Labor Shortage in Manufacturing: Statistics & Ways to Combat (2024)

• According to the US Chamber of Commerce, 45% of job openings remained unfilled.
• A Deloitte analysis found that one-third of the manufacturing workforce is over 55 years old, suggesting that the labor shortage problem for manufacturers could become more critical as these baby boomers retire.
• A global scale, 2023 PwC Survey found that a quarter of workers are still considering switching jobs within a year, which can lead to a costly labor skill gap and require additional onboarding processes.
• Nearly 75% of manufacturing managers identified skilled labor shortage as their biggest business challenge, according to a National Association of Manufacturers (NAM) survey.

On shop floors, many tasks, like scheduling, are repetitive. Industry 4.0 solutions can significantly reduce the time workers spend on these tasks. For example, a Boston Consulting Group study found that AI-driven schedulers can cut the time spent by scheduling teams in half. This freed-up time allows teams to focus on other value-added activities or you can operate with less workers.

• Scheduling Automation: AI-driven APS systems can solve job shop scheduling problems significantly faster and more efficiently than human specialists. Additionally, AI schedulers enhance factory agility by allowing managers to select various algorithms that can minimize makespan, maximize OTIF scores, and promote just-in-time delivery, among other benefits (See image below).
• Maintenance Activities Automation: Machine learning-driven predictive maintenance can extend equipment lifespan and improve uptime within the factory by automating maintenance decisions and making maintenance activities proactive.
• Data Collection Automation: IoT tools integrated with PLCs can automatically collect high-quality, real-time data about machines, workers, and the environment. This data can then be used for reporting activities and factory monitoring.

A McKinsey study revealed that paper-based documentation processes can consume up to 30% of worker time, particularly in industries like pharmaceuticals where strict adherence to regulations like cGMP is crucial.

Our case studies demonstrate that by implementing paperless manufacturing solutions, the duration of this tedious process can be reduced by 50% to 85%, depending on the specific task and industry. This shift frees up worker time for more value-added and engaging activities.

To learn features and use cases of our GMP compliant Digital Logbook read our article.

The social issues that are mentioned above all fall under the umbrella of Environmental, Social, and Governance (ESG) factors. We recommend that companies begin collecting and reporting ESG data for each component, ideally through a third-party verification process. Comprehensive ESG reporting will reveal any shortcomings in your sustainability and fair business practices, allowing you to take targeted actions for improvement. Which in return increases your chance of hiring and retaining skilled employees.

Here are some metrics manufacturers can disclose:

• Greenhouse Gas (GHG) Emission: Equivalent to gasses such as carbon dioxide, methane, and nitrous oxide, which are emitted by operational activities of a manufacturing business..
• Emissions Intensity: For a sizable manufacturer, overall corporate carbon emissions are likely to be substantial. Conversely, evaluating emissions intensity by considering emissions per dollar or per product can provide insight into the environmental impact, indicating a company that potentially has a lower ecological footprint.
• Energy Mix: If your factory is located in a region with existing green energy producers, and you source your manufacturing energy from them, or if you have solar panels installed on your roof, your carbon footprint can be significantly reduced, even in the presence of high energy consumption. Therefore, it is crucial to disclose the percentage of corporate energy consumption that is generated from renewable sources.
• Resource Productivity: This metric can be calculated by dividing total sales by the mass of virgin materials used for manufacturing, providing insight into how efficiently manufacturers utilize and replenish materials sourced from the Earth.
• Percentage of Circular Water Consumption: The industrial organizations are heavily dependent on water. On the other hand water is a scarce resource where many populated regions from all continents deal with extreme risk of reaching healthy water. Hence, possessing water treatment systems that enable companies to reuse a certain percentage of water for their activities is a crucial metric.

Measuring and enhancing social metrics is instrumental in mitigating employee turnover. Here are some recommended metrics for disclosure:

• CEO Pay Ratio: This ratio is calculated by dividing the CEO’s total earnings, encompassing bonuses, by the company’s median compensation. A higher ratio indicates a less equal distribution of turnover, potentially leading to employee dissatisfaction.
• Gender Diversity: This represents the ratio of men to women employed by a company.
• Gender Pay Ratio: This metric is determined by dividing the median male earnings in a company by the median female earnings. It is a crucial statistic for stakeholders assessing occupational segregation within the organization.
• Injury Rate: This metric illustrates the frequency of injuries occurring in a factory.

• Board Gender Diversity: This signifies the ratio of men to women among board members.
• Incentivized Pay: This metric signifies the presence of corporate policies that reward employees for enhancing the ESG posture of the business through bonuses. For example, a scheduling team with an incentivized pay aimed at reducing the company’s GHG emissions by 3% without compromising output and cycle time. Successful achievement of this goal results in predetermined awards for the team.
• Supplier Code of Conduct: The constitution of a firm outlines the standards it seeks when engaging in business with other companies. As part of a supplier code of conduct, certain international certificates, ESG reports, product carbon footprint metrics, and similar criteria can be stipulated as prerequisites for considering collaboration with a specific company.
• External Audit: Demonstrating your willingness to undergo external audits signifies the company’s commitment to transparency and is regarded as a commendable ESG practice. (For manufacturers obligated by CSRD, this is a mandatory requirement.)
• Anti Corruption Practices: To showcase fair operating practices and high standards against corruption and bribery, consider obtaining international certifications such as ISO 26001 and ISO 37001.