Finding and retaining a skilled workforce continues to be a critical need, and those unemployed during the pandemic may need training and help with other issues to step into those open roles.
This article also appears in the Q4/2020 issue of Area Development magazine.
While the COVID pandemic continues to accelerate consumer and workplace trends that were, in many cases, already underway pre-pandemic, challenges and opportunities in finding, training, and retaining an efficient industrial workforce remain constants for distributors and manufacturers. Effective site selection decisions hinge on a complex cost/quality balance of labor, logistics, and location. It is critical that occupiers remain vigilant in fostering a workplace and workforce that delivers on performance objectives while meeting current and future pandemic-driven challenges. With labor costs making up as much as 70% of warehouse operating expenses, the focus on workforce potential in existing and future locations continues to be one of the most critical components of ongoing innovation for successful occupiers.
Much of the conversation has centered on the agility of suppliers and distributors, and how they have been able to meet the peaks and valleys of volatile demand (or early in the pandemic, temporary facility shutdowns). Certainly, higher than typical demand for online order fulfillment in Spring 2020, as U.S. e-commerce demand increased 44% Q2 YoY, meant that occupiers were implementing creative solutions to find more interim worker resources, and some of those solutions will remain for ongoing fulfillment demand as it finds its new equilibrium for the rest of 2020, into 2021.
Similarly, manufacturers are reevaluating anticipated product volume and workforce demands as consumption patterns settle, and new opportunities related to some sectors considering ‘right shoring’ in reaction to supply chain disruptions encountered in 2020 and lessons learned during the pandemic. Some sectors, such as PPE (personal protective equipment) and pharmaceuticals, may also find new opportunities as government mandates or company decisions on inventory holding positions drive new demand patterns in locations around the globe, and in North America, specifically.
Whatever the future holds for how consumers buy, suppliers distribute, and manufacturers produce, meeting industrial labor and workforce needs will bring new opportunities and challenges that will help drive differentiation among successful users. Questions surrounding quantity, cost, and quality of industrial labor offer multiple dimensions for examination and discussion.
Unemployment and Labor Availability
As of September 2020, U.S. unemployment was reported at 7.9%, translating to 12.5 million people. While this indicates continued improvement in the jobs situation since the April 2020 unemployment rate of 14.7% at the to-date height of the pandemic this year, there are still significant numbers of potential workers that could find employment opportunities in the Warehousing/Distribution, Transportation, and Manufacturing sectors. Many wonder why some industrial occupiers, including e-commerce distribution, are still having difficulties finding enough labor in some markets to meet upticks in demand and peak seasonal hiring. In September 2020 there were over 300,000 Material Moving Worker jobs posted in the U.S., up over 30% from the same month YoY, and up nearly three times from September 2016. While some of this may be due to temporary demand that may level off post-pandemic, the reality is that seasonal holiday hiring for warehousing and distribution has been growing each year, and starting earlier (in late summer) and ending later as many workers are needed to process returns of online purchases after the holidays.
As hotels, restaurants, and shops closed temporarily (or permanently) in the early stages of the pandemic, over 8.5 million workers in the Retail and Hospitality/Restaurant industries were impacted in March and April 2020 with temporary or permanent job losses. Some thought this might translate into an abundance of available workers for Warehousing/Distribution or Transportation jobs, which are currently in greater demand. There are certainly transferable skillsets, competitive wages, and career opportunities to encourage those workers to transition, but high unemployment in one sector does not necessarily equate to abundant labor in another.
There are many factors contributing to the lack of available workers that industrial employers should consider when addressing the current workforce and preparing for future labor needs.
- COVID Safety and Return to Work: Some workers may be reluctant to return to work over concerns about coronavirus exposure. This includes workers who may be immunocompromised, or may reside with family members who are, and do not want to risk exposure to the virus.
- Family Care Constraints: Across the country, there are varying solutions to how children are returning to school or daycare, with some facilities offering virtual learning or daycare facilities remaining closed. During the pandemic, workers may be supporting school-age children with virtual learning or may not have access to childcare or family/eldercare options, limiting their ability to go to an onsite job or to work the hours required.
- Transportation and Access to Facilities: Before e-commerce, many large warehouses or manufacturing plants were traditionally in locations requiring a commute by car. Current trends now allow for last-mile facilities and smaller plants to be located in areas accessible via public transportation.
- Skillset Gaps: As industrial operations have become more complex, with more technology or automation implemented over the years, job skill requirements have also progressed. Workers may not have the required skillsets or may be deterred by the time and training required to gain them.
- Perceptions Surrounding Industrial Jobs: Warehouse and manufacturing operations have changed over the decades, very different from historical misperceptions of heavy lifting jobs in dark, dusty warehouses. In many sectors, facilities are temperature-controlled and high-tech with more worker amenities, and many of these jobs leverage broader skillsets (e.g. workers managing highly automated manufacturing equipment or robotics) allowing for more clearly defined career paths.
Ideas and Approaches to Recruiting and Retaining an Effective Industrial Workforce
Just as the pandemic has accelerated or amplified some consumer and industry trends that were already in play, the ability to find and retain productive workers in an industrial operation remains a long-standing objective for every successful operation. Here are some things to consider:
- Understand workforce pain points: Is the operation struggling to keep up with unexpected demand due to a lack of workers or inefficient process/product flows? Is the operation finding workers, but suffering high turnover, or instead, struggling to get workers to minimal production levels? Are workers leaving for higher wages or benefits at another employer in the area?
- Revisit the approach to training: Are the right supervisors involved in training new hires? Is it a focused activity or something they are asked to do ‘while they also do their own work’? Are production goals for team members involved in training modified to allow the extra time needed to correctly train a new hire? Is there any technology-enabled training that can help speed the process and provide the new hire ‘real-time’ feedback on activity accuracy or productivity?
- Get creative: Are there potential worker pools in the community that remain untapped? If so, is there a simple or creative tweak that can be made to better access that untapped talent pool? For example, could the operation offer adjusted shifts to better accommodate childcare or school schedules? Are there public transportation adjustments the occupier can request from the local municipality that would allow for greater access to the facility during certain shifts?
- Solve for the present while solutioning for the future: Unexpected or seasonal demand may require temporary labor, leveraging staffing agencies, or implementing referral bonuses for existing employees to help supplement the workforce. Solving for the immediate need is the priority, but as seasonal demands turn into longer stretches of time throughout the year, a more strategic approach may be warranted. Consider forming an informal group of human resources and operations managers among other local employers to discuss successful strategies for effective worker recruiting and retention. Ensure periodic and ongoing conversations with operations, facility management, HR, I/T and other stakeholders at the facility and corporate level to discuss future plans for operational improvements, automation, or anticipated changes in workforce requirements.
A major key to successfully attracting and retaining qualified labor lies in the ability of distributors and manufacturers to promote the career opportunities the industrial sector has to offer. Changing perceptions and increasing the understanding of the skills and career paths available in these important, and often growing, sectors of the economy will have lasting effects on the overall stability of the industrial workforce