#178 – Inside Our Industry – Industrial Labor Market Demands

Posted on | Inside Our Industry

Two recent posts on Area Development’s Site & Facility Planning Insider hit on the demands facing the labor market, in particular skilled manufacturing jobs. As noted in the second post, labor availability and labor costs rank as top site selection factors. Following are the posts; click on the links within each for more details.

Finding — and Keeping — Industrial Workers

In August 2022, the Chips and Science Act was signed into law, providing $52 billion to grow the domestic manufacturing of semiconductors, and a number of chipmakers have responded by announcing plans to build new plants. However, according to a study conducted by the Semiconductor Industry Association, of the 115,000 semiconductor manufacturing jobs expected to be created, as many as 58 percent of these positions will go unfilled.

In order to close this gap, universities and colleges around the nation have been updating semiconductor-related curricula. “Universities have to be part of the solution; a lot of workers need specialized (industry) knowledge,” says Peter Bermel, an electrical and computer engineering professor at Purdue University. He also notes that rapidly developing AI will impact the semiconductor labor market. Although AI may reduce the number of workers needed, those who are employed in the industry will need to be better-educated.

While finding needed workers in any industry is the first step, keeping them satisfied and retaining them is the next step. Workers value their quality of life and want competitive pay and their well-being supported in order to keep them from jumping ship. And it’s not just workers in the office sector who want flexibility in how and where they work. Industrial workers want a better work-life balance too. Companies need to “think outside the box” when it comes to keeping their industrial workers satisfied, perhaps by offering flexibility of shifts, on-site childcare, or company-sponsored recreational events that include the employee’s family members.

Regardless of the sector in which individuals work, they also want clear goals to strive for in order to advance their careers. Employers who provide such milestones will be more likely to retain their workforce.

Satisfying Labor Force Needs

Through the years, labor availability as well as labor costs always rank as top site selection factors by the companies responding to Area Development’s Annual Corporate and Consultants surveys. In fact, labor costs ranked as the number-one factor in both the 2022 and 2021 Corporate surveys. It’s no surprise that workers have been able to ask for better compensation and working conditions with U.S. unemployment reaching new lows — just 3.9 percent in October, according to the Bureau of Labor Statistics.

With a shortage of available workers along with rising labor costs, companies looking to grow their operations at a new site must, therefore, consider how they are going to fulfill their workforce needs early on in the site selection process. They need to know whether they can get skilled labor at a competitive price at the locations under consideration. By crunching labor force data, site selectors can determine what skill sets can be found in the existing labor pool, how many people are considered underemployed in a community, and from how wide a geographic area the company can draw workers. And, since not every piece of data can be relied on 100 percent, companies should look at multiple data sources.

In addition to data, site selectors can also avail themselves of state and local government-backed workforce development programs. To create the most competitive labor pool, workforce development departments have brought technology to the forefront, especially for recruitment, training, and “upskilling” to different positions, or even entry into completely different industries.