UKG: U.S. Manufacturers Building Momentum from Increased Productivity, Despite Talent Challenges

Ahead of Manufacturing Day in the United States, the fifth-annual survey on manufacturing talent trends from UKGshows 3 in 4 manufacturing organizations (76%) experienced moderate growth in demand for goods and services¹ and 66% noted increases in production capacity² in year-over-year (YoY) comparisons. Furthermore, despite rising turnover³ and retirements⁴ among their frontline workforce, 74% of manufacturers report increased productivity, and 58% say total employee headcount continues to expand.

The findings from more than 300 U.S. manufacturing HR leaders indicate manufacturers continue to build momentum heading into the final quarter of 2024, all while navigating continued labor challenges and external factors such as inflation and economic uncertainty.

Navigating Persistent Talent Recruitment Challenges

While 76% of manufacturers report YoY revenue increases - with 18% citing a significant jump - labor challenges from recruitment to retention continue to linger. For example, 61% of manufacturers say they're struggling to fill critical labor gaps.

Moreover, the top five recruitment challenges for manufacturers have all become more challenging YoY:

• #1: Finding talent with the right experience (56% in 2024 vs. 46% in 2023)
• #2: Finding talent with the right skills (47% in 2024 vs. 42% in 2023)
• #3: Maintaining a strong talent pipeline (43% in 2024 vs. 39% in 2023)
• #4: Finding local talent (41% in 2024 vs. 27% in 2023)
• #5: Competing with other manufacturers for skilled talent (39% in 2024 vs. 31% in 2023)

Still, manufacturers report YoY improvements in appropriate staffing levels, though production lines remain understaffed 31% of the time. Additionally, 7 in 10 (69%) manufacturers say labor shortages impact their ability to meet production demands, and 40% experience production delays at least once a week.

Over the post-pandemic period, U.S. manufacturing employment has recovered to a higher level than at any point since the Great Recession. According to the monthly UKG Workforce Activity Report, working activity in the manufacturing industry experienced positive proportionate month-over-month increases in six of the nine months in 2024 to date. UKG data also shows overtime hours as a proportion of total hours worked is highest in manufacturing, compared with other industries. With investment in new manufacturing construction tripling over the past three years and manufacturing firms facing moderate-to-significant increases in turnover and retirement in their workforces, there are substantial opportunities for employment in the manufacturing sector now and in the future.

Retention Strategies: Elevating the Employee Experience

Manufacturers, meanwhile, are taking critical steps to help retain the valuable talent they already have on staff. According to the UKG survey, nearly 3 in 4 manufacturers (71%) indicate that frontline employees receive the same benefits extended to corporate employees. This includes such benefits and programs as:

• Training and development opportunities (59%)
• Opportunities for advancement (59%)
• Paid time off (58%)
• Predictable work schedules (54%)
• Employee wellness programs (53%)

However, 73% of manufacturers admit they're having trouble providing a key benefit wanted by the frontline workforce: greater flexibility. To become a more desirable workplace, 73% of manufacturers are actively trying to provide more flexible work arrangements for frontline employees.

"In our survey, half of HR leaders at manufacturers agreed with the statement, 'We have two separate cultures in our company: one for frontline employees, and one for everybody else,'" said Kylene Zenk, senior principal at the UKG Workforce Institute™. "Due to the nature of their roles, frontline employees are increasingly susceptible to burnout, and they often lack the workplace flexibility that many desk-based employees enjoy. Progressive manufacturers understand that increased productivity and revenue don't have to come at the expense of frontline employee wellbeing and work-life balance - and that's where workplace technology can play a key supporting role."

Improving Processes with Workplace Technology

The UKG survey found 82% of manufacturers proactively seek new ideas from frontline employees to improve processes. However, many still rely on manual (e.g., paper processes) or outdated electronic solutions (e.g., spreadsheets, emails) to manage and engage frontline employees. Furthermore, fewer than 1 in 10 manufacturers are embracing AI-driven technology to specifically support various aspects of the employee experience, such as scheduling and shift swapping, and more than half (53%) agree their organizations aren't doing enough with mobile technology.

"Manufacturers have historically led the way in deploying new technologies to positively disrupt the supply chain, and there's a clear opportunity to turn that same eye for innovation onto the employee experience," said Zenk. "These technologies built for all types of workforces - such as leveraging AI and intelligent scheduling to build work shifts that support both the person and the business - can help shrink the perceived culture gap between frontline workers and the rest of the organization."

Read the full 2024 Manufacturing Talent Trends Report from UKG.

UKG is a proud sponsor of Manufacturing Day, an annual U.S. event in October organized by the National Association of Manufacturers and the Manufacturing Institute to inspire next-generation talent. To learn more about the program and how to get involved, visit mfgday.com.

About UKG

At UKG, our purpose is people^®. We are on a mission to inspire every organization to become a great place to work through HCM technology built for all. More than 80,000 organizations across all sizes, industries, and geographies trust UKG HR, payroll, workforce management, and culture cloud solutions to drive great workplace experiences and make better, more confident people and business decisions. With the world's largest collection of people data, work data, and culture data combined with rich experience using artificial intelligence in the service of people, we connect culture insights with business outcomes to show what's possible when organizations invest in their people. To learn more, visit ukg.com.

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Survey Methodology: Research findings are based on an industry survey conducted by InnovateMR on behalf of UKG to better understand the current state of the U.S. manufacturing sector, with a focus on talent trends and practices. Responses were collected between June 3 and June 11, 2024, from 300 HR leaders at U.S.-based manufacturing organizations, including HR directors (22%), HR executives at the VP or C-level (21%), HR managers (12%), hiring managers (8%), and other leaders outside of HR with decision-making authority in frontline hiring practices (37%). Overall, 57% of respondents said their company's annual revenue is $100 million or more, and 31% work for a U.S.-based multinational organization. UKG conducted similar studies in 2020, 2021, 2022, and 2023.

Footnote 1: Manufacturers noted a moderate (56%) to significant (20%) increase in demand for goods and services YoY.
Footnote 2: Manufacturers noted a moderate (50%) to significant (16%) increase in production capacity YoY.
Footnote 3: Manufacturers noted a moderate (33%) to significant (9%) increase in voluntary and involuntary turnover YoY.
Footnote 4: Manufacturers noted a moderate (29%) to significant (8%) increase in retirements of frontline employees YoY.

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