Manufacturing talent: what are the biggest shortages, and how can brands adapt?

May 31, 2023 by Mark Dingley

Choosing the right technology takes knowledge, not talent


Australian manufacturers are facing a workforce crisis. Whether in food and drink, electronics or automotive, 80% of employers within manufacturing are struggling to find people with the necessary skills to fill their vacancies.

Manufacturing is amongst the five sectors hit the hardest with staff shortages, along with trades, hospitality and tourism, healthcareand technology, according to Seek.

According to the Australian Industry Group (AIG), 90% of CEOs expect staffing shortages this year. In the annual Skills Priority List, the National Skills Commission found 31% of assessable occupations have experienced worker shortages this year.

In this article, we'll look at the biggest talent shortages in manufacturing and some practical ways for manufacturers to attract and retain talent.

Manufacturing talent shortages: An overview

As much as we can blame the Covid-19 pandemic, the talent shortage has been a problem in Australia for decades.

Now it's reached concerning levels. Nearly a third of employing businesses report having difficulty finding suitable staff to fill jobs, according to an ABS report in June 2022.

Large (66%) and medium businesses (62%) were more likely to report difficulty finding suitable staff, compared with 29% of small businesses.

However, more small and medium businesses (46% and 40%) reported that their business operations are impacted to a great extent compared with large businesses (29%).

Australia is not alone in its skills shortage. Globally, skilled migrants are desperately in demand, with countries including the United States, Canada, New Zealand and the United Kingdom competing for the skilled labour force, and actively trying to attract skilled migrants and international students.

One of the biggest challenges facing recruiters in the manufacturing industry is the increase of advanced technology, such as robotics, automation, AI and machine learning. This has eliminated some manual jobs in the manufacturing industry while opening the door to new roles.

In other words, there's a skills shift. The new tech-based jobs require skills many manufacturing workers don't have, leaving businesses scrambling to find workers with the right skills to help them move forward.

This is a global problem, with an estimated 10 million manufacturing jobs estimated to remain vacant due to the skills gap.

Which manufacturing skills are most in demand?

Even with the focus on digitalisation and automation, recent research by Randstad highlights how some traditional skills are still in high demand in the manufacturing industry, including:

  • Welders
  • Machine operators
  • Assembly line workers
  • Electricians
  • CNC mechanics
  • Engineers

For example, welders are more in demand than ever. Yet, Weld Australia reports that the number of welding trade workers in Australia dropped 8% over the five years to 2019, and welding apprenticeship completion rates have fallen by as much as 23% annually.

Digitisation, automation and Industry 4.0 are also increasing the demand for new skills. Recent industry estimates show that 87% of manufacturing jobs now require digital skills.

Specifically, this means automation skills, data management, programming, data analysis, and more.

Can permanent migration solve the skills shortage?

Outside of manufacturers’ hands, one solution to the skills shortage is migration. Currently, Australia has the second-worst skills shortage globally, after Canada.

The Federal Government promised at the Jobs and Skills Summit in September to increase the permanent migration intake from 160,000 to a record 195,000 places this year and speed up visas for foreign workers.

This policy recognises that Australia had traditionally relied on temporary labour, which came to a halt when borders were closed during the Covid-19 pandemic. If Australia can move towards more permanent migration, it will improve the labour pool.

This will only work if manufacturers are willing to employ foreign workers. According to a survey by NAB in November, more than four in 10 small business owners (42%) would consider hiring migrant workers, international students, backpackers or similar in the next six months if they were available. This was highest in Tasmania (56%), South Australia (52%) and Western Australia (47%).

How manufacturers can solve their skills shortage

a) Emphasise your benefits

According to the latest Randstad Employer Brand Research report, the factor most appealing about an employer to prospects is its salary and benefits offering (cited by 62%).

This is good news for businesses willing and able to increase salaries to attract workers. In an ABS survey, increasing wages and salaries was the top solution for companies to attract skilled labour, with 30% of businesses saying they planned to increase salaries over the next three months.

However, if you can't afford to increase salaries, you should emphasise your employee benefits instead.

In research by SEEK, Australians said the top five perks (aside from salary) are:

  1. The ability to choose their own working hours during the day
  2. Extra time off for additional hours worked
  3. The ability to work from home
  4. Health insurance
  5. Subsidised education, training or personal development courses

Smaller businesses can be much more agile than big organisations and can start adapting the workplace to offer many of the benefits that today's candidates are looking for, such as flexible working hours, extra time off in lieu, or the ability to buy additional holiday days.

If you already offer these, make sure prospects know about them. Outline them clearly and proudly in every job you advertise.

b) Be more flexible

Speaking of perks, according to the Randstad Employer Brand Research, 58% of employees rank a good work-life balance as a motivator for changing jobs, making it the second leading motivator after salary and benefits.

And who can blame them? Australia suffers higher burnout levels than other countries, with 62% of employees and 66% of managers reporting they feel burnt out at work, compared with a global average of 48% and 53%, according to Microsoft's Work Trends Index (2022).

Manufacturers offering flexible work arrangements, whether by location or schedule, will stand out from the competition. Consider other strategies, such as shift swapping, voluntary vs mandatory overtime, and part-time work options, to help to expand your talent pool and keep workers happy.

c) Upskill your staff

If you can't attract skilled workers, start upskilling the workers you already have. Almost half (48%) of business leaders offer upskilling or training opportunities to improve retention and attract talent.

There's a misconception that career growth within the manufacturing industry is almost non-existent. But manufacturers can attract younger generations by highlighting their training and development programs so that they see a career path with the company.

The transition to automation has shifted the skills required in the manufacturing sector. While it has opened up different jobs, such as data engineers and machine learning/AI engineers, there is a need for more talent to fill those jobs.

Victorian manufacturers can ask for help with this. In late 2022, the Victorian State Government announced its $4.5 million Digital Jobs for Manufacturing program to help local manufacturers adapt and develop the digital capabilities they need to maintain their competitive advantage.

Starting in January this year, the program is offering courses in 13 different fields, including artificial intelligence, data analytics, cyber security and software development, with specialist courses in robotic process automation, computer-aided design or manufacturing and additive manufacturing coming later.

d) Close the diversity gap

Did you know that globally women make up less than 30% of the entire manufacturing workforce?

Gender equity and diversity in the manufacturing industry workforce is a problem that only worsens the skills shortage.

Recent economic research by Chief Executive Women found that increasing women's participation in the paid workforce would address Australia’s current skills shortage. The study estimates that engaging women in paid work at the same rate as men would unlock an additional one million full-time skilled workers in Australia.

The need for women in manufacturing isn’t just about numbers – research shows that gender diversity in manufacturing leads to greater innovation and increased profitability.

With women in leadership positions, the benefits are even greater. Deloitte’s study found that leadership teams that include women help manufacturers provide more diverse perspectives and creative solutions and drive greater profitability.

So what can manufacturers do? Assess your job offerings and change your workplace to attract women and build a diverse workforce. Honour equal pay and offer benefits such as flexible work to show you care about their needs.

e) Promote your values

We've talked a lot about the importance of being sustainable and ethical for customers, but this matters for employees too. Job seekers are increasingly drawn to organisations that talk the talk when it comes to the environment and social impact.

According to Talent Victoria, environmental sustainability is third or fourth in candidates’ priorities, where traditionally, it wouldn't have featured in the top five.

In addition, a Gallup poll reveals that 69% of employees said they would look at a company’s record on the environment before deciding whether or not to take a job, often checking social media to find out.

What’s more, a quarter of employees would take a pay cut to work for an environmentally sustainable company, according to a TotalJobs survey.

It’s not just about environmental sustainability – employees want to work for a company that shares their values.

For example, with the debate around Australia Day, Woolworths is one of several major Australian companies now offering staff the opportunity to work Australia Day and take a different day off instead.

Actions speak louder than words – so get out there and give something back. Then (and only then) talk about it in your job descriptions, careers pages, company news and social media.

Over to you

How will you redesign your employee experience to recruit and retain skilled workers?