As rising interest rates, poor economic conditions, and an ongoing talent shortage continue to plague manufacturers, optimism amongst industry leaders remains low, according to a new industry report. The latest “Industry Pulse: Manufacturing and Distribution” from Chicago-based Sikich found that more than half of manufacturers (57%) rated their optimism about business prospects over the next six months at a seven or lower on a scale of one to 10. This is similar to the same time last year – in March 2022, 53% of manufacturing leaders gave the same rating.
When asked about factors contributing to decreased optimism, 36% of manufacturer cited interest rates, while 27% cited economic conditions and 26% cited labor shortages.
Compounding these challenges, manufacturers have had to increase wages to meet labor needs and support employees through an economic slump. More than half (53%) of manufacturers have increased wages by 5% to 8% in the past 12 months, and 22% have increased wages by 9% or more. Thirty-six percent of manufacturers reported that wage increases over the past 12 months are significantly higher than increases over the past five years.
On a positive note, nearly half of survey respondents (43%) reported consistent or increased customer demand, and 34% noted improvements to the supply chain. In comparison, in October 2022, 43% of manufacturers reported supply chain issues.
To keep up with customer demand, manufacturers are focused on talent acquisition. Half of manufacturers plan to increase their workforce within the next 12 months. Of those companies, two-thirds plan to increase their workforce by more than 5%, and nearly 20% plan to increase their workforce by more than 10%.
Manufacturers have also reported that talent acquisition is easier than it was this time last year. While only 20% of manufacturers are able to fill an open role in less than 30 days, 79% say they are able to fill open roles in the same amount of time or faster than they were able to last year. Factors contributing to improved hiring efforts include a larger available talent pool (reported by 77%), enhanced compensation and benefits packages (reported by 31%), and streamlined recruitment and hiring processes (reported by 26%).
“In addition to increasing wages and benefits, we’ve seen some manufacturers get creative when it comes to their talent acquisition strategies,” said Laura Fischer, a managing director on Sikich’s human capital management and payroll consulting team. “Offering alternative work schedules, strengthening employer branding initiatives, and working with external recruiters are all effective strategies to attract and retain a high-performing workforce.”
Reposted from https://www.canadianmetalworking.com/canadianmetalworking/news/management/labor-still-a-top-challenge-for-manufacturers-as-optimism-remains-low-report-finds