How Labor Shortages Are Holding Back Manufacturing

Manufacturing has long been a cornerstone of economic growth, innovation, and employment. But today, despite the ongoing boom in activity, a challenge threatens to impede progress: the skills gap crisis.

With more than a million vacant positions in the industry, the lack of a skilled workforce is having a major impact on the manufacturing sector’s potential. Here’s a closer look at the labor shortage and potential solutions to drive the industry forward.

A surge in activity, a shortage in labor

The resurgence of U.S. manufacturing has been evident over the past few years, fueled by everything from progressive legislation and reshoring efforts to innovation. While this growth has injected new life into the sector, the upward trajectory is encountering a significant roadblock when it comes to hiring.

The recent Dallas Fed’s manufacturing report unveils the labor challenges. For companies recovering from industry downturns or striving to meet the demands of new investments, hiring is proving to be a formidable obstacle. One executive succinctly captured the sentiment: “With the lack of reforms in immigration and education, we are encountering major difficulties in running industrial operations.”

The shrinking manufacturing workforce

Examining manufacturing employment over the past few decades highlights a concerning trend. During the last 20 years, the number of manufacturing workers has declined from 14.4 million in July 2003 to 12.98 million in July 2023. If you go back even further to July 1983, the number of manufacturing workers was 17 million.

When analyzed as a percentage of the overall workforce, the decline is even more pronounced. Manufacturing’s share of total employment has dropped from 18.8% in July 1983 to a mere 8.3% in July 2023.

The cultural challenge

The shortage of skilled workers isn’t just a numerical crisis but a generational shift. The incoming workforce — primarily consisting of millennials and Generation Z — holds different perceptions of what constitutes a rewarding and meaningful job. The emphasis on digital skills and technological careers has overshadowed the value of hands-on trades.

Aidan Madigan-Curtis, a partner at venture capital firm Eclipse, explains: “They’ve been taught that the future is digital. And while obviously at Eclipse we deeply agree with the digitization of industries, there’s still a huge role for the human element in human-machine interaction.”

Seeking solutions

As the shortage of skilled workers takes center stage, innovative solutions are emerging to bridge the gap. One such solution is the rise of private trade schools and apprenticeship programs. Organizations like Forge are leading the charge by providing paid training to individuals seeking to learn skilled trades.

Forge operates a 12-week apprenticeship program teaching carpentry skills and preparing participants for specialized roles. Apprentices not only gain hands-on experience but also secure full-time positions upon graduation. This approach helps alleviate the labor shortage while creating a new generation of skilled workers.

Embracing a collaborative approach

Addressing manufacturing’s labor shortage requires a multipronged strategy. Collaboration among the industry, educational institutions, and government bodies will be crucial. Now is the time to encourage young individuals to consider trades as viable and rewarding careers to help reshape the future of manufacturing.