Manufacturers Must Focus on Workforce Planning to Accelerate Digital Transformation Efforts

Sharon Lindstrom, Managing Director Manufacturing and Distribution Industry Leader

Global manufacturing has been expanding, new orders are up, and the sector is experiencing an uptick in job growth. Even U.S. manufacturing appears to be on the rebound; in March, the industry posted its strongest two-month advance in three years. Leading the way in output were manufacturers of fabricated metals, machinery and plastics, paper, and rubber production.

Despite this growth, employment in the U.S. manufacturing sector remains far below the heights seen during the latter half of the 20th century. Technology advancements are a factor, of course. Some of the manufacturing segments mentioned above are among those that have been greatly expanding their use of robotics to enhance productivity, for instance.

While robotics, artificial intelligence and other advancements are making manufacturing companies less reliant on human workers for certain tasks, they are also creating new jobs that require specialized skills. Robotics engineers, big data analysts, 3D printing specialists and cybersecurity experts are just some examples of new positions in the modern manufacturing workforce. Many companies are also now seeking workers to help “teach” robots how to collaborate safely and effectively on the factory floor.

Demographic Trends, Succession Challenges Creating New Risks

Demand and competition for workers with advanced technical and specialized skills, such as programming, analytics and problem-solving, will only increase as manufacturers accelerate their efforts to automate and digitize. Skilled production roles, such as machinists and technicians, will also remain difficult to fill. And as manufacturers seek to recruit, train and retain qualified talent for both new and more traditional roles, two demographic trends are challenging those efforts:

  • Baby boomer retirements: These workers are leaving the manufacturing workforce in greater numbers and taking decades of hard-to-replace knowledge and skills with them. (Pension freezing and the decline in other retirement offerings have helped to hasten the exit for many.) Even though a lot of the expertise baby boomer workers possess will not be relevant in the next wave of the Industrial Revolution, companies will still suffer from losing people who have a deep understanding of the business and industry that can only be learned over time.
  • The new generation’s lack of interest in manufacturing jobs: Many millennials simply cannot visualize a career path in an industry that they associate with monotonous assembly lines, low-paying and less-skilled jobs, and lack of innovation. Some leading companies are working hard to change the millennial mindset about manufacturing. They’re using high-tech and high-touch approaches to showcase just how rewarding manufacturing careers can be — and that talented, tech-minded millennial workers are, in fact, eager to work in the industry. GE’s multimillion-dollar campaign to rebrand itself as a 21st century “digital industrial” company is one well-known initiative. However, these efforts alone cannot solve a labor problem decades in the making.

To be sure, new business models, changing demographics and the persistent supply-and-demand problem in the hiring market contribute to the high number of open jobs in manufacturing and widening talent gaps in many companies. Manufacturers must also recognize how their own workforce planning practices can exacerbate these problems. Lack of attention to succession planning is a prime example.

In fact, many manufacturers have already started to realize that minimizing — or completely overlooking — the importance of succession planning in the past is creating risk for them today as well as for the future. Industry executives who took part in the latest Executive Perspectives on Top Risks Survey from Protiviti and North Carolina State University’s ERM Initiative cited the following as a top risk for their businesses in 2017: Our organization’s succession challenges and the ability to attract and retain top talent may limit our ability to achieve operational targets.

Learning From the Past

As manufacturers seek to modernize their operations so they can compete in Industry 4.0, they face the risk of not being able to meet their objectives due to a shortage of skilled labor. Now is the time for companies to acknowledge potential missteps in workforce planning and adopt leading practices. If they don’t, they risk not being able to align the talent they need to succeed in an Internet of Things world.

Manufacturers should move swiftly to preserve remaining institutional knowledge by establishing mentoring programs that pair baby boomer employees with both Generation X and millennial workers. Identify areas in the organization where succession planning is critical, and create formal programs with milestones and performance measurements. Provide internships that will allow students to learn firsthand about career opportunities in modern manufacturing, and help the company position itself as an employer of choice with up-and-coming talent.

Also, be sure to promote these initiatives internally and externally. Study how peers in the industry — and in other sectors facing serious talent shortages like IT and healthcare — use outlets such as social media to shine a light on their culture, workforce and operations. Showing that the company actively invests in the development of its workforce and values its talent can help the organization retain existing employees with valuable skills sets and experience, as well as improve its chances of recruiting the highly skilled professionals it needs to succeed in the future.

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