what they’re doing to make their companies attractive employers and take advantage of the major opportunities in the labor market. Some strategies include:
- Investing, both big and small, in improvements for the physical workplace
- Improved safety measures
- More in-depth training for direct managers to equip them to connect with and fully support their team members
- Diversity and inclusion initiatives
- A focus on “belonging,” including affinity groups, mentorship opportunities, and other initiatives
- A robust and clear feedback structure
If a recession is indeed on the horizon, unemployment often comes along with it. Manufacturers can work to alleviate these pressures by looking at ways to make their budgets work smarter and go further, while providing good, safe positions for current employees and for new job seekers where possible. After all, a healthy manufacturing sector means employed people, goods produced, and income to purchase those goods – all key for avoiding or exiting a recession.
By Rose Dorta
Are you a high-performing leader or believe you have the potential to tackle a more challenging role? Would you be interested in career opportunities that are seeking these attributes?
I’d love to chat with you and answer any questions that you have. Email me, Rose Dorta, managing director of Kaizen HR Solutions, here.