The labor shortage has been one of the hallmarks of the pandemic era with all companies having a much tougher time hiring across their whole organization.

This pain is even more acutely felt in the manufacturing industry which is in the grip of a myriad of other issues like supply chain disruptions.

In this post, we’ll explore this thorny and very actual topic through the lens of three innovators in the manufacturing space. Their different perspectives and background will shed light on two important questions related to this topic:

1. What is the core issue of labor shortage in manufacturing in North America?

2. What can manufacturers do to adapt to the current labor shortage?

We’ll hear from Christopher Dip, cofounder at InPilot, a digital solution that transforms complex work instructions and processes into easy-to-use apps for frontline workers.

We’ll then hear from Louis-Antoine, Head of Sales at Deep Sight, a platform that enables the creation and visualization of 3D instructional guides that accurately overlay the work environment.

We’ll finish by covering my experience with Axya and what Yacine (myself) learned from our manufacturing customers.

If you are a manager currently trying to attract talent and want to gain some perspective, this post is for you!

Don’t hesitate to direct questions or comments to question@axya.co!

1. What do you think is the core issue of labor shortage in manufacturing in North America?

"To better understand the labor shortage in manufacturing in North America, you need to look at the current statistics.

According to a July 2022 U.S. Chamber of Commerce Analysis, even if every unemployed person with experience in the durable goods manufacturing industry were employed, the industry would only fill 65% of the vacant jobs.

This is a bad outlook for the manufacturing industry in the USA.

In Canada, it’s not much better: nearly half of the Canadian companies in manufacturing declared that recruiting skilled employees were expected to be an obstacle over the next three months.

This means that the underlying problem is that there simply aren’t enough skilled workers to fill the vacancies.

This is mainly due to the manufacturing industry having difficulty in attracting a new and younger labor force, as well as current workers leaving manufacturing jobs for more flexible opportunities in other fields.

There’s an interesting analysis by Randstad VP Sandra Ebbers, who is attributing the labor shortage to a mix of the following factors:

1. Lack of work stability due to the supply chain disruption
2. Lack of mental health support
3. Workplace safety concerns
4. Desire for flexibility
5. Low wages
6. Negative perception of the industry
7. Lack of diversity
8. Aging workers
9. Higher demand for tech-related skills

I left the manufacturing sector, mostly due to a desire for flexibility, and partly because of low wages and workplace safety concerns."

2. What can manufacturers do to adapt to the current labor shortage?

This forces the industry to do one or many of the following:


1. Increase wages and compete for experienced, skilled labor, which is expensive
2. Add automation to their production chain, which requires big capital investments, the need for highly skilled workers to implement and maintain this equipment, and a long time before a return on investment
3. Diversify their hiring pools, e.g. hiring from abroad, which involves a lot of bureaucracy and takes a long time
4. Reskill or upskill existing employees to do more value-added tasks, which is cost-effective, but manufacturers don’t have the tools to capture existing knowledge
5. Hiring new untrained employees and training them, which is difficult due to the negative perception of the industry
6. Outsource their manufacturing, which is a big risk considering the current supply chain disruption

Given the options, I am a firm believer in reskilling, upskilling, and training new employees, which directly addresses the underlying problem which is that there simply aren’t enough skilled workers.

That is why, in my opinion, manufacturers need to introduce technologies that:

1. Capture existing shop floor knowledge (aka tribal knowledge)
2. Give employees the tools to access that knowledge quickly and easily (Digital work instructions, web forms, mobile apps, AR)
3. Reduce administrative tasks and let employees focus on high-value actions, increasing productivity and worker satisfaction

That being said, technology is only part of the solution, the rest needs to come from management and a shift in the current mentality that automation brought forth by the 4.0 industry will solve all problems (a nod to industry 5.0).

This also reaffirms that for most manufacturers, the most valuable asset is still its people.

Disclaimer: I am a product manager at InPilot, a digital platform that transforms complex work instructions and processes into easy-to-use form apps for your mobile frontline workers.

References:

1. Understanding Labor Shortage in America
2. Labour shortage trends in Canada 
3. why is there a global labor shortage?

1) What do you think is the core issue of labor shortage in manufacturing in North America?

The underlying problem with the labor shortage in North America is the lack of productivity of companies. The labor shortage only exacerbates the lack of productivity. A company that is experiencing a lack of productivity can adapt to make its current workforce more productive, or keep its old ways and hope to hire more workers. Many companies, for example, are turning to automation to have machines perform some of the tasks that were once performed by labor.

On the other hand, where the problem of productivity is the most glaring is for the companies that are not able to automate certain tasks, and for the companies that succeed in automating their production, a new problem appears: the workers' tasks become less repetitive, but much more complex because they must constantly operate and maintain machines and equipment that are becoming increasingly sophisticated.

So, whether in an automated production line or a non-automated assembly line, the underlying problem of labor productivity remains the same: lack of technical knowledge.

2) What role does technology play in improving this situation in your opinion?

So how do we facilitate the transfer of technical knowledge using technology?

Before answering this question, we must first understand how knowledge transfer is done in the industrial sector. Traditionally, industrial workers are trained through job shadowing, whereby experts accompany learners to demonstrate how to perform certain technical tasks and the learners gradually develop their autonomy. The major problem with this method in the current context of labour shortages is the critical shortage of experts to do the mentoring - by 2030, more than a quarter of industrial workers in Canada will retire. Often, these experts are not trainers either, they have productive tasks to accomplish, and taking the time to accompany learners greatly affects, once again, the productivity of companies. So let's ask the question again, how can we use technology to replicate job shadowing in operations? That's where DeepSight comes in.

In fact, DeepSight is a knowledge management platform that leverages augmented reality, 3D, and smart glasses to replicate expert guidance in operations.

The DeepSight platform enables the creation and visualization of 3D instructional guides that accurately overlay the work environment. These holographic guides are deployed in operations to accelerate the execution of complex tasks while reducing the risk of learner errors or accidents. The DeepSight solution also aggregates data generated by workers during use to analyze their performance for real-time learning and continuous improvement opportunities.

1) What do you think is the core issue of labor shortage in manufacturing in North America?

The core issue in my opinion is very simple.

Situation: There is a high demand for more labor from manufacturers and a very limited supply of people considering manufacturing as a career path.

Problem: The manufacturers have a very difficult time attracting this limited talent supply and increasing that supply pool themselves is taking more effort than most can afford.

Result: This then results in an obvious labor shortage since the market can’t correct the supply and demand.

Here is what my team at Axya has witnessed in the procurement and fabrication of parts of manufacturing companies to come to this conclusion:

On the procurement side:

• High turnover in the procurements team as they are in high demand.

• The procurement manager is usually left to do the routine operational work while searching for new hires, reducing the amount of time they can spend on coaching the remaining employees.

• The people applying for the roles are mostly very junior and looking for an entry-level job.

• In smaller organizations, owners might have to do the routine procurement work themselves among all their other responsibilities.

It’s quite a difficult situation for companies to handle, even more, when supply chains are getting pressured with lots of other disruptions (i.e. pandemic is still a thing, raw materials costs are highly volatile, geopolitical issue complexifying offshoring, cyber attack in manufacturing companies have doubled down).

On the fabrication side:

• There is a lot of demand for manufacturing work, but manufacturers can’t find enough labor to keep up with the requests.

• Attracting employees is very difficult when the job is not stimulating as they can’t compete with other companies' perks for lack of resources.

• The location of the manufacturing plant has a high impact on a company's ability to attract talent (i.e. if it sits in between two big cities, it's near impossible to attract a younger demographic).

• Similarly, it’s mostly very junior employees looking for entry-level jobs that are applying.

The situation on the fabrication side is very interesting because there is much more job coming their way than they can handle. This means that there is demand for bringing more people into the manufacturing company to increase the number of fabrication contracts captured.

BUT, most manufacturers cannot accept more workload because hiring is too difficult. All of this makes it so that there is a very high business incentive for manufacturers to figure out how to increase their capacity and solve the challenge related to hiring.

The two choices to correct the situation is:

Attract more of the limited talent pool.

To do so better work condition needs to be offered, but most companies are either unwilling or unable to give salary compensation that is significant enough to make a difference.

Increasing the limited talent pool.

The company that is feeling the least amount of pressure from the labor shortage is actively doing so at a micro-scale by upskilling or training employees. However, not all manufacturing companies have the knowledge or the bandwidth to invest in this area without help.

2) What role does technology play in improving this situation in your opinion?

During the summer of 2022, I visited quite a few manufacturing companies at their facility to get a direct sense of what their core issue with respect to labor shortage (amongst other things) was.

My personal observation was that the people having the best return on investment on fixing their labor shortage were the ones that relied on technology in these two areas:

1) Teaching and training

2) Job automation

Companies that heavily relied on teaching/training could attract and retain raw talent that might not have had the standard curriculum. The best at this sort of in-house training type of talent strategy were owners/managers who had some kind of teaching experience.

Yet, most manufacturers don’t have either a teaching background or time to structure this upskilling aspect in an optimal fashion. So those that didn’t attempt this or had mixed results were usually the type that had no teaching inclination. A way to palliate this lack that showed great success was to use technology to structure the teaching process for their new employees.

Generally, the jobs that were the most difficult to staff were the ones that were highly repetitive and not mentally challenging. In order to palliate for this, yet again the best owners/managers were the ones that were able to bring in engineering challenges to stimulate their workforce or automation to remove the boring jobs.

The best places I've seen layered the above with automation using robots or some sort of data-optimized workflow.

I’ve seen the same trend on the procurement side (minus the robot). Every manager that had difficulty staffing was thinking about automating non-value added tasks to reduce the workload on their team and figure out ways to train junior people as fast as possible to be able to operate.

Therefore, from my observation, automation and building a knowledge base through technology was a big part of the solution for most leaders in the manufacturing industry.

This labor shortage problem is not simple to crack down on, especially not in the manufacturing space where a lot of limiting factors are present that aren’t present in other industries.

If there was one piece of advice to give to you, manager, it would be to not be afraid to innovate and improve how the information can be shared across your organization.

Don’t hesitate to reach out to either of us for comments, questions, tips or just to rant about labor shortages in general:

• Christopher Dip

• Louis-Antoine Genin-Brien

• Yacine Mahdid

Yacine Mahdid