The manufacturing industry accounted for 9.4% of total UK economic output between July and September 2023. That makes it the eighth largest manufacturing nation in the world by value of output, having climbed up from ninth place last year. Manufacturing is also one of the UK’s biggest employers by sector, with 2.6 million employees. That’s about 8% of the total working population.
But while these figures point to a stable outlook, there’s no denying the industry still faces significant challenges, and an ageing workforce is one of the biggest. Employees who began their careers during the 1970s manufacturing boom (a time when the industry accounted for almost 25% of total GDP) are either retired, or nearing retirement, and the average age of a manufacturing employee is now forty three.
Skills shortages remain another key cause for concern. Fuelled by a rapidly changing – and technologically-advanced – environment, manufacturers are struggling to upskill and reskill people at speed, and at scale. Then there’s the fact that high employee turnover is also exacerbating these challenges.
But the conundrum doesn’t end there. Manufacturing companies are also being torn between two opposing demands: on the one hand, they need to reduce spend in a difficult economic climate, but on the other, and in an employee-led market, they must invest in the employee experience to attract and retain the best talent.
Creating opportunities to retain and grow
Make UK’s 2022 labour turnover report reveals that, in the previous 12 months, employee attrition (excluding redundancies) hit 25% in manufacturing, a figure that is significantly higher than the 15% UK average across all sectors. And when you consider that the cost to replace an individual employee ranges between one-half to five times the employee’s annual salary (and that’s a conservative estimate), investing in people as a means of driving engagement and reducing attrition needs to be a top priority.
It’s not all doom and gloom, though. By understanding and catering to the needs and wants of employees, manufacturers will not only retain more talent (and the tacit knowledge that would have otherwise walked out the door with them) but create new opportunities to adapt and grow.
So how can manufacturers invest and channel their resources to create maximum value, both for their people and the business?
What will encourage manufacturing employees to stay?
A recent study of manufacturing employees across the UK and Ireland highlights two critical factors that employers need to get right in order to retain talent – and by extension, mitigate the impact of an older workforce and skills shortages.
The financial factor: pay and benefits
With three-quarters (77%) of UK employees having experienced financial stress at some point over the past year, it’s perhaps unsurprising that pay is the biggest motivator for manufacturing employees right now. Nearly half of those polled (46%) chose ‘increased salary or bonus’ as their top driver, followed by ‘increased training and skills development’ (32%).
Pay is also the biggest determining factor in the industry’s race to retain talent. Of the 44% of manufacturing employees who plan on leaving their current role in the next two years (yes, nearly half the entire workforce), ‘increased salary or bonus’ is revealed as the thing most likely to make them stay (51% of respondents). And to eliminate any lingering doubt as to its criticality, ‘inadequate pay and benefits’ is also the top factor that would drive these employees to leave sooner (46%). These findings paint a very clear picture: manufacturing companies need to get pay right – and if they are to avoid mass attrition, they must do it quickly.
Closely tied to this, employees are also looking to their employers for financial wellbeing policies and packages that provide a sense of security in financially stressful times. What we’re talking about here is practical safety nets in the form of critical illness and personal accident insurance, flexible pay that empowers people to access their earned wages before pay day, affordable loans, and retail discounts. Addressing any scope to provide these benefits will enable manufacturers to support employees who are struggling, and positively differentiate themselves in a market where companies are battling to fill job vacancies.
L&D that fuels progression
The same research confirms that nurturing talent and providing strong opportunities for learning and development (L&D) is also paramount. Seventy one percent of manufacturing employees say training and development is important to them, with 36% wanting more training sessions, and 34% looking for more mentoring and coaching. One in three (30%) would also feel more motivated if they had ‘better career progression opportunities.’
This confirms what we already knew: manufacturing employees want to learn and develop new skills. So why is the industry still rife with skills shortages? There are three factors at play here: loss of subject matter expertise due to an ageing workforce; the unending cycle of ‘recruit and replace’ that drains L&D budgets; and the exponential rate of technology change that demands continuous upskilling.
On the positive side, two-thirds of those polled said current training programmes are ‘high-quality’ suggesting that employers just need to increase the scope and volume of L&D opportunities. This is especially true when it comes to new technologies: a third (33%) believe that Artificial Intelligence (AI) will create new job opportunities, yet only 17% feel ‘very confident’ they have the skills necessary to work with more automation and AI. What’s more, close to half (43%) agree that AI will aid skills development itself, further emphasising the importance of training employees in how to leverage these new technologies.
Ultimately, these are the things that most of us want from work. We want to be properly remunerated so that we can live comfortably; we want to be developed so that our experiences are enriching; and we want a culture that makes this possible, and which affords the flexibility and recognition that drives us to succeed. This is how manufacturing companies can set themselves apart – and those that do, will reap the bottom-line rewards.
