Recruiting vs Retention: Today's Challenges

Finding enough skilled workers has been the cry for help for most manufacturing businesses whether large or small. Beginning with the Industrial Revolution, a trained, capable worker had been a treasured but elusive commodity for every business. With the invention of the personal computer and micro-chip driven software, finding technologically capable workers added a whole new layer of difficulty to the skilled worker pursuit.

Overcoming the “skills gap” is an ongoing workforce challenge that has not been solved through the decades. The traditional formula for recruiting was to advertise and hope the needed talent would walk through the door. While successful in some cases, workers with the skills needed never applied for work. This led companies to begin upskilling their own workforce, add technology wherever possible, and outsourcing whatever is transferable.

This is seldom the optimal solution and every year the skills gap gets wider and more challenging.

Starting in 2020, the pandemic exacerbated this issue and caused marketplace dynamics to dramatically shift. The type of products, the way customers use them and the services they require, have forced businesses to reinvent their entire work process. As a result, worker skill sets no longer align with these demands of future work flows.

The 2021 World Economic Forum projected 85 million jobs may be displaced by 2025 due to the change in the way work is divided and shared between humans and machines. A composite summary of numerous digital job sites demonstrated the top jobs needed in 2021 included: data analyst, AI and machine learning specialist, digital marketing and strategy specialist, and process automation professionals.

Our current education system is playing catch-up in order to respond to these dramatic work systems changes. The time required to develop courses, find instructors, and recruit willing participants is generally longer than the speed business requires. Youth of today, the largest population currently in the education system, are generally not attracted to manufacturing jobs.

Automation has always been an attractive alternative to addressing the worker shortage issue. The limitations, however, have been the cost of creating, implementing, and using the new equipment and systems while finding the workers to match the machines. Benny Lampert, VP of Manufacturing at TE in Harrisburg, maintains, “All industries are doing more automation. While it varies from plant to plant, it doesn’t mean there aren’t jobs, it means the jobs are different.”

Unfortunately, workers adapting to “different” may be the most difficult training challenge of all.

The outsourcing option continues to hamper growth and development of local businesses and their workforce. While significant effort is being made to reshore work and build domestic supply chains, the reality is:

• The U.S. trade deficit ended at a 12-year high in 2020

• China’s portion of the forecasted 2025 global GDP is projected to grow to 27.7%

• India will top 13%

• The U.S. will settle out at about 10.4%

• Russia will hover around 2%

What this means is the U.S. slice of the global business pie is shrinking rapidly. The current administration is attempting to address the China market domination challenge by cultivating a “Quad” alliance with India, Japan and Australia thus creating competitive economic forces of similar size and population. While still trying to bring lost work back to the U.S., the goal is to build global alliances that support domestic trade capabilities and product offerings, not compete with them.

The digital infrastructure of the U.S. market is not competitive with China and will be a limiting factor going forward. The largest U.S. e-commerce marketing site, Amazon, is almost totally focused on the domestic consumer market. The Chinese e-commerce site, Alibaba, is six times larger than Amazon and sells manufacturing products produced in China to the world. U.S. manufacturers do not have a digital option to compete against Alibaba. As a result, if you can’t beat them, use them.

The Small Business Development Center of PA is holding a webinar training session called, “Manufacturers Going Global with Alibaba.com,” in June. This helps put local companies on the global playing field but doesn’t quite advance efforts to build locally based supply chains or expand local B2B business relationships.

The Philadelphia Inquirer has published a series of articles about the re-shaping, slimming down, and modernizing of America’s aging industrial economy. This overall change has been accelerated by the pandemic crisis. Highlighted quotes about the effect of COVID-19 on the future of U.S. businesses include:

• Employers, who have already cut a net 582,000 factory jobs compared to pre COVID levels, plan to emerge leaner and meaner in the future. (From Bloomberg Report)

• Half of all business travel, and 30% of “days in the office”, are gone forever. (Bill Gates, Microsoft)

• “We’re recovering, but to a different economy.” (Jerome Powell, Federal Reserve Chairman)

• Robotics will help some specialized manufacturing return to the U.S., “But it’s hard to see how very labor intensive manufacturing can.” (Rajiv Gupta, Avantor and Aptiv Corporations)

• Amazon’s website captures almost 40 cents of every on-line dollar spent in the U.S. “Amazon is building a massive economy comparable to the GDP of entire countries.” (Michael Rosen of Softbank)

• On-line job recruiting sites such as Phenom, Ambler, Pa, are using Artificial Intelligence to upscale and automate the job hiring process. Phenom has also secured over $60 million investment dollars to create the software systems that will move Human Resources to an AI driven platform.

For over 30 years, SEWN has worked with companies needing to restructure and reinvent themselves to survive and keep their employee population working. This work has given us hands-on insights into where change is happening and what the future holds on a real time basis. Working with client companies during the pandemic has shown that almost every company will be required to re-think their business model and 30 to 40 percent of manufacturing jobs will require re-training.

While the SEWN charter requires us to do whatever is needed to save today’s jobs at stressed companies, it also requires us to make recommendations and implement strategies that will help save tomorrow’s endangered jobs by taking action now. Based on all the information presented, part of SEWN’s focus will be on future jobs saving through use of advanced technology. From our perspective, the need to upskill current workers is more critical than ever.