Daily Archives: December 2, 2013

The Manufacturing Labour Shortage Isn’t That Big of an Issue

when compared to the logistics labour shortage in the trucking industry.

The SCIDigest Editorial staff might have painted a grim picture in their recent article on how the labor shortage in manufacturing really is getting worse, but SI believes this grim picture is only temporary, whereas the logistics labour shortage is poised to continue getting worse for some time. Before SI explains why, let’s examine the current situation.

The SCDigest Editorial quoted a recent Fortune magazine article that said that companies that make tangible products are struggling to find candidates for about 237,000 job openings — a number that is 89,000 more than the total number of jobs created by the U.S. Economy in September. To make matters worse, nearly 80% of the manufacturing workforce is over the age of 45, and over 33% are over 55 and not far away from retirement — and the number of young workers (under 30) entering the sector is shrinking significantly, with one study reporting that only 5% are 25 or younger.

Basically, the majority of young people just don’t see manufacturing work as an attractive option — which it isn’t if you are talking about old-school 1980’s shop floor manufacturing which was hard work for low blue-collar pay.

Turning our attention to logistics and trucking, new estimates put the driver shortage at 240,000 drivers, as SI reported back in March. With 100+% turnover a year, one third of drivers reaching retirement age this decade, and an average graduate age from driver training schools of 54, the trucking industry is in dire straits!

In comparison, manufacturing has it easy. Young professionals enter an industry in which they see opportunity, typically defined as a mix of growth potential in their career and their salary, and given two equal options, many will choose the industry with the higher starting salary. Taking this into account, we see that manufacturing is in much better shape.

First of all, factory jobs are not what they were in the old days. Most of the tedious, menial labour has been replaced by automation and the only manual labour done by shop floor workers are high-end speciality tasks as most of the work on the shop floor is focussed on maintaining the robots on the automated assembly lines. In comparison, in trucking, you’re still driving a truck. The only difference is instead of driving an old pollution producing rig, you might get to drive a new hybrid that uses electricity and biofuel or clean diesel and is equipped with enhanced catalytic converters.

Secondly, the opportunity for advancement is great. Factories need senior engineers for each task, floor managers, and plant managers — there is a career path for a bright engineer. In comparison, in trucking, unless you can be a dispatcher, you’re still driving that truck in 20 years.

Thirdly, due to the sophisticated high-end nature of the work in manufacturing, most of the jobs are for skilled engineers who will often start at 50K to 60K a year, and have the potential to climb to 100K a year or more as an engineer progresses, whereas the trucking jobs require one skill — the ability to drive a truck — and salaries, adjusting for inflation, have not increased and typically don’t increase much more than inflation on an annual basis (if the driver is lucky).

Manufacturing can easily solve their labour shortage by

  1. enhancing their image and
    which could be as easy as the NAM producing the right PR campaign (with prime-time airings on traditional and online media); a
    manufacturing equivalent of the “Got Milk” campaign could rejuvenate the industry
  2. implementing their own apprentice-type programs
    which take community college graduates (for the more traditional jobs in welding, machining, etc) and even university graduates (for the newer jobs in robot maintenance, etc.) and teach them the skills that colleges and universities don’t

In comparison, logistics is out of the frying pan and into the fire between a rock and a hard place. With little advancement opportunity and limited earning potential, how do you make trucking advantage to anyone who has other options? Unless you’re targeting fast food workers (tired of asking “would you like fries with that”), interest is going to continue to wane.