5 Manufacturing Sectors Affected by the Great Resignation

Businesses face many challenges in the wake of COVID-19, but few are as imposing as the Great Resignation. Waves of employees leaving the workforce or pursuing other careers continue to strain organizations across industries, with no end in sight. Manufacturing, in particular, has borne the full weight of this trend.

 

While the Great Resignation has touched virtually every industry, it’s hit manufacturing harder than most. Even within manufacturing, some subsectors have seen more daunting challenges than others. If businesses hope to move past these obstacles, they must first understand their full extent.

 

Overall Impact on Manufacturing

The manufacturing workforce has long been one of the nation’s largest, employing more than 10 million people for the past two decades. Despite this massive presence, it’s also experienced more drastic labor changes than any other sector amid the Great Resignation.

 

While restaurants and hotels have seen the highest quit rates, manufacturing has seen the greatest change since before the pandemic. Quit rates in the sector were 58% higher in 2021 than pre-pandemic levels, almost 20% more than the second-highest change. While employment in the industry has slowly declined over the years, losses this significant are historic.

 

This mass exodus has produced tangible side effects, too. Without enough workers to maintain pre-pandemic productivity, many factories are struggling to meet demand. Consequently, stock shortages that started from supply chain issues have become more impactful, leading to longer lead times and dissatisfied customers.

 

The Great Resignation may have compounding workforce effects, too. As employees must work more to sustain output, they may become overworked and stressed, leading them to leave the industry too. This creates an exponential rise in labor shortages.

 

5 Most Affected Manufacturing Sectors

The Great Resignation has thoroughly disrupted the manufacturing sector. Still, this disruption hasn’t been totally even throughout the industry. Here are five subsectors that have felt the weight of this shift more than most.

1. Nondurable Goods

While nondurable goods’ demand shifts haven’t been as extreme as some durables, they face considerable labor shortages. Nondurable manufacturing added 67,000 job openings in April 2022, compared to durables’ 53,000. Since nondurables also account for a smaller part of the manufacturing workforce, this faster labor shortage growth is significant.

 

As employees leave the manufacturing industry as a whole, they may leave nondurables faster. This subsector often pays less, and the work may have a less positive reputation among job seekers coming from an environment that stresses university education and office jobs. Nondurable manufacturers may have to do more to retain talent as a result.

2. Semiconductors

Shortages in the semiconductor industry have become infamous over the past two years. While strained raw material supplies account for much of the shortage, the Great Resignation has exacerbated the issue. This technical manufacturing branch has higher skill requirements for its workforce, and demand has skyrocketed, leaving it struggling to keep pace.

 

While this sector is highly automated, its niche talent requirements make it harder to fill its growing job gaps. Semiconductor fabrication plants need an additional 70,000 to 90,000 workers by 2025 to meet demand in the U.S. alone. As electronics become increasingly central to everyday life, this demand will only rise.

3. Auto

Automakers also rank among the top manufacturing sectors affected by the Great Resignation. While automakers face the same labor issues as most manufacturers, much of its current problems stem from the labor shortage in semiconductor fabrication. As semiconductor supplies have fallen from decreased productivity, it’s become harder to produce vehicles that rely on these parts.

 

This supply strain, combined with automakers’ own labor issues, has resulted in considerable quality degradation. Problems per 100 vehicles have risen 11% between 2021 and 2022, coming to a 36-year high. As manufacturers struggle to acquire the parts and talent necessary to produce vehicles, overall quality has suffered for the sake of higher output.

4. Electronics

Electronics manufacturers face similar challenges amid widespread labor shortages. While job openings in the sector may not necessarily be higher than in other manufacturers, overall labor gaps impact them harder. Semiconductors are a crucial part of electronic devices, so as semiconductor fabs struggle to find enough workers, it limits production for electronics manufacturers.

 

Demand for consumer electronics has also fluctuated widely across the past few years, making it difficult to set production targets. This lack of predictability takes inventory issues further, leading to more dramatic losses, all stemming in part from the labor shortage.

5. Aircraft

The aircraft manufacturing sector also faces considerable obstacles amid the Great Resignation. While flying as a whole has declined, private flights have seen significant demand spikes as people try to avoid the complications and health risks of commercial air travel. Some operators now fly at 10 times their normal level, making aircraft manufacturers’ labor shortages more impactful.

 

These demand spikes following pandemic-era dry spells leave the industry with a considerable gap to cross. The already strained workforce now must grow even faster to keep up with demand, which is no easy task as workers leave manufacturing positions.

 

Where Do These Labor Shortages Come From?

Addressing these labor shortages begins with understanding how they arise. Part of the issue is the rising prominence of more flexible careers. As much as 25% of all jobs will be remote before long, giving workers more freedom, but remote work is difficult to apply in manufacturing. Consequently, employees may leave the industry to find more flexible positions elsewhere.

 

Pay and benefits are other prominent issues. While manufacturing used to pay substantially above average for nonsupervisory work, it now falls well below the average. Lack of upward mobility and other benefits have also driven people away as the realities of their harsher working environments have become clearer.

 

Toxic work environments and poor company culture may also play a role in the Great Resignation. Many of these factors aren’t necessarily new, but as demand shifts have placed more stress on workers, they’ve become increasingly evident. What many manufacturers offer is no longer enough for employees to put up with low pay, poor benefits, stress, and toxic work environments.

 

While some influencing factors, like changing attitudes and demand fluctuations, are out of manufacturers’ control, many of the underlying issues are addressable. Companies in the hardest-hit industries should look at how they approach these factors to see if there’s room to improve. Changes won’t likely yield immediate benefits, but they can create long-term labor improvements.

 

Manufacturing Must Grapple With Labor Issues

These five sectors are some of the most heavily affected by the Great Resignation, though disruptions are common throughout manufacturing. At these levels, workforce issues will likely persist for some time, but manufacturers can still adapt.

 

If manufacturing organizations address their internal operations that may drive workers away, they can start to reverse this trend. Over time, they can regain their workforce and become the large employers they once were.

 

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