Manufacturing Faces Massive Labor Shortages; Industrial Automation Technologies and Sustainability Are Key to Overcoming Them

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By James Prestwood | 1Q 2023 | IN-6843

Manufacturing industries are facing labor shortages like many other market verticals in Western markets, with overall unemployment rates being historically low. Manufacturers need to change their messaging around sustainability and technology, and adopt sustainable production practices and new technologies to attract new workers. Industrial automation can help manufacturers overcome this challenge, making the workers they already have more efficient and serving as a strong attraction to new workers. Battery manufacturers are an excellent example of how manufacturers can position sustainable production processes

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Unemployment Rates Are Low, Creating a Dire Situation for Manufacturers


The U.S. unemployment rate in January was at its lowest level (3.4%) since 1969. Germany has a similarly low rate of 2.8% (December 2022), and both are below the general economic consensus of healthy unemployment rates (3.5% to 5%). While these are already concerningly low rates for the economy, the situation for the manufacturing sector is even more dire. In the United States, the manufacturing unemployment rate is currently at 2.6%, a slight improvement from December 2022’s 1.8%, but still significantly lower than pre-pandemic levels of 3.9% (February 2020). Germany has also seen its manufacturing job vacancy rate creeping up to 2.9% (3Q 2022), 1.8% higher than the previous year. These issues are compounded for the manufacturing sector, as it faces high retirement rates from the baby-boomer generation. The Society for Human Resource Management (SHRM) forecasts that over the next decade, 2.6 million baby boomers working in the manufacturing industry will retire. According to the U.S. Census Bureau, in 2020, the manufacturing sector employed nearly 12 million people, so this retirement number represents around 20% of the manufacturing labor force in the United States.

Manufacturers Need to Change the Market Perception of the Sector


The manufacturing market already faces a disadvantage within the labor market, with poor stereotypes regarding sustainability, working conditions, and compensation compared to white-collar jobs. Furthermore, as many manufacturing roles now require high-value technical skills, such as coding and data management, manufacturers are competing against companies like Google and Amazon for talent. As the economic soundness and reliability of outsourcing and long supply chains are being challenged, manufacturers need to adapt their production processes and messaging to attract new workers. Manufacturers may not be able to identify a direct Return on Investment (ROI) for attracting new employees, but it is incredibly important. Young, talented labor wants to work for companies that exhibit an ethos that people engage with; key examples are sustainability and being technologically forward thinking. Manufacturers need to adopt these new technologies and sustainability practices, and ensure that they are well advertised to students and potential employees. Companies need to mirror the success of Tesla, which applied the shine of Silicon Valley tech work to the unattractive features of automotive manufacturing.

New Automation Technology and Sustainability Messaging are Key to Attracting New Talent


Industrial automation is an example of technology that improves a manufacturer’s use of labor, and makes manufacturing processes more attractive to highly skilled labor. An excellent example is Stratasys’ P3 Automated Production Cell prototype, an automated Three-Dimensional (3D) printer that allows for 24/7 production with nearly no operator involvement. This lets workers be more mobile on the factory floor and manage a wider range of machines, promoting a one-to-many architecture, rather than a one-to-one orientation. Alongside this, new Supervisory Control and Data Acquisition (SCADA)/Human-Machine Interface (HMI) software supports manufacturers by making data available enterprise wide, marrying Enterprise Resource Planning (ERP), Manufacturing Execution System (MES), and Operational Technology (OT) sensor data. Offerings like Hitachi Vantara’s Lumada DataOps portfolio and GE Digital’s Proficy portfolio aim to support manufacturers in leveraging actionable business intelligence from manufacturing data. Manufacturers need to make use of SCADA/HMI software offerings that have attractive User Interfaces (UIs) and remote control capabilities. New workers want to use slick new UI designs, not be thrown into using displays designed in the early 2000s. Furthermore, remote working has never been more important to the labor market. Manufacturers will struggle to completely adapt to this model, due to the nature of production; however, deploying HMTL5 support solutions that can be accessed from anywhere goes a long way toward meeting the flexibility that workers are demanding. Examples of technology vendors that offer software with attractive UIs and HTML5 designs are AVEVA’s Plant SCADA, Siemen’s WinCC V7, and Yokogawa’s CI Server.

The current market drive around electrification will help promote a positive change in workers’ attitudes about manufacturing. The battery manufacturing narrative fits in well with the current trend toward sustainability, with manufacturers like Northvolt building its brand around delivering the “world’s greenest batteries,” highlighting information such as 100% fossil-free energy use in its production processes. Huge new battery manufacturing facilities are under construction, such as Panasonic Energy’s US$4 billion factory in Kansas, CATL’s €7 billion factory in Hungary, and GM/LG Energy’s US$2.3 billion Ohio plant. This construction trend isn’t slowing, with 111 industrial battery projects being developed across European Union (EU) member states, all requiring a large and technically-competent employee base. These facilities will fit the correct messaging that manufacturers should look to embody—manufacturing can be part of the new sustainable supply chain. The pressure to make changes and match this messaging and production ethos will only continue to grow, and manufacturers that fail to adopt this will find themselves looking outdated and incredibly unattractive to new talent. Traditional heavy manufacturing industries, such as chemicals, primary metal, and pulp and paper, will be likely to struggle the most in making this transition, as they have high sunk costs in production assets and a more challenging battle to make their final products “green.”