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Manufacturing Hiring: Good Employees Have Never Been Harder to Find

May 22, 2018

The Operations Manager just informed you that he needs ten new hires next week to meet the growing customer demand.  In addition, you've had four people turn over this week who will need to be back filled immediately.  However, your candidate pipeline is running dry and you cannot get people through the hiring process fast enough.  How are you possibly going to fill these 14 new positions?  For many Talent Management professionals, and particularly those in the manufacturing industry, this is the new norm – an unending list of open positions and a dearth of qualified and available talent. There is a confluence of events that are leading to some of the most difficult hiring conditions that we have seen in decades.

The unemployment rate in the United States has hit its lowest rate (3.9%) since December of 2000.  Rural Mid-west counties (areas considered to be hot beds for manufacturing) are seeing an unemployment number closer to 2%.  Experts indicate that these figures are representative of "full employment" (meaning that workers who want a job have a job with the hours they need and, since the percentage is so low, the people who do not have a job represent workers who are incapable of finding gainful employment).  These low unemployment rates combined with the growth in the oil/gas and manufacturing industries (among others) have led to stiff competition in the labor market. This has forced companies to entice potential new employees with additional benefits or compensation or risk being unable to fill open jobs with quality employees.  In addition to creating difficulties filling open positions due to growth, this stiff competition has led to higher turnover in these industries because candidates understand that if they are unhappy, there are multiple other companies that are seeking the skills that they bring.  The war for talent is real and is being waged across the country. 

This problem is not only felt by the companies trying to fill the jobs, but by cities and counties in which these organizations reside, as well.  Cities and counties fear that if organizations cannot fill their hiring needs in their current locations, they will move their plants elsewhere.  For example, counties in Indiana will provide a $5,000 home purchase benefit from the county for candidates who accept a job and move into their county.  That’s right, cities and counties are paying people to move there and fill their jobs! 

As with anything, there is a complex set of factors that have led to this labor shortage in the manufacturing industry.  Here are some of the critical factors impacting the labor market:

  • During the last recession, individuals flocked to larger cities and urban living to increase their job-seeking opportunities.

  • The current political climate has encouraged American manufacturing and has attempted to make the benefits of foreign-made goods less appealing.

  • There is a growing negative perception of manufacturing jobs among new individuals entering the workforce.

  • Those perceptions of manufacturing jobs may not be unfounded.  Specifically, many manufacturers who previously offered pensions and other differentiating benefits have moved to more variable workforce models that allow them to be more flexible to the changes in the economic landscape.

  • Finally, manufacturing is in a state of transition from manual processes to automated processes with more robotics, so hiring individuals with the right skill sets can be difficult as organizations need individuals that will fit in both worlds during the transition.

All of these factors are creating a difficult landscape to fill open positions with quality people.  Organizations fear that if they maintain high selection criteria they will be unable to fill jobs and meet company goals.  Even if they can fill open positions with quality candidates, they are still seeing turnover increase month after month as quality employees are in high demand and employment options are plentiful.  As such, the hiring turnstile continues to spin.  How do organizations attract more quality candidates?  How do they attract younger talent and keep them within the organization? How do they do so while still maintaining profitability? 

Employment trends tend to change and are cyclical in nature, but that does not help the talent management team who needs to fill their customer demand now.  Thus, what are the best practices for organizations to hire, place, and retain talent in this difficult market?  This is the first in a series of blogs on manufacturing hiring in a tight labor market. In future blogs, we will cover hiring system issues, solutions to consider, sourcing alternatives, assessments, and ideal recruitment and selection strategies.

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This is the first part of a blog series on Manufacturing Hiring in a Tight Labor Market. The other posts in the series can be found here:

Part 2: Are There Too Many Steps in your Manufacturing Hiring Process?

Part 3: Low Applicant Volume? Selection System Strategies to Consider

Part 4: Evaluate Your Selection Process to Combat Tight Labor Market Challenges

Part 5: Hiring in Today's Job Market: 5 Tips for Being Proactive

Part 6: Design An Ideal Selection Process for the Current Tight Labor Market

Steven Jarrett, Ph.D. Steven Jarrett, Ph.D. is a Senior Consultant at PSI. He has extensive experience developing, implementing, and validating legally defensible selection solutions for organizations. Steven has worked in a variety of industries including manufacturing, retail, healthcare and education.