2024 Outlook: Can Heavy Industry Overcome Its Labor Challenges?
As 2024 kicks off, major manufacturing hubs around the world continue to face a tough labor market.
The struggles vary—whether your company is trying to fill an entry-level mining job paying more than $150,000 annually in Australia or a pipe welder for a refinery in the U.S.
Specifically, in the U.S., the number of jobs available has exceeded the number of people looking for work since the spring of 2018.
Ultimately, these significant labor shortages threaten manufacturing output. Management needs to recruit more effectively and find ways to make the workforce more productive.
Retaining Quality Workforce Proves Challenging
Once upon a time, the United States was a manufacturing powerhouse and employed scores of people. While less dominant globally, today’s U.S. manufacturing and heavy-asset industry is on the upswing.
One reason is due to various government regulations aimed at increasing manufacturing under the Made in America Act. However, all the regulations in the world will not have a significant impact if the workforce is insufficient.
For many companies, labor challenges are hindering their goals. In a recent (Q3 2023) survey by the National Association of Manufacturers (NAM), 72.1% of respondents said attracting and retaining a quality workforce was a top challenge.
The heavy-asset industry includes multiple niches and many of them, including oil and gas, utilities, pulp and paper plants, and mining, are struggling to hire and retain labor.
The problems are deep, complicated, and worsening. McKinsey reports that “71% of mining leaders are finding the talent shortage is holding them back from delivering on production targets and strategic objectives” and 86% of mining executives found recruitment and retention of talent harder than it was two years ago. The number of open manufacturing jobs went from 3% in 2011 to 7% in 2022, according to EY.
Labor retention is another challenge facing these businesses. An Industry Week survey from early 2023 found that 56% of manufacturing employees plan to leave their current jobs during the calendar year. This is not a new phenomenon, “… only 7.6% of respondents said turnover has lessened at their workplace, while 45% and 47.3%, respectively, said turnover was higher than ever or about the same as last year.”
It's no wonder that NAM members were less confident in their company’s outlook in Q3 of 2023 than they were during the second quarter of 2022. The confidence level was nearly 10 percentage points lower than the historical average.
What Is Driving the Labor Shortage?
Manufacturers and industrial sites are facing labor challenges across all positions. Production workers/shop floor employees, engineers, and middle-skill workers (trade workers) are roles cited by Manufacturing Dive.
This challenge spans the globe. In Australia, the National Skills Commission reported that 40% of technical and trade occupations are in shortage.
Filling such jobs is not likely to ease anytime soon. Industry Week presented data that found just 3.5% of Gen Z want to work in manufacturing. There are no simple answers as to why there is resistance. The shortages noted by Manufacturing Dive exist—and the Industry Week data point to four reasons millennials and Gen Z are uninterested in manufacturing:
- Rigid work structures
- Dark, dirty, dangerous
- Fierce competition for talent
- Lack of diversity
A survey by Industry Week of those already in the field offered some clues as well. Workers cited discontent with available free time (a desire for more PTO) and wanting more flexible hours. Workers also want a more high-tech and sustainable workplace.
Industry leaders can make a concerted effort to meet these desires and retain productivity. Doing so should help grow the talent pool, at least to some extent.
Incorporating technology can not only increase productivity but also drive workers of all types into the heavy-asset workplace.
In Japan, manufacturers are making use of robotics to offset labor shortages. Nearly half of all industrial robots in the world can trace their production or design to Japanese companies, according to the International Trade Organization. They add that both orders for and production of robotics are at record highs. “…Japan had 631 robots working in the manufacturing sector for every 10,000 humans in 2021. By comparison, the U.S. had 274 robots for every 10,000 humans.”
Why Technology is a Win-Win for Heavy Industry
Gen Z is typically defined as those born between 1997 and 2012. They, as well as younger millennials, have grown up with technology. As digital natives, they are comfortable with devices and prefer to incorporate them into their personal and work lives. But not just any old technology will do.
In a survey, Dell Technologies found that 91% of Gen Z respondents said workplace technology would impact their job choice, and 80% wanted to work with cutting-edge technology. Furthermore, Adobe surveys found that70% would leave their job for better technology.
Some may equate incorporating technology into manufacturing as the end of human labor. Although some technology/robotics may result in reducing the workforce, it’s not always the case. More often than not, even the best tools require human oversight. The goal of most technology is to improve efficiency by handling repetitive tasks, which allows people to focus on more complex issues.
The bonus is that embracing and investing in technology could boost the industry’s appeal to these younger generations.
Some may regard manufacturing as stuck in a time warp. But it’s not 1950, 1970, or even 2010 in manufacturing. Technology is being incorporated into the industry, and there are many options for those who want to further integrate it.
The mining industry, for example, has seen great advances in technology. “Recent technological advances in mining will impact the existing workforce, livelihoods … up to 30% of predictable manual tasks could be displaced by 2030, while many roles will become highly skilled and shift remotely from the mines (that is, operated at central or operations hubs in town),” notes McKinsey.
And the growth in technology isn’t slowing. Tim Shinbara, vice president and CTO for the Association for Manufacturing Technology, told Manufacturing Dive that demand for manufacturing was increasing in 2023. For example, regarding EV production, he noted, “Companies are likely to increase spending on R&D for chemistry alternatives to lithium for use in producing EV batteries,” which will increase EV manufacturing.
Still, some segments of manufacturing need to increase their commitment to technology. Regarding oil and gas, Grigor Bambekov, a senior executive leader in the industry said, “Companies need to showcase their technological capabilities to appeal to young workers. The oil and gas industry has been slow to adopt new technologies, but with the rise of the digital age that needs to change.”
Technology Can Help Industry Boost Production
Making today’s manufacturing and industrial plants home to more technology will not mean an automatic end to labor shortages. But if younger generations are taught that technical skills and technology are needed, more will be drawn to the sector.
One of the biggest benefits is that heavy-asset businesses can increase productivity. For example, technology can boost productivity by helping manufacturers with scheduling.
“Planners and schedulers can spend countless hours building the best production plans, but when employee counts vary at every shift, those plans must be readjusted in real time,” notes McKinsey.
“Advanced analytics ... can optimize the staffing of available employees, maximizing productivity and service levels by accommodating variables such as individual skills, available equipment, production targets, and shipping dates—all with minimal guidance from supervisors.”
How myTrack Can Help
Deloittenotes that more than 70% of surveyed manufacturers have already begun to integrate data analytics and cloud computing into their processes to enhance productivity.
If you’re ready to provide real-time data to improve decision-making, consider the myTrack platform. With myTrack, your business can improve productivity, job site safety, spend visibility, and build stronger owner-vendor relationships.
Not only will you add automation and data insights with myTrack, but you will redefine the way you navigate contracts, contractors, and the journey to continuous improvement—whether you are managing 200 employees or an additional 2,000 third-party contractors.
Learn more about myTrack today.
