There’s reason to believe a macroeconomic cooling period, despite current data’s suggestion of a positive trend, might be on the way in addition to various labor challenges, according to Chad Moutray, chief economist for the National Association of Manufacturers, Washington, D.C.
“We have as a sector just shy of 13 million workers in the economy,” says Moutray. “The last time we were able to say 13 million was 2008. We’ve seen a lot of growth, and in fact, we had more job growth in the last two years than we’ve seen since in the two years between 1983-1984. So that’s a nice positive that’s out there.”
The labor force participation rate for prime-aged workers — those between the ages of 25-54 — was 83.4% in May, the highest since January 2007, according to the Bureau of Labor Statistics. While strains on labor and retaining workers have been a struggle for many segments, the continuing stress on the manufacturing market could have an impact on service industries that rely heavily on manufactured products, such as irrigation, which has already struggled with supply chain issues in the past year. Moutray adds that manufacturing activity has slowed from its highest levels but has not led to “bottoming out” quite yet, and one particular labor-related challenge continues to loom large in the industry.
“We are clearly in a much more challenging environment now,” he says. “The interesting thing is that even amongst that cooling that we’re seeing in manufacturing hiring — and [the cooling] that is expected in the larger labor market — the inability to attract and retain workers is still the number one issue.” Similarly, the trends in the manufacturing sector generally reflect labor patterns in the irrigation market, with 69% of respondents to the 2023 Industry Outlook Survey reporting that labor shortages were a barrier to business growth.
“We continue to hear from our members about the persistent challenges they face in recruiting and retaining employees,” says Natasha Rankin, MBA, CAE, CEO of the Irrigation Association. “Recognizing the immense potential for sustained growth within the irrigation industry, we believe that it is our responsibility to rise to the occasion and meet the evolving needs of irrigation industry partners. In line with this commitment, we recognize the need to foster the training, development and education of a professional and highly skilled workforce.”
Building a diverse, equitable and inclusive workforce is a crucial element in addressing the existing labor situation, according to Rankin.
“As we engage in the crucial conversation surrounding workforce development, it is imperative that we share resources and information that empower companies to consider and include diversity, equity and inclusion as an integral component in their businesses and a critical ingredient in creating a thriving workforce — and champion an industry that embraces the diverse talents and perspectives of individuals,” she says.
Only 29.2% of workers in the manufacturing labor force are women, according to Moutray.
“What can we do to increase the number of women entering manufacturing? What can we do to increase the pipeline of more diverse candidates going into manufacturing moving beyond white men? I think that certainly is something that when I talk to manufacturers that they’re very focused on. How can they reach into new communities? How can you reach out to folks who are justice-involved? Or working with some folks who are disabled? I think finding new ways to bridge that gap by looking at different populations is going to be key.”
Moutray says an additional part of the solution to the recruitment problem is to address the stereotype of what working in manufacturing actually looks like.
“We have a perceptions challenge. There are a lot of young kids, parents and guidance counselors who think of manufacturing as being dark, dirty or dangerous, or they might have some other connotation out there about manufacturing,” he says. “We need to change minds. Manufacturing’s cool, right?”
The Manufacturing Institute partnered with Deloitte to conduct a study to analyze the future labor needs of the manufacturing industry in which the data suggest a $1 trillion estimate of the cost of not filling the 2.1 million jobs that would go unfilled by 2030 if current recruitment and retention efforts do not improve.
“That really was the point of the Deloitte study more than anything else,” Moutray says. “We know we’re going to have to identify 4 million workers because of increased demand, but also because of retirements. Out of that 4 million, we know we will have to find about half of that — 2 million more workers — just because perceptions are a challenge. So we need to find new and creative ways to differentiate ourselves and to increase the size of the pipeline of people who are looking at manufacturing as a career.”
Getting to that point will be a challenge, he says, but Moutray says he’s optimistic about the manufacturing industry rising to the occasion.
“The reality is we could continue to do more,” he says. “As manufacturers, the onus is on us to work with our local educational institutions to make sure that they’re offering programs that are going to be helpful for us as a sector moving forward. We certainly embrace many things, like the Fame program, which does apprenticeships. So there are other avenues out there where we can certainly partner with students and employers to make sure that those skills are being offered. Companies will actually tell me all the time, ‘We’ll train them.’ We just need to get them in the door.”
The future ahead is bright despite today’s challenges, Moutray says.
“Certainly, depending on what data source you’re looking at now, the manufacturing sector looks pretty challenged right now in the here and now. But I’m pretty bullish about the sector moving forward, and I think a lot of the data points show that there’s a lot of investment flowing into manufacturing, and we’re going be able to benefit from that over the coming years.”
