At 3.8 percent, the national unemployment rate in the U.S. hasn’t been this low since 2001. The low rate combined with a growing number of individuals who are retiring from the manufacturing workforce is creating a growing labor gap; Thomas Lee, head of Fundstrat Global Advisors, predicts a shortage of 8.2 million workers through 2027. Manufacturing jobs aren’t the most glamorous positions sought by new grads, and with fewer people seeking work, more factories will have openings on the line as these shortages continue.
It doesn’t seem all that long ago that the United States was facing a double-digit unemployment rate. In 2009 we nearly hit 10 percent, the highest it had been since 1982. While few are bemoaning our much more solid economic position, the low rates present a different set of challenges to manufacturers: factories are powered by people, and without people, factories cannot meet demand, which in turn hurts customers and puts the whole business at risk.
The employment reversal is primarily due to several factors:
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Retirement: 76 million baby boomers are set to retire in the coming years, and many of those retirees are leaving unskilled labor positions in factories. CFO Magazine says that 10,000 boomers reach retirement age every single day in the U.S., leaving six million jobs unfilled each month.
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Changing tastes: Around the country, a growing focus on white collar jobs in the science, technology, engineering and math (STEM) fields is making young people more reluctant to consider trades as they choose a career. Simply put – high school graduates don’t want to work in factories anymore.
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Cultural moments: The opioid crisis that is plaguing the U.S. has had a profound impact on manufacturing; in 2016, the counties with the highest drug overdose deaths also had the greatest manufacturing jobs – but struggled to fill them.
Labor: A global conundrum
The United States isn’t the only country suffering from labor shortages. In fact, the problem is even more pronounced in Asia and Europe. Traditional manufacturing powerhouses like Japan, China, Germany and Eastern European countries are struggling to fill gaps, much like the U.S.
In Japan, the unemployment rate for the past several months has hovered around 2.5 percent, indicating that available labor is in short supply. The Financial Times reported in 2017 that the country’s birth rates are at a record low and expected to keep declining – a trend that means the labor crisis is likely to deepen before it improves.
China’s outlook is slightly less bleak than its neighbor’s – for now. Boston Consulting Group reports that while it currently has a surplus of workers, by 2030, that trend should reverse, leading to a shortage of 24.5 million people to fill jobs.
European countries are seeing many of the same challenges as their counterparts in the east and west. Germany expects a shortage of up to 10 million workers by 2030. In Eastern Europe – namely Czechia, Hungary, Slovakia and Poland – a combination of rising wages and fewer people in the labor pool is forcing companies to decline orders because they aren’t equipped to meet demand.
Tech to the rescue
Around the world, companies are looking to automation to limit their reliance on human laborers who are in increasingly short supply. In Czechia, robot installations rose 40 percent in five years. Germany, the traditional automation leader in Europe, averages 309 robots per 10,000 human workers; for the first time, Czechia is approaching that number with 101 robots per 10,000 workers. Meanwhile, in Asia, Japan is working on building the world’s first fully automated plant, which is set to be revealed as early as 2020.
Companies in the U.S. are also reaping the benefits of automation. The Wall Street Journal recently reported that artificial intelligence will eliminate 1.8 million job openings by 2020. Companies that start retraining workers today will see the greatest benefit in the future; by redesigning jobs to take advantage of human skills, manufacturers can use automation – such as collaborative robots, or “cobots” – to fill the undesirable, repetitive jobs that are most difficult to fill.
Regardless of what area of the world you’re in, lack of labor is a pervasive problem that has the potential to cripple the global economy. Fortunately, automation in many forms can help bridge the gap and fill holes on the factory floor, doing jobs that humans just don’t want – and can afford to turn down.
Ferdinand Teuber is the head of business development at Rethink Robotics GmbHmember of the HAHN Group, a German automation specialist. This article was reprinted with permission and originally appeared on the Rethink Robotics blog.