5 Trends Driving the Manufacturing Skills Gap & What to do About Them

Understand five key trends driving the manufacturing workforce shortage so you can better prepare and build a skilled, future-ready workforce.

The manufacturing sector, despite being a cornerstone of the global economy, has faced a skills shortage for years. A growing labor shortage is making conditions more challenging, intensifying threats to innovation and the industry’s ability to satisfy production demands. 

Research underscores this challenge: 

These shortages are not temporary and have far-reaching consequences. But there are steps manufacturers can take to adapt. First, it’s important to understand what’s driving the growing shortage of skilled workers. 

Five Trends Fueling the Manufacturing Workforce Shortage 

1. Aging workforce:

The workforce in many developed countries is aging alongside the general population. A global study from Bain & Company found that 150 million jobs will shift to older workers by 2030. 

With its disproportionately older workforce, this trend hits the manufacturing sector particularly hard. Manufacturing faces greater numbers of workers nearing retirement age. In the US, this could leave an estimated 2.4 million positions unfilled by 2028. 

As workers retire, they take valuable experience and organizational knowledge with them. This exodus threatens to widen critical skill gaps and makes knowledge transfer a top priority. 

2. Automation and digitization: 

The rapid adoption of automation, robotics and advanced technology is reshaping manufacturing processes. As one example, manufacturing’s investment in artificial intelligence (AI) is expected to grow to $16.7 billion by 2026. 

The digital revolution is rapidly transforming the skills required for the smart factories of tomorrow. Employees will need to work with advanced technologies. Unfortunately, a significant portion of today’s workforce lacks these emerging capabilities.  

Without a shift in workforce skills composition, through efforts like upskilling and reskilling, manufacturers will face an even bigger talent crisis. In the US alone, estimates suggest a potential shortfall of 2.1 million unfilled positions by 2030. The industry will need to bridge this to unlock the full potential of digital transformation. 

3. Greenification:  

As countries transition to greener economies, manufacturers are embracing environmentally sustainable methods. The green technology market is forecast to grow a whopping 20% annually until 2030. 

The drive towards sustainable production is positive but adds a layer of complexity to the skills landscape. Manufacturers need workers who understand green technologies, energy efficiency practices and how to meet environmental targets. 

Manufacturers in the UK identified greenification as a top trend shaping the jobs needed by 2030, with almost two-fifths (37%) of manufacturers citing it as a factor in changing skills needs.

4. Challenges filling skilled positions:

While the demand for traditional manufacturing abilities continues, the most acute need is for workers who can manage advanced manufacturing technologies. This mismatch makes specialized skill acquisition a priority. 

 The Manufacturing Industry Skills Alliance in Australia estimates that the skills profiles needed for up to 40% of jobs will shift to advanced technologies by 2030. For core manufacturing occupations, the demand for skills in advanced electronics, automation and big data has already grown anywhere from 318% to 771% in recent years.  

5. Turnover and attrition: 

Beyond finding talent, manufacturing faces retention problems. Workers seeking greener pastures are increasing the industry’s talent drain. Three main factors are in play: 

• Work/life balance: According to the 2020 Deloitte Global Human Capital Trends survey, finding better work/life balance is the top reason why manufacturing employees consider leaving the industry. 

• Lack of training: In a recent survey, 39% of employees said they’d consider leaving a job for another that offers better learning programs. Offering training to build in-demand skills helps fill skill gaps and simultaneously increases employee morale and retention. 

• Lack of career interest: Many potential and early career employees are unaware of the long-term career potential in manufacturing and have misconceptions about wages and conditions, especially in innovative and growing sectors like defense, clean energy, and pharmaceuticals. 

The worker shortage in the US alone could translate to an economic loss of $1 trillion by 2030. When manufacturing executives were asked about the consequences of being unable to fill jobs: 

• 82% were concerned about limits on revenue growth 

• 81% cited the inability to satisfy customer demand 
• 79% reported it would be difficult to respond to new opportunities

Addressing the Manufacturing Workforce Shortage 

Proactive workforce planning is now mission-critical for manufacturing companies. This includes investing in skills development programs and reimagining the manufacturing workplace to attract and retain a new generation of workers.  

To help streamline and accelerate your focus, efforts can be guided by informative workforce intelligence. Trusted data providers such as Faethm by Pearson fuels informed decision-making with its world-class data science. Helping to provide the strategic insights needed to confidently grow and reshape teams for a smooth transition to the future. By applying this layer of Faethm expertise and data you can better understand future work insights for your organization. Including where the manufacturing industry is headed, how your people can help you stay competitive, unlocking capacity, and providing direction for learning pathways that bridge the gap between your current and future workforce. 

Once the goalposts are identified it’s important to activate learning interventions to upskill your workforce. Digital credentials can foster continuous learning, motivate employees, and streamline talent management through portable and shareable proof of skills and achievements. Credly by Pearson offers an end-to-end solution for creating, issuing and managing digital credentials. Helping to increase course completions, enhance brand engagement as well as certify your employees learning and development. 

For candidates moving into new roles robust psychometric assessments, such as those offered by Pearson TalenLens, can help identify candidates' skills, aptitudes, and cultural fit. This streamlines hiring, reduces turnover, and enhances job performance. By evaluating critical traits such as problem-solving and teamwork, TalentLens ensures the selection of the most suitable candidates, ultimately boosting workforce effectiveness and retention 

By integrating strategic workforce planning with data-driven insights from Faethm by Pearson, and employing digital credentials for continuous learning, manufacturing companies can effectively address workforce shortages. Pearson TalentLens' psychometric assessments further ensure the selection of the best candidates, enhancing hiring efficiency and job performance. This comprehensive approach fosters a skilled, motivated, and adaptable workforce, essential for sustaining growth and competitiveness in the manufacturing sector. 

Connect with our team of experts to build an agile, adaptable workforce that can lead the way into the next era of manufacturing.