Technology as Manufacturing’s Skills and Applicant Solution
For some manufacturers on the journey toward M4.0, technology improves operational performance and enables innovative workforce solutions.
TAKEAWAYS:
● The US manufacturing industry has emerged from the COVID-19 pandemic on a strong growth trajectory.
● There could be as many as 3.8 million net new employees needed in manufacturing between 2024 and 2033, and around half of these jobs (1.9 million) could remain unfilled if the talent conundrum is not solved.
● Technology can be used to help attract, engage, and empower workers while enabling the flexibility that many seek.
In December 2023, Deloitte and The Manufacturing Institute embarked on their sixth manufacturing talent study in more than two decades. This article presents some of the important highlights from the resulting publication titled Taking charge: Manufacturers support growth with active workforce strategies (hereafter referred to as the “study”), including how some manufacturers seem to be leveraging technology to help with attracting and retaining talent.
Strong Growth in US Manufacturing, Even as Talent Challenges Persist
The US manufacturing industry is experiencing strong growth. Manufacturing employment has surpassed pre-pandemic levels and stands close to 13 million as of January 2024.1 Construction spending in manufacturing—that is, dollars invested to build new or expand existing manufacturing facilities—has nearly tripled since June 2020 when it reached a record high of $225 billion in January 2024 (Figure 1). The desire to de-risk supply chains and establish facilities closer to US customers has continued to drive investment from domestic and foreign manufacturers.2 Legislation and policy have played a role in spurring investment in new clean technology and semiconductor and electronics manufacturing facilities,3 as well as guiding future investment to support the development of a modern and innovative defense industrial ecosystem.4 These combined efforts seem to signal a positive outlook for the manufacturing sector, with potential implications for innovation, supply base expansion, job creation, and overall industry resilience in the US.
Figure 1: Total construction spending in manufacturing has grown significantly in recent years
Workforce Issues Remain a Leading Concern for Manufacturers
Alongside this potential growth, the study identified another trend: There is not just a skills gap, but notably a gap in applicants for open positions in manufacturing. More than 65 percent of respondents of the National Association of Manufacturers’ (NAM) outlook survey for the first quarter of 2024 indicated that attracting and retaining talent is the primary business challenge.5 With the exception of the pandemic, workforce challenges have also been the top concern for manufacturers surveyed by NAM since the fourth quarter of 2017.6
Even with some recent cooling, the labor market remains tight, and the resulting applicant gap may continue. This could impact manufacturers’ ability to fully capitalize on this recent growth in public and private investment. The net need for new employees in manufacturing could be around 3.8 million between 2024 and 2033. And, around half of these open jobs (1.9 million) could remain unfilled if manufacturers are not able to address the skills gap and the applicant gap7 (Figure 2).
Figure 2: An estimated 1.9 million open positions may prove difficult to fill by 2033
Evolving Skill Requirements Complicate the Search for Talent
Further complicating the picture is the evolving landscape of skill requirements and the rearchitecting of roles that is likely to be required as manufacturers continue their journey toward the smart factory and Industry 4.0. As operations become more complex and manufacturers look to integrate the information collected from their smart connected devices, equipment, and systems, highly skilled roles—that will likely require a combination of digital skills, soft skills, and high-level technical skills—could grow the fastest between 2022 and 2032.8
The study found a 75 percent increase in demand for simulation and simulation software skills, sought mostly for technology-enabled production or testing roles (Figure 3). Customer service and client support skills showed significant upticks in demand as well, and this trend is likely to continue as manufacturers increase digital interactions with customers and expand their aftermarket services.9 Manufacturing-specific skills, including those related to advanced processes like 3D printing, have also experienced gains. And the growth in demand for soft skills like critical thinking and problem-solving tend to underpin many of the other skills that have shown the greatest gains.
Figure 3: Between 2019 and 2023, a combination of digital skills, soft skills, and high-level technical skills show the fastest compound annual growth rates in manufacturing
Technology Can Help to Address Changing Workforce Expectations
As more baby boomers and Generation X workers approach retirement, the workforce may comprise more millennials and Generation Z workers, who can have a different set of expectations when it comes to work culture and the work environment. The study found that technology, including AI and automation, can be used to help attract, engage, and empower workers while enabling flexibility.
Providing the Flexibility that Workers Want
Nearly half (47 percent) of respondents in the study indicated that providing flexible work arrangements—for example, flexible shifts, shift swapping, split shifts—is the strategy that their company has found to be most impactful for retaining employees (Figure 4). Some manufacturers are partnering with innovative temp agencies to secure the workforce and skills they need while providing workers with the flexibility they desire. For example, leveraging digital tools and apps, some temp agencies enable part-time workers to sign up for work slots and overtime while providing the flexibility to cancel or swap shifts, and vacated spots are backfilled with another worker with the help of AI.10
“The desire to de-risk supply chains and establish facilities closer to US customers has continued to drive investment from domestic and foreign manufacturers.”
Taking a Bigger Role in Skills Development
The applicant gap seems to be prompting more employers to focus on training as a means to attract and retain employees (Figure 4). According to Deloitte’s Workforce Experience Research Study, employees who feel they can acquire necessary skills that are important for the future are 2.7 times less likely to leave their organization in the next 12 months.11 Many companies that participated in the study are leveraging e-learning platforms to facilitate flexible and self-paced learning opportunities. Some indicated that they are exploring the potential of augmented or virtual reality (AR or VR) for comprehensive training, and one executive added that VR has reduced training time for welders at the company by 50 to 60 percent. The flexibility in technology-facilitated trainings can enable individuals to upskill at their convenience, helping to foster a more dynamic and efficient learning environment.
Technology as a Magnet for Talent Attraction and Retention
The study gleaned that high-tech manufacturing environments seem to appeal to the workforce. For example, manufacturers that have built smart factories to enhance performance are also noting higher retention in these high-tech facilities.12 The study also found that technology can provide autonomy by giving operators new channels to report production issues, which can enable efficient triage and rapid problem resolution. In another recent report, over half of the surveyed workforce believe it is important for manufacturers to focus on the consistent availability of technology to attract more people.13
Figure 4: Most impactful strategies to attract and retain employees, according to survey respondents
The Road Ahead
Manufacturers are actively applying an innovative mindset to address talent challenges the industry faces, including using technology to help attract, engage and empower workers. With the industry poised for growth in the next decade, these approaches will likely continue to be necessary as manufacturers compete for the talent they need. M
About the authors:
John Coykendall is a vice chair, Deloitte LLP.
Victor Reyes is a managing director in Deloitte’s Human Capital practice.
Kate Hardin is executive director of Deloitte’s Research Center for Energy and Industrials.
John Morehouse is the research leader for industrial products manufacturing in the Deloitte Research Center for Energy & Industrials.
Gardner Carrick is the chief program officer for The Manufacturing Institute, the non-profit affiliate of the National Association of Manufacturers.
Footnotes:
1 Deloitte analysis of data from U.S. Bureau of Labor Statistics.
2 Reshoring Initiative, Reshoring Initiative 1H 2023 Report, 2023.
3 Deloitte analysis of data from: The White House, “President Joe Biden: Investing in America,” accessed March 21, 2024.
4 US Department of Defense, “DOD releases first-ever national defense industrial strategy,” press release, January 11, 2024.
5 National Association of Manufacturers, “2024 First Quarter Manufacturers’ Outlook Survey,” March 5, 2024.
6 2024 Deloitte and The Manufacturing Institute Talent Study.
7 Deloitte analysis of data from U.S. Bureau of Labor Statistics and estimates of private investments from Invest.gov.
8 Ibid.
9 2024 manufacturing industry outlook | Deloitte Insights
10 MyWorkChoice, “Bring Flexibility to Your Workforce,” accessed January 2024.
11 Deloitte Digital, Workforce Experience Research Study, 2023.
12 2024 Deloitte and The Manufacturing Institute Talent Study.
13 Deloitte Insights and The Manufacturing Institute, Competing for talent: Recasting perceptions of manufacturing, 2022.