Double-Sided Demand

Double-Sided Demand

The Indiana manufacturing sector, by its own account, is like a ship manned by a skeleton crew about to get hit by a big wave of business.

Recently released survey data indicates that a record number of Hoosier manufacturers are expecting their markets to grow very soon, but they’re being held back by difficulties in finding young workers to replace those that are retiring. Compounding the issue is the fact that many parents of potential candidates are virtually overlooking manufacturing as a quality career option for their child, according to a different survey of public perceptions about the industry.

Together, the two surveys illustrate a distinct set of challenges Indiana manufacturers are currently working to address as we begin the new decade.

The Challenges

The 2019 Indiana Manufacturing Survey by the Indiana University’s Kelley School of Business at IUPUI was released last quarter with a blunt title; “Labor Shortages Hit Home.” It was commissioned by Indianapolis-based accounting firm Katz, Sapper & Miller and was promoted by the Indiana Manufacturers Association.

Overall, the responses indicated a positive direction for the sector due to a continuing strong demand for Indiana-made products. Authors noted that “expectations for future growth rates in sales revenues, profit margins, and capital investment remain positive and a record number of survey participants expect rapid growth in their product markets over the next three to five years.”

Also, there has been a general trend toward greater operational efficiency for most companies, in part driven by the labor shortfalls. Many companies are investing in automated processes to improve efficiency and remain competitive.

About 48% of manufacturing employers say the number of jobs continues to increase at their organizations, and nearly two-thirds expect the number of skilled jobs to increase as a result of implementing new technologies and automation.

Key challenges include:

  • Technology investment – With the overall industry movement toward Industry 4.0, which is the increased connectivity of equipment and greater use of automated processes, companies will need to make capital investments in advanced technologies to help them improve efficiency, keep up with demand, and stay competitive.
  • Workforce development – To keep pace with innovation and the deployment of new technology, workers are going to need more training. Also, the industry is going to need to be marketed differently to younger generations of workers to support recruitment. Workforce development initiatives will be needed, and companies will have to adapt.
  • Supply chain flexibility – The broad picture of the nation’s overall trade and tariff policies have created uncertainty for lots of different types of manufacturing entities. Without a clear picture of what lies ahead, companies are advised to reassess their supply chains and build in flexibility.

The Perceptions

One of the ways companies are working to market manufacturing employment options for younger candidates is by gaining a deeper understanding about how their parents perceive the industry. Or, more accurately, how they don’t.

Conexus Indiana partnered with BBC Research & Consulting to release its survey, “Public Perceptions,” a few weeks ago. The logic behind the survey was that familiarity leads to desirability. Unfortunately, in this case, the results indicated that most parents in Indiana aren’t familiar with manufacturing career opportunities for their child at all.

Several surprising details from the survey noted that:

  • 2 out of 3 Hoosier parents are unfamiliar with the Indiana manufacturing industry
  • Of those unfamiliar, 83% of them find manufacturing to be an undesirable career pathway for their child
  • 50% of all parents underestimate industry salaries

The report concluded with a recommendation from employers to leverage more opportunities to make manufacturing “real” for both parents and students by working in conjunction with educators. In general, authors noted that educators described manufacturing as thriving and should be equipped with more information to inspire students and their parents to consider the industry.

Taking Charge

As demand grows for products made in Indiana, companies are going to have to get creative in terms of how they sell careers in their industry to younger demographics and their parents. It’s likely that we’ll be observing a corresponding uptick in recruitment endeavors alongside the increase in business that’s projected for manufacturing, and likely new informative campaigns, training methodologies, and operational strategies. It’s a time for big changes and big challenges, but it’s an optimistic time as well.