Manufacturers have complained for decades that too few qualified workers are in the market for manufacturing jobs, but the challenge has intensified, especially during the COVID-19 pandemic. Adding to their staffing problem, as much as one-third of the US manufacturing workforce is over 55 years old, at or near the point at which they consider retiring for good (Source: National Association of Manufacturers). According to the US Chamber of Commerce, manufacturing is one of the industries most affected by the labor shortage, with 45% of all job openings in manufacturing unfilled in during the summer of 2023. Nevertheless, individual companies can do much to meet their talent needs.

How We Got Here

The pandemic’s most dramatic contributions to the labor shortage were a spike in unemployment followed by a drop in workforce participation rates (percentage of the working-age population who were working or seeking work). At the height of the pandemic, more than 120,000 businesses in the United States closed temporarily, and more than 30 million workers were unemployed. But as companies reopened in 2022, many people of working age opted out of the labor market, and many who were employed resigned. In 2021, 47.8 million workers quit their jobs, and in 2022, more than 50 million did so. The workforce participation rate was 62.7% in May 2024, versus 63.3% in February 2020 and 76.2% in January 2001. So, when employers in 2023 added 3.1 million jobs, they could not always fill these job openings (Source: US Chamber of Commerce).

Exacerbating this situation, attitudes about work and working conditions have shifted in ways that make job seekers more selective, often to the detriment of employers in manufacturing. Longstanding factors include young people’s preference for and greater familiarity with professional than with manufacturing careers. And the pandemic-driven work-from-home arrangements fed what is now a strong preference for remote work arrangements. In a May 2022 survey of unemployed workers by U.S. Chamber, about half (49%) of respondents indicated they were unwilling to take a job that does not offer an opportunity for remote work. Such attitudes put manufacturers at a particular disadvantage. Manufacturing jobs typically require a worker’s physical presence. Many of these jobs also are physically demanding, and they may require hard-to-find skills such as working with robots and other Industry 4.0 technologies.

What Manufacturers Can Do

Leading companies in the industry have identified at least five ways in which manufacturers can attract and keep talent even during the current labor shortage:

1. Develop talent internally. Existing employees have already demonstrated an interest in manufacturing. Companies that invest in training not only add to their value but also motivate and attract workers seeking opportunities for advancement. Tom Ferguson , CEO of AZZ Inc , says upskilling the workforce helps his company with smooth leadership transitions and improves employee retention. Gregory Rustowicz , CFO of Columbus McKinnon , says, “People are everything in a business,” so a key to success is identifying high-potential employees to fill key positions.
2. Cultivate an ownership culture. A company culture that encourages employees to take initiative, solve problems, and show leadership goes a long way in nurturing talent. Victor Mendelson , co-president of HEICO , says when his company acquires a start-up, they let the acquired company maintain its own “smaller ownership mentality.” At Amsted Industries , CEO Stephen Smith takes this to the level of adopting a “100% employee-owned model,” which “fosters an ownership culture and offers competitive advantage in retention, talent acquisition, and resilience through economic cycles.”
3. Decentralize the organization. One move that can create the conditions for an ownership culture is to decentralize the structure of the organization. Mark Behrman , CEO of LSB Industries, Inc. , says a company’s executive team is not always positioned to make the best decisions. Employees who are closer to the customer can not only make better-informed decisions but also move faster in many cases. Darron Ash , the CEO of Sammons Enterprises, Inc. , describes decentralized organizations as “helpful in empowering people ... [and giving] the employees a sense of accountability and pride in the work they do.” Such a structure can contribute to job satisfaction, potentially increasing employee retention and decreasing turnover.
4. Lead with empathy. The right kind of leadership also can attract and retain talent. The key, according to Bob Chapman , CEO of Barry-Wehmiller , is empathy: “The most profound thing we teach about creating leaders is the ability not to judge people, but to listen to them with empathy.” Mike Olosky , CEO of Simpson Strong-Tie , takes another tack toward considering employees’ perspective: recognizing that they need to earn a living. Olosky told us, “If a company can make sure that their employees can take care of their families, they are more motivated to get working hard at a company.”
5. Get assistance from AI. As artificial intelligence does with other vexing challenges, it may help companies address the current labor shortage. AI tools have potential to improve employee recruitment, selection, training, and retention. Even with fewer candidates in the pipeline, AI capabilities such as predictive analytics can help companies select the ones who are likely to succeed on the job and build a career with the company. AI also can support performance management, identify skill gaps, and provide relevant training and development opportunities.

Manufacturing companies, with their aging workforces and challenging jobs, can expect to need continued resilience in the face of labor shortages. Fortunately, they can look to high-performing peers as role models. A good place to start would be to generate ideas for developing internal talent, cultivating an ownership culture, decentralizing the organization, fostering empathic leadership, and identifying how artificial intelligence can support these efforts.