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With global markets in a state of constant flux, the manufacturing sector faces a complex array of challenges that test its resilience and capacity for innovation. Supply chain disruptions and global logistics bottlenecks continue to plague industry leaders, compounded by escalating costs of materials and inflationary pressures. Adding to this landscape is a cloud of economic unpredictability, fuelled by inconsistent consumer behaviour and fluctuating spending patterns.
The fast-paced evolution of technology, from automation to artificial intelligence (AI) and machine learning, is a double-edged sword. While offering avenues for increased efficiency and innovation, it also redefines the landscape of workforce management. As this technology advances, so too does the skillset required to harness it effectively, intensifying the need for upskilling and reskilling programs within the manufacturing workforce.
Considering these challenges, leaders are increasingly recognising workforce innovation as a pivotal strategy for success. This focus is well-justified, as Ceridian's 2023 Executive Survey reveals that 92% of industry executive respondents see workforce issues as a significant barrier to achieving their business goals in the near future.
Understanding and tackling these hurdles requires more than reactive measures — it calls for strategic foresight and agility. Those who invest in a sustainable approach, backed by digital transformation and proactive workforce development are laying the groundwork for a resilient and sustainable manufacturing future.
The new talent equation in manufacturing
As manufacturers look to the future, one thing is clear: talent is a critical factor for success. According to KPMG’s Global Manufacturing Prospects 2022 report, a staggering 84% of CEOs plan to increase their headcount over the next three years. But this ambition comes amid a concerning shortage of talent.
According to our 2023 Executive Survey, 66% of respondents reported experiencing labour shortages over the past year. Even more alarming, 88% anticipate that this trend will persist over the next 12 months.
For manufacturing organisations, the numbers are even more troubling. Recent Census data reveals that manufacturing has suffered the most significant drop in employment compared to any other industry — losing 219,141 workers in just five years. The future isn't looking much brighter, with projections indicating a decline of another 23,100 jobs over the next five years.
For manufacturers, this doesn't just mean vacant positions — it could lead to delayed projects, quality issues, and increased pressure on existing staff, thereby affecting overall productivity and employee morale.
As a response to these ongoing challenges, many are turning to contingent workers to fill the talent gap. A notable 80% of industry leaders from our research respondents confirmed they already employ contingent workers, and 65% have plans to integrate more of these flexible labour resources over the next two years.
However, even this approach is not without complications. Our survey indicates that 70% of manufacturing executives find it challenging to integrate these flexible workers into their existing operations. Additionally, 44% report difficulties in finding contingent workers with the specialised skills they need.
To maximise the benefits and minimise the challenges of using a contingent workforce, manufacturing leaders should integrate them into broader workforce talent strategies. Implementing an integrated workforce management system can provide invaluable insights into full-time, part-time, and extended workforce metrics, helping decision-makers to allocate resources more effectively.
Technology's double-edged sword: Efficiency meets workforce challenges
The rapid advancement of technology is both an opportunity and a challenge for the manufacturing sector. Whether it's automation, AI, or machine learning, disruptive technologies are dramatically reshaping the landscape. Yet, manufacturing leaders are far from passive bystanders in this transformation. A recent survey by KPMG reveals that an impressive 70% of manufacturing CEOs consider their companies to be the disruptors, rather than waiting to be disrupted.
While disruptive technologies can be unsettling, they also offer a multitude of opportunities. Eighty-seven percent of 2023 Executive Survey respondents are already harnessing the power of AI and machine learning to automate repetitive tasks.
And this is where manufacturing stands to gain significantly. Using robotics to handle dangerous tasks, automating quality checks, and predicting machinery maintenance needs can reduce downtime and increase safety, quality, and productivity.
However, applying these technologies also brings significant workforce challenges. Automated processes can replace jobs that were traditionally manual, requiring workers to manage the technology rather than perform the task themselves. This shift demands a new skill set, ranging from technical know-how to operate new software or machinery, to data analytics skills for roles that have become more complex. Manufacturers must respond to these challenges by investing in targeted upskilling and reskilling programs.
Cultivating the right skills for tomorrow's manufacturing challenges
The manufacturing sector is increasingly aware of the need for a skilled workforce to sustain its future, yet companies are grappling with notable gaps in talent. A staggering 93% of survey respondents globally admit to a deficiency in at least one skill type within their organisations. In the Australia/New Zealand (ANZ) market, specialised technical skills such as machinery operation and tool and die work were cited as the most glaring deficiencies, with 44% of respondents acknowledging the shortfall.
In addition to these immediate concerns, manufacturers must also prepare for the impending "Silver Tsunami." As a significant portion of experienced baby boomers near retirement, organisations are faced with the impending loss of invaluable institutional knowledge and skills.
The skill gap is further amplified by the rapid adoption of digital technologies. As automation and machine learning become staples in manufacturing operations, there is a pressing need for advanced technical and digital skills. Yet, 32% of leaders report that their organisations lack the technological skills needed to keep pace with these changes.
In response to this, many manufacturers are exploring various avenues for talent development. Reskilling and upskilling strategies are gaining traction. Our survey shows that 43% of industry leaders are actively focusing on retraining their existing workforce. Beyond immediate training programs, some companies are taking a more long-term view. They are investing in startups to gain access to both emerging technologies and the talent to harness them. Others are forming partnerships with academic institutions to tap into pools of digital skills.
Investments in workforce development are not just about filling the skills gap — they're also about retaining the talent you already have. As automation and other future-of-work technologies eliminate certain roles, reskilling programs can serve a dual purpose. They not only prepare employees for new, often more engaging roles but also improve job satisfaction and morale. In a sector where retention is already a key concern, these efforts can go a long way in fostering a more committed and competent workforce.
Building business resilience through workforce management software
For manufacturing businesses, the key to sustained growth and resilience lies not just in the quality of products or the efficiency of the production line but increasingly in the agility and effectiveness of their workforce. Traditional models of workforce management are increasingly inadequate in the fast-paced, data-driven world we’re living in.
One of the most promising solutions to this challenge is the integration of workforce management software into the operational strategy of manufacturing organisations. Real-time visibility and performance intelligence capabilities empower leaders to drive continuous improvement and operational excellence.
By having immediate insights into key metrics — like schedule adherence, labour costs, budget variances, and compliance breaches — manufacturers can make data-informed decisions that better align with both short-term needs and long-term objectives. This kind of visibility is more than a nice to have — it’s a necessity for adaptive planning and proactive management in challenging and changeable conditions.
Manufacturers who adopt these technologies are better positioned to adapt to the fast-evolving landscape, from navigating labour shortages to integrating disruptive technologies, and, most crucially, bridging the skill gaps that could otherwise inhibit growth and competitiveness.
Over 2,000 leaders have weighed in on how to build a workforce for a resilient future. Download your copy of the 2023 Executive Survey and uncover the transformative workforce strategies that will help manufacturers navigate the fast-moving world.
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