Manufacturing today: Continuing to grow when talent is scarce

In the March 2019 edition of Twin Cities Business, reporter Ingrid Case investigated how attracting and retaining talent is limiting the growth potential of Minnesota’s largest private sector industry, manufacturing. Despite an average wage ranking second highest, manufacturing companies are losing the war on talent to other local industries like healthcare and high tech – leaving them scrambling as the baby boomer labor base retires. Ms. Case reports that a declining number of high- school, post-secondary, and college students are pursuing careers in manufacturing. With costs rising due to tariffs and transportation workforce shortages, local manufacturers should look internally, get creative, and use employee engagement strategies to unlock value.

West Monroe’s Consumer & Industrial Products practice comes across this challenge frequently with our clients. Recognizing that workforce dynamics are trending against manufacturers, we have three pieces of advice:

Create an effective strategy to attract talent

Make hiring a priority and develop a team of individuals dedicated to hunting new talent. This team should understand market salary ranges and ensure the hiring pipeline stays top of mind. In instances where hiring requirements are increasingly stringent (e.g., drug testing), process reform is worthwhile. Many employers are beginning to rethink traditional hiring channels and archetypes as well. Where manufacturing companies have typically only had a presence at engineering career fairs, there is opportunity to take advantage of attending business and technology events as well. In sectors where globalization and automation are becoming more prevalent, business and technology skillsets are imperative.

Elevate the employee experience

This perception needs to change, and it starts with elevating the manufacturing employee experience. Digital technologies are transforming manufacturing ways of working and investing in these capabilities now can yield operational improvements AND help resolve workforce issues.  Two immediately come to mind:

1. Implement augmented reality (AR) in manufacturing to reduce workforce transition costs like employee training, reduction in controllable quality. In addition, AR is safer, more cost-effective, and engaging than traditional techniques like job shadowing and on the job training. Domestic businesses like Boeing, Stanley Black & Decker, and Hitachi are using AR both in the factory and out in the field for their maintenance teams.
2. Create and develop predictive analytics, BI, and data science capabilities at the operational technology level. This is cutting edge, Industrial IoT, next gen technology that introduces opportunities, skills, and career growth opportunities to the workforce. Not only can it help with employee engagement, but predictive analytics can improve existing asset efficiency and reliability, reduce the cost of poor quality, and increase material efficiency. Companies with local operations like Siemens and Honeywell are already starting to deploy some of these techniques.

While these types of investments are easily justified on the operational benefits alone (WMP typically sees ROI of 5-10x), they help create the types of career defining opportunities that will help Minnesota’s manufacturers attract and retain the talent they need to reach their full potential.

Structure the business to do more with less

A modified approach to employee engagement should prompt manufacturers to assess their “way of working” at the same time. It is likely that the old way of operating, “run it into the ground”, is helping perpetuate the “dark and dungy” stereotype. That’s why we recommend taking a zero-base budget approach to evaluate operations when looking for employee experience opportunities. It can be easy for decision-makers throughout the organization to justify keeping machinery, technology, and processes status quo – when liquidating and repurposing capital to build a new operating model might be a more optimal strategy. Like cleaning out your garage at home, asking “what is the argument to keep this”, instead of “what is the argument to sell this”, can pay off. Carrying this out cross-functionally often pulls costs out of information technology, operations, and supply chain as well.

With a new lens, one focused internally on the employee, we believe Minnesota’s manufacturers can unleash their potential by winning the war on talent.