Iowa's Ongoing Manufacturing Workforce Shortage

Iowa manufacturing leaders are optimistic about increasing sales and growth after a challenging 2020 but continue to grapple with workforce shortages that will likely continue for years to come. Manufacturing is the state’s second-largest sector, with 3,500 manufacturers who add $33 billion to Iowa’s GDP, according to Iowa Workforce Development. Experts say moving the industry beyond its current challenges will require leaders to take several steps, including training, collaboration, investment and seeking out technological solutions.

WHAT STATEWIDE SURVEYS SAY

The latest Iowa Association of Business and Industry (ABI) Quarterly Business Survey showed that 79% of manufacturers expect to see sales expand in the third quarter of this year. While those same survey respondents said they expect their workforce to grow in the third quarter, they said employee shortages are a top issue for their businesses.

“The expected growth sheds light on an important priority for our members,” said ABI President Mike Ralston. “We are focused on increasing the manufacturing workforce. Iowa’s manufacturers are experiencing the same trends manufacturers nationwide are seeing. There is an ongoing labor shortage, but we have a lot of Iowa manufacturers offering competitive salaries and benefits, as well as other initiatives to keep Iowans engaged. In addition to the labor shortage, manufacturers are also working hard to address ongoing concerns about supply chain issues and the increasing cost of raw materials.”

The Iowa State University Center for Industrial Research and Service’s “Iowa Manufacturing Needs Assessment” report of 2019-2020 listed workforce shortages as the manufacturing sector’s top concern, due to retirements, job abandonment and a lack of child care availability. The report showed that manufacturers have been losing supervisors and skilled trades workers to retirements, and that employees new to the field are abandoning the industry at a high rate. The shortage is such an issue, workforce shortages are influencing decisions on whether to relocate to other states and regions. Many companies are changing their recruitment strategies as well, such as posting job vacancies on social media and at local venues, like churches, the report found.

PROMOTING ADVANCED MANUFACTURING

Manufacturing Day, also known as MFG Day, is a day when manufacturers work to recruit and fill positions within their local communities, often by hosting local students or hosting events. This year’s MFG Day lands on Oct. 1. “Our plan is to share Manufacturing Day with our local middle school and high school students by providing them the opportunity to come to our facility for a learning tour,” said Nate Weaton, president and CEO of Fairfield-based Weaton Capital, a private holding company focused on providing succession opportunities to Iowa business owners. “We feel that this has the biggest impact in promoting what advanced manufacturing really is.”

Weaton agrees that the workforce shortage is the top concern of manufacturers.

“There is no argument that workforce is the No. 1 challenge in our industry, and most others, right now,” he said. “Beyond workforce, it’s communication infrastructure, which impacts both business and education in our communities.”

To improve the situation, Weaton said manufacturers need to invest in technology and people and collaborate with other business leaders. Manufacturers have done a good job of investing in technology during the pandemic.

“Iowa manufacturers continue to invest in innovation, even through the difficult times of the last few years,” Weaton said. “This focus, coupled with a state government that works hard to keep our state manufacturing sector competitive, has provided great opportunity for Iowa manufacturers.”

Increased collaboration could also help business leaders, he said.

“Business leaders, no doubt, are including these critical issues in their strategic discussions with their teams,” Weaton said. “It’s time to take those discussions outside our organizations, share best practices and work together to solve the problems.”

Weaton Capital invests in competitive wages and training to tackle challenges within the sector.

“The investments in technology and skills enhancement not only make our business more productive, they facilitate innovative and customer-focused thinking across our organization,” he said. “This culture ultimately drives a safe, clean and efficient work environment for everyone.”

CIRAS OUTLOOK

Ron Cox, director of the Center for Industrial Research and Service (CIRAS) at Iowa State University, said the manufacturing industry’s dilemmas are daunting, but not insurmountable.

“The struggles we are all seeing with COVID are extremely challenging,” he said. “It reminds me a bit of what we saw two-plus decades ago, when Iowa lost so many manufacturing jobs overseas. It seemed at the time like there just wasn’t much we could do to stem the loss of jobs. But thousands of Iowa companies fought through those tough times and manufacturing in Iowa has rebounded so well.”

Technology could provide many answers to those challenges, he said.

“I believe if we look at new ways to solve our workforce challenges and double down on productivity improvements and implementation of new technologies and automated systems, we can continue to grow manufacturing in Iowa,” Cox said. “Our economy is so dependent on manufacturing; to me, no other option but extreme success is acceptable.”

He predicts workforce shortages to be a long-term challenge for the state. CIRAS has taken statewide workforce data and broken employees into 27 workforce types. The center is now developing strategies to better target each type of worker, he said.

“I believe Iowa will continue to see labor shortages far longer than the rest of the country,” he said. “We have systemic, low population growth and a high labor force participation rate. There just are not that many more people that we can pull into the labor force if we use the same approaches as in the past. We believe companies have to change their labor force strategies and laser-focus their workforce recruiting toward the types of individuals they want to hire. Then they need to address the root causes that are preventing those types of workers from entering the workforce.”

While workforce challenges are likely to be ongoing, Cox said he hopes supply chain disruptions will dissipate throughout the coming year.

“I’m hopeful supply chain issues will be in the rearview mirrorin 12 months, but I believe workforce issues will remain with usin Iowa for many years to come,” he said. “Supply chain issues are affecting companies across the country, so it is going to take some time to get back to pre-COVID conditions. The best advice I can think of is to over-communicate with customers and suppliers so expectations are understood and people can plan.”

Despite Iowa’s manufacturing challenges, there is a lot going right in the sector, Cox said.

“The demand for goods and services is very high, in part due to the pent-up demand created by the COVID pandemic,” he said. “We also see companies working together more on really tough problems, like development of workforce solutions and exploring Industry 4.0 possibilities.”