Talent Pressures and the Aging Workforce: Manufacturing Sector
by Stephen Sweet and Marcie Pitt-Catsouphes with Elyssa Besen, Shoghik Hovhannisyan, and Farooq Pasha
more hardship ahead for us manufacturing
June 2010—A wave of retirement in the manufacturing sector could plague US companies with skill shortages and high costs of replacing veteran employees. Overall, the top three concerns of manufacturing employers were recruiting competent job applicants (45.1%), the low skill levels of new employees (30.3%), and knowledge transfer from experienced to less experienced employees (28.8%), a new study by the Sloan Center on Aging & Work reports.
“In many ways, the aging of the workforce will be like a tide, drawing the talents of older workers out of the labor force,” explains Stephen Sweet, co-primary investigator for the (2009) Talent Management Study and co-author of “Talent Pressures and the Aging Workforce: Responsive Action Steps for the Manufacturing Sector.”
Since 2000 the US has lost millions of manufacturing jobs, according to the Bureau of Labor Statistics. Meanwhile, the pool of inevitable retirees in the sector has swelled. From 2000-2007 the percentage of workers aged 55-64 working in manufacturing increased significantly, as did the proportion of workers aged 65+.
These findings are an especially dire sign for a sector trying to resuscitate itself following recent economic hardship because, as workers leave, their talents leave with them. Indeed, top skills in reportedly in short supply include: Management skills (37.4%), legal skills (33.3%), sales/marketing skills (28.2%), operations skills (24.4%), and technical computer skills (22.1%).
And the cost of replacing skilled older workers can be significant. The median cost of replacing employees in the manufacturing sector is $5,000 per employee, compared to $3,000 per employee in other sectors.
According to Sweet, “one strategic means of addressing future talent shortfalls is to identify and introduce flexible work arrangements, such as flexible work schedules, career breaks or job sharing. These will enable employers to hold on to the workers they have while attracting workers they need.”
A major barrier, though, is that manufacturing firms appear even less prepared for their aging workforce than employers in other sectors. Despite the impending labor and skill shortage, a lower percentage of manufacturers overall have analyzed the projected retirement rates (17%) or developed succession plans to a moderate/great extent (26%) compared to employers in other industries (25% and 39%, respectively).
The Sloan Center report also moves beyond simple awareness of aging trends, suggesting action steps for the manufacturing sector.