Written by
Michael Connors

Manufacturing, productivity on the rise — and so is the worker shortage

Genius ERP: ready out-of-the-box for custom manufacturing.

The US unemployment rate is sitting at 4.1 percent, its lowest level since 2000. And jobless claims dropped to the lowest level since 1969 in February. For manufacturing employment alone, that number is 2.6 percent, underlining how hot the sector is. We’re hearing things from customers about revenues being up 30-50 percent YoY, three shifts running 7 days a week, and accelerated plans for expansion. In short, SME shop floors are certainly feeling the rev of the economy.

The catch-22 of this is manufacturers are unable to find enough workers. While the demise of North American manufacturing was being greatly exaggerated over the last 30 years, investment and interest in blue collar labor declined. So in 2018, we are left with an interesting situation: there is a manufacturing worker shortage.

Imagine going back 15 years and telling somebody that in 2017 they would have better job prospects as a welder than as a lawyer.

The low unemployment rate doesn’t mean that there are more manufacturing jobs than ever. Veterans of the industry and the public at large could tell you that over the past 30 years offshoring and automation has had a deep effect on employee counts. Illustrating this is the current number of manufacturing jobs, which is lower than it was in 2000 by 25 percent, from around 17 million at the beginning of the century to around 13 million today.

Interestingly, productivity has gone up 250 percent since 1980, with most of the gains coming between 2000 and the current day. So while worker numbers went down, something improved throughput. Answer: The hardware of automated machinery reduced the need for workers, while productivity gains were made possible first by Material Resource Planning software, and later full-blown ERP systems for businesses.

The worker shortage emphasizes the need for software solutions

Businesses not running an ERP couldn’t find a better time to consider the move and see if it makes sense, budget- and time-wise. Although the speed-to-value might be a bit slower than a shop would get with additional hires, once running an ERP can increase the value each of your employees brings to the company. There is often a lot of slack—or more throughput hiding in plain sight—to be utilized in a plant’s current setup. The right ERP will take out the slack and replace it with more throughput.

The GDP in America is forecasted to grow at a modest pace of around 2 percent for the coming years. A couple of things coming up could adjust forecasts: the NAFTA renegotiation, strength of the US dollar, and a trade war with other large countries. Whatever the case, manufacturing in the US should continue to be strong and the employee shortage will continue. Any manufacturer finding themselves in a position where they need an ERP will have to start thinking seriously about implementation timelines, and assessing where there are bottlenecks slowing things down and redundancies in operations. No better time to see where help is needed than when things are running at 100 percent. And being busy is a good problem to have, especially when a company has the right ERP in place.

Other Blog Posts

See all the articles