It’s no secret the manufacturing industry faces more challenges than most. And while these obstacles may vary based on the size and location of your manufacturing business, there are a few standout challenges facing manufacturers of all types and sizes across the country.
1. Attracting and Maintaining a Skilled Workforce
Manufacturing is becoming more and more technically advanced as we enter what has been dubbed the “fourth industrial revolution.” This revolution encompasses new and emerging manufacturing technologies, which work together to produce and manufacture a wide variety of products. These technologies include:
- Advanced robotics
- Artificial intelligence
- Cloud computing
- The “Internet of Things”
- Sophisticated sensors for data capture and analytics
- 3D printing
To compete in a global market, manufacturing companies implementing these technologies must attract and retain highly trained and educated individuals such as software engineers, machine operators and maintenance technicians. However, software engineering and development jobs continue to remain in high demand throughout the country, with almost 60,000 unfilled positions as of August 2016, according to the United States Department of Labor (DOL).
This emerging and increasingly competitive need to attract technically trained and educated employees is at odds with public perception that manufacturers are, for the most part, blue-collar employees. Unlike in the past, manufacturers now face the challenge of competing for talent against more traditional technology companies, like those in Silicon Valley, which may be perceived as more innovative and rewarding employment opportunities with better compensation.
2. Rising Healthcare Insurance Costs
It should come as no surprise to any manufacturer that manufacturing companies across the United States are struggling under the heavy costs of healthcare insurance.
In the Q3 survey of the National Association of Manufacturers, over 74% of survey respondents said rising healthcare costs was their top business challenge, with small and medium sized manufacturers reporting annual increases of up to 10%. Family coverage in the manufacturing sector has risen to over $16,000 per year, and employers see the impending employee benefit tax on health insurance as another potential concern.
With the “Cadillac” tax taking effect in 2018, employers will soon be required to pay a 40 percent surcharge on benefits that exceed $27,500 for family coverage. If plan costs continue to increase by the historical average, the average health insurance plan for a manufacturing employee will be subject to the employee benefits tax by 2024.
3. Unfavorable Business Climate
Manufacturers have always dealt with various levels of regulation but, lately more than ever, business owners are sensing an increasingly intrusive and costly regulatory environment. With a lack of comprehensive tax reform, manufacturers now face tax laws that have made turning a profit more difficult than in the past.
According to the National Association of Manufacturers, on average, between 2012 and 2016 the DOL finalized almost twice as many major labor regulations per year than in the previous 24 years combined. Manufacturers rely on a stable and balanced regulatory environment to create jobs and fuel economic growth. However, money spent by manufacturers on regulatory compliance are dollars not spent on job growth or capital investment.
Where Do We Go From Here?
In order for the United States to continue to compete in a global economy, the concerns of manufacturers must be heard. As manufacturers struggle to attract and retain a new crop of technologically-trained and skilled employees, they continue to face the ongoing struggle to keep up with rising healthcare costs in a business climate that doesn’t seem to be doing them any favors.
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