A new warning about the manufacturing labor shortage

Nov 14, 2018

Manufacturing in the U.S. faces a labor shortage at a scale not seen in decades, as the country's economy expands and aging workers retire — only half of whom will be replaced by new ones.

Why it matters: For the U.S. to stay competitive, experts say it must take a page from the Chinese playbook. As we’ve reported, China is investing billions in factory robots as wages rise and labor becomes more expensive.

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By the numbers: A study Deloitte released Wednesday paints a dire picture of the manufacturing labor shortage.

In the next ten years, Deloitte expects 4.6 million new manufacturing jobs to be created, 2.4 million of which will remain unfilled because of a skills shortage.

Nearly half of those openings will result from retirement, as baby boomers leave the workforce en masse.

Over the course of the decade, this shortage could cost the U.S. economy $2.5 trillion.

Companies are making short-term changes, like offering higher salaries and relaxing hiring requirements, to attract skilled workers, Deloitte found.

Perks like remote work could lure new workers — like women and college graduates — who typically shy away from manufacturing jobs, said Paul Wellener, who leads the U.S. industrial products and construction practice at Deloitte.

The Deloitte study also calls for companies to implement training programs and hire gig economy workers to help make up the shortage.

In the long term, automation will help close the gap — but it will take immediate investment in robotics to get there, according to a recent report on manufacturing competitiveness from Boston Consulting Group and Carnegie Mellon University.

"The US urgently needs a more aggressive approach to developing and adopting robotic technologies for manufacturing," the report’s authors wrote.

Robots will help counteract several forces threatening to hold back manufacturing in the U.S.: the labor shortage, decreasing productivity, rising barriers to trade, and China's swift robotization.

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