Top HR Challenges in Manufacturing

As the manufacturing industry rebounds from the coronavirus, it will have to overcome skill gaps, retirements, and an image problem.

Before the Coronavirus upended the global economy, U.S. manufacturers were facing a shortage of workers. In fact, Deloitte and the Manufacturing Institute estimated in a 2018 study, that as many as 2.4 million factory jobs could remain unfilled through 2028 because of a tight labor market and a lack of people with the needed skills.

Now, the economic expansion in the U.S. has been reversed in sudden and dramatic fashion and the labor market has been upended. As the pandemic wreaked havoc on public health and the economy, some factories were shuttered to avoid the spread of the virus. Manufacturing output measures dropped sharply as the disease spread. Consumer demand for big-ticket items dropped. Disrupted supply lines from China and elsewhere slowed production.

Meanwhile, HR departments scrambled to deal with the new landscape, sorting out staffing demands, and interpreting new regulations on paid leave. They established rules on access to facilities, including temperature checks and social-distancing requirements for employees, and new processes for clocking in and out.

At the same time, companies making crucial supplies, such as protective masks for health care workers, scaled up production to meet skyrocketing demand. Others revamped operations to make ventilators and other vital products. Meanwhile, sectors such as food and beverage saw increased demand as the public stayed home.

The virus also exposed faults in the international supply chain that in the long term may lead to expanded U.S. production of medical supplies, prescription drugs, and other items.

Manufacturing, like the global economy, is on uncertain ground. It will take months, if not years, for operations at some plants to rebound. The demand for new workers is likely to be soft during the early stages of the recovery. Still, the biggest challenges many HR leaders in manufacturing cited before the pandemic will remain, including a tide of Baby Boomer retirements and the negative view of manufacturing among younger workers.

Transitioning to High-Tech

The National Association of Manufacturers (NAM) recently launched a campaign to pump up interest in manufacturing jobs. “Too few people know what’s in the big buildings that line the highways,” says Carolyn Lee, Executive Director of the Manufacturing Institute, an affiliate of NAM.

NAM has raised $14 million from manufacturers to launch a social media and marketing campaign, called Creators Wanted, to attract workers. One important goal, Lee says, is to draw more women, veterans, and other underrepresented populations to the industry. While roughly half of the overall U.S. labor force is female, just 29% of the nation’s nearly 13 million manufacturing jobs are filled by women, according to Lee.

When her father and grandfather worked in manufacturing, the jobs were physically demanding. Now, though, “these are not necessarily manual labor jobs,” she says. “There’s a place for everyone.”

New technologies are helping make that transition possible. “Companies are planning and investing in the next three years for enterprise-wide solutions, so they have factories that are wired and smart,” says Luke Monck, Senior Manager in Deloitte’s manufacturing practice. “We’re at the cusp of that.”

In the near term, that means fewer employees will be needed for some functions that can be done by robots, but when sensors are used to measure a machine’s operations, for instance, someone still needs to install the sensors, understand the resulting data, and create a dashboard so managers can track productivity. People with these skills are in short supply.

“These aren’t people who work in the factory today,” Monck says.

So, how does HR find that talent? How does it attract, retain, and engage a digital workforce, all while keeping the old manufacturing system running?

Part of the answer will involve adopting a less hierarchical structure that empowers workers and allows them to see beyond their own tasks, Monck says. “Smart factories will be awash in data, so everyone will need to be making strategic decisions. It’s the democratization of data.”

Career-progression planning will be tailored to lower-level workers, and many employees will move laterally within an organization in order to learn a broad set of skills.

Performance management systems will need to move from objective measurements to value-based assessments, Monck says. For instance, instead of rating a worker on the ability to produce 100 widgets, a new evaluation may assess how the employee was able to improve efficiency by programming a robot to produce 500 widgets.

HR leaders will need to understand the tech road map for their organizations and then update job descriptions and staffing plans to get where they want to go. According to the Deloitte study, 47 percent of manufacturing jobs will be gone in the next decade because of the shift to more technology. Overall staffing will be higher, but the jobs will be different. There may be 20 percent fewer assembler jobs, but new workers will be needed to program the corresponding machinery.

Finding and Developing Workers

Restless workers haven’t helped manufacturers close the skills gap. That trend, however, is likely to be tempered by the pandemic.

“It feels like the workforce lately is looking to move quickly through things rather than spend the time to become skilled in the position,” says Dawn Kubiak, HR Manager at Grafton, Wis.-based Kapco Metal Stamping, which makes components for items ranging from military equipment to snowmobiles.

In response to the worker tendencies it was observing, Kapco’s HR team revamped its employee development plan. The process, which lasts 24-36 months, spells out how workers can develop their skills as well as boost their compensation over the long term. The effort has resulted in reduced turnover and increased engagement and communication, according to Kubiak. “They can own some of their own success and career path,” she says.

Kapco’s recruiters check in with new hires early on to see how they’re doing and identify potential problems. The company also uses a buddy program, pairing more-experienced workers with new employees to help them assimilate faster.

All of that helps boost retention, but the skills gap has also prompted the company to rethink its approach to hiring. “It’s not all skill,” says Jennifer Wenger, Senior Director of Talent and Organizational Development at Kapco. “Our hiring is no longer [just about] what you know in metal stamping and manufacturing. It’s about what attitude do you bring every day when you walk in.”

It's critical for companies to be more creative when it comes to hiring. NAM's Heroes Make America initiative is designed to help veterans transition into manufacturing jobs. A military mortar operator might never have worked in a plant, but he or she has had a job where precision, teamwork, and communication were vital. Those are perfect traits for some factory jobs like quality control, Lee notes.

Julie Mann, Senior Corporate HR Director at Neogen Corp. in Lansing, Mich., thinks a lot about the ideal candidate, where to find him or her (at a college robotics competition, perhaps), and how to initiate contact. “They’re not out there looking for us,” she says.
Neogen, a food safety products manufacturer with 1,800 employees worldwide, has a digital strategy to pinpoint potential workers. The HR department uses a local television station’s Facebook page to target job ads geographically—such as within a 30-minute drive of the plant—or based on an individual’s interests. (It’s the same technology that bombards shoe shoppers with ads after they’ve been browsing sneakers online.)

“It’s crazy how well it works,” Mann says, noting that clicks on her targeted job ads are 25% above expected rates. In January, a Facebook ad for a warehouse worker job drew interest from 76,000 people online. “I can’t get that with anything else,” she says.

Retraining and Retaining Talent

For many manufacturers, a crucial strategy for closing the skills gap is retraining current workers.

At Hatch Stamping Co., a Chelsea, Mich.-based supplier to the auto industry with 1,250 employees around the world, there’s no place like home—or the plant floor—when searching for talent. With die setters nearly impossible to find, Judi Wooten, Vice President of Administration, looks for employees with good mechanical skills and arranges to train them as die setters.

She’s found workers with other skills, too. Once, she was chatting with a manufacturing worker who mentioned he was taking technology classes. Now, he’s doing well in the IT department.

In addition to retraining, Hatch Stamping also focuses on retaining skilled workers. Small gestures can make a difference, say Wooten and Suzanne Morrison, the company’s Director of Marketing. Breakfast with Santa each year includes gifts for employees’ children. Workers with perfect safety records get a free lunch, and employees love receiving a free turkey at Thanksgiving. “We treat them like family,” Morrison says.

Keeping pay levels competitive is another important retention tactic. Each November, the company benchmarks current positions and brings wages up to market level as needed.

Saying Goodbye to Boomers

Demographic trends present one of the biggest challenges to manufacturers. In the next decade, Deloitte estimates that 2.6 million Baby Boomers in the industry will retire.

“We’ve been talking about a talent tsunami, and now we’re seeing that happen—the older workforce is entering retirement,” Monck says.

To facilitate a transfer of knowledge, companies are pairing seasoned workers with younger ones. Kapco, for example, allows older employees to switch to part time as they near retirement in order to retain their knowledge and have them serve as mentors.

Neogen pairs older workers with those who are likely to stick around longer, which Mann points out is a smart business practice anyway. “Any of us can be hit by a bus tomorrow, so cross-training is huge,” she says. Transferring knowledge before workers leave is a way “to learn not just what they do, but how they do it, and why they do it.”

Improving Manufacturing’s Image Problem

As Baby Boomers leave the workforce, manufacturers know the industry has a bit of an image problem with younger workers—and with their parents.

“There’s still that misperception that you can’t have a great career without going to college,” Mann says.

Part of the challenge of drawing young people to the factory floor is convincing their parents that manufacturing holds promise, say Mann and other HR professionals. When Neogen offered a program for high school students to work in manufacturing jobs part-time during their senior years, it invited their parents to the orientation as well. 

“All these people are going to college and then realizing they don’t like it but have racked up college debt,” Mann says. “If parents understand the child could leave high school and get into a trade making as much money as they would have their first year out of college—without the college bills—they would be more prone to go that way.”

Outreach efforts also need to involve convincing younger generations that vocational training is a valid choice. “The skills gap is not going to be closed by everyone going to college and becoming a mechanical engineer,” Monck says.

“Dumb, dirty, and dangerous” has been the rap on manufacturing in some quarters, he says. Millennials, in particular, tend to view the sector as hierarchical and short on technology. “All of those things have changed and are changing,” Monck says. “The smart factory is allowing Millennials to see the outcome of what they do every day in what the organization is trying to achieve.”

HR leaders at many companies have become public relations agents for their industry. “We’re leading-edge,” Morrison says. “It’s not your grandfather’s manufacturing.”

Neogen, like Hatch Stamping, offers tours for students and their teachers as part of Michigan’s statewide manufacturing day that draws busloads. “We’re trying to get high school students’ eyeballs on manufacturing,” Mann says. “A lot of it is getting information into their hands before they need a job—getting them to think about what the job looks like.”

Kapco in Wisconsin has embraced younger generations by giving students tours, sending speakers to high schools, joining a state youth apprenticeship program, and talking up the technology the company uses. These efforts reinforce the message that the operation “is clean, it’s bright, it’s state-of-the-art technology, it’s safe,” Wenger says.

Companies also need to appeal to younger potential workers by highlighting the value of the work. Neogen, for instance, emphasizes its role in protecting food safety. “We call it being part of the mission that matters,” Mann says. “That’s more and more important to people: working for a company where they believe in what it’s doing. We’re all getting more purpose-driven, but it’s particularly important for the Millennial group.”

The strategy to fill jobs needs to focus on the narrative of why those positions are worthwhile, Lee says. Creativity, flexibility, and storytelling about why the jobs are important can go a long way toward finding the right people to keep production lines humming as the economy and manufacturers regain their footing.

Written by:  Tamara Lytle, Freelance Writer, for SHRM.