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Workforce, supply chain top manufacturing challenges, report says

State of Manufacturing results presented at MAM trade show find industry leaders remain optimistic

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Missouri manufacturers are facing myriad challenges in today’s economic environment, yet optimism in the industry’s future is a common sentiment, according to results from a report prepared by a Springfield professional training and coaching firm.

The State of Manufacturing in Missouri report was delivered by Habitat Communication & Culture at the Missouri Association of Manufacturers Trade Show & Conference. The report presentation served as a kickoff to the second annual conference, held Feb. 7-8 at the Branson Convention Center.

Spencer Harris and Paige Oxendine of Habitat unveiled the report’s results, which were compiled from a survey, focus groups and research gathered by MAM as it toured nearly 130 manufacturing facilities statewide over an 18-month period. The report noted the most significant challenges today for Missouri manufacturers fall into three areas: workforce, supply chain, and industry resources and support.

“We did hear some consistent and persistent themes when we asked you about the ways in which you have been most challenged in recent years,” Oxendine said at the conference. “We know, first and foremost, you are experiencing incredible workforce-related challenges. Secondly, we hear you are still experiencing and have experienced supply chain impacts.”

Primary challenges
Workforce development was identified as a primary challenge for manufacturers in Missouri, as 93% of respondents said they had been affected by issues including recruiting, hiring, onboarding and retaining employees. Oxendine said the total was a reflection of a nationwide issue, as the National Association of Manufacturers’ fourth-quarter 2022 survey found nearly 76% of respondents listed attracting and retaining a quality workforce as the No. 1 business challenge.

She said many Missouri manufacturers reported operating at less than 75% of capacity due to workforce shortages.

“Which means essentially at the very top of the funnel, the very early stages of our workforce pipeline, we just fundamentally are stalling out because we can’t find the right people,” Oxendine said.

The report cited new opportunities and pay as the primary reasons workers had left their place of employment over the last two years. 

A 2021 study by Deloitte and The Manufacturing Institute, the workforce development and education partner of the National Association of Manufacturers, pointed to hiring needs in the industry. The study noted the manufacturing skills gap in the U.S. could result in 2.1 million unfilled positions by 2030. 

Respondents in the report said they were impacted by supply chain issues even more than workforce struggles, Harris said. Supply chain challenges to some extent were felt over the last one to two years by 97% of respondents.

“According to our data over the last two years, some of you have tried to solve some of your workforce issues by implementing more automation through some innovative strategies and process improvements to try and offset labor challenges,” he said to conference attendees.

However, because there are supply chain delays, getting hold of new technology in the market to offset the workforce issues also can be a problem, producing a “double whammy,” Harris said.

Roughly 30% of survey respondents believe supply chain issues will not continue to impact their company in the next three to five years. However, 54% expect the challenges to persist, while 16% were uncertain.

When it came to finding support for challenges from partner organizations, such as MAM, and governments, it was a mixed bag, Oxendine said. Survey respondents viewed MAM positively, as 71% said the organization was providing adequate support to manufacturers. That number dipped to 52% when respondents weighed in on receiving sufficient support from government agencies, while NAM only had 44% satisfied with its assistance.

Finding optimism
Despite manufacturers citing challenges they expect to continue for the next few years, Harris said there is “radical optimism” across the state about the future of manufacturing. The research revealed 89% of respondents are optimistic about their organization’s growth over the next five years. That sentiment dipped to 80% when respondents said they were optimistic about the industry’s future at the state level, followed by 71% when expanded to the outlook for manufacturing in the U.S.

Research participants who were the most optimistic were also most likely to indicate that their companies had formal strategic and marketing plans, according to the report. Additionally, they were likely to identify workforce recruitment and development as a priority.

“We learned that the most optimistic manufacturers in Missouri are also the most intentional manufacturers and, frankly, the most innovative manufacturers,” Oxendine said.

Culture also was stressed by many respondents, with 80% identifying it as a priority over the next one or two years. That could include offering schedule flexibility, use of open-book management and employee recognition programs, according to the report. 

Michael Eaton, MAM executive director, said his organization was an integral part of the conversation in research for the report.

“We brought a lot of information to the table just in visiting around the state,” Eaton said, declining to disclose details of the contract the nonprofit signed with Habitat for producing the report.

Eaton said the report provides information that speaks to most manufacturers in the state, noting 80% of the industry’s companies employ 50 people or fewer.

He expects the report will become an annual offering at the conference, adding the next one is planned for February 2024 in Branson.

“We will be looking for sponsors of the report to help in the future,” he said. “Hopefully, we’ll get more engagement from future surveys.”

This year’s MAM conference featured over 100 exhibitors and session tracks covering topics such as workforce, operations, marketing, supply chain and cybersecurity. Eaton said more than 650 people registered for the two-day event, even drawing representatives from outside Missouri, including Kansas, Illinois, Indiana and Oklahoma.

The State of Manufacturing report can be downloaded at TeamHabitat.com/MAMreport.

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