The manufacturing sector was already in the midst of a talent crisis when the U.S. administration implemented hefty tariffs in early 2025. The tariffs – designed to create more manufacturing jobs on American soil, protect American workers, and bolster American economic security – assume that U.S. manufacturers can step into the void created by the resulting trade wars and ramp up production to meet market demands.
However, American manufacturers are struggling to fill existing roles. That difficulty can be traced to persistent issues around skill shortages, demographic shifts, and outdated perceptions of the manufacturing industry. The factory floor has seen significant changes in the past few decades. Rather than relying on rote, hands-on work, many of today’s manufacturing jobs require digital skills to interact with complex systems and devices. But while younger generations are adept with technology, few are drawn to factory work.
Even before the tariffs were announced, it was projected that almost two million manufacturing jobs could remain unfilled as the sector ramps up production between 2024 and 2033. It’s a critical time for manufacturers. Those who wish to future-proof their workforce to stay competitive must critically assess their current talent strategies and act decisively.
Demand Is Outpacing Supply – And It’s Going To Get Worse
Even before the tariffs were introduced, the American manufacturing sector was on the rebound. As Jay Jacobs explains, U.S. manufacturing peaked in 1979, when the sector employed about 20 million workers. But beginning in 1980, the industry entered a period of structural decline. By 2017-19, only about 12.5 million workers were employed in manufacturing.
The pandemic instigated a shift. Although about 1.3 million manufacturing jobs were lost at the beginning of the pandemic due to layoffs, business closures, and a sluggish economy, the sector rebounded by 2022. That year, about 12.7 million workers were employed in the manufacturing sector – surpassing numbers recorded immediately pre-pandemic.
But even as employment numbers began to surge, companies struggled to recruit and retain workers. The talent shortage can be attributed to a few key issues, including:
- The complex, specific skillset required on the factory floor;
- Retiring baby boomers;
- Low numbers of younger generations entering the trades; and,
- A poor perception of manufacturing work.
According to the U.S. Bureau of Labor Statistics, there were approximately 400,000 unfilled positions, on average, during the first four months of 2025. Citing a survey by the Manufacturing Institute, NPR reports that more than 65% of manufacturing companies listed recruitment and retention as their top business challenge in 2024.
Unless companies proactively invest in addressing the root cause of the sector’s talent shortage, that shortage will worsen. In fact, a recent study by Deloitte and the Manufacturing Institute found that, by 2033, 2.1 million manufacturing jobs could remain unfilled if current trends continue.
Modern Manufacturing Requires Modern Skills
As with most things, manufacturing is becoming increasingly digital. As this shift occurs, smart technologies, automation, robotics, machine learning, data analytics, and virtual and augmented reality are being integrated on the factory floor. Instead of rote work on an assembly line, many of today’s workers in the manufacturing sector require a skillset that draws on complex technological knowledge. Digital literacy, systems thinking, and adaptability are now essential in production roles.
Further, as NPR points out, only two out of every five jobs in the manufacturing sector are directly involved in assembling or making things. The other three may be employed in areas such as research and development, engineering, design, finance, sales, marketing, and human resources. Many of these areas also require specialized digital literacy.
As a result of this trend towards increased digital reliance in the workplace, the World Economic Forum projects that approximately 44% of workers will see their skill sets disrupted within the next five years. To fill open roles, meet production demands, and stay competitive, employers must be proactive in helping their workforce acquire needed skills.
Younger Workers Are Turning Elsewhere
Despite increased investment in the manufacturing sector since the early 2020s, job growth remains flat, and the industry’s share of total U.S. employment is declining. As baby boomers increasingly exit manufacturing, younger generations are reluctant to enter the field. One of the biggest hurdles to attracting young workers is an outdated perception of factory work.
Interviewed by NPR, Carolyn Lee, the president and executive director of the Manufacturing Institute, sums up the issues that plague the public’s perceptions of work within the sector:
For one … manufacturing has a PR problem. Many Americans have outdated notions of what manufacturing jobs actually entail. She suggests that many imagine they’re the dirty, monotonous and dangerous factory jobs depicted in Charles Dickens[‘] novels. But, Lee says, they’re actually “clean and bright and full of technology.” … [As well,] if the industry is seen as vibrant and growing, as opposed to dying, that will probably help with recruitment.
To attract more young Americans to their workforce, it’s critical that manufacturers change public perception about factory work.
Retention Is The Next Frontier
Recruitment is only part of the problem that manufacturing faces. The other piece of the puzzle is retention.
Retaining skilled talent is a growing challenge. The skills and labor market are competitive, and manufacturers may find that they lose talent to adjacent industries that offer more flexibility, higher perceived prestige, or better-defined career paths. This may be especially true of younger workers – Gen Z and younger millennials – who appreciate meaningful work, flexible schedules, growth opportunities, and employers that reflect their personal values.
In the manufacturing sector, HR teams must think beyond recruitment and recognize how critical retention is to long-term success. To increase retention rates, companies should prioritize three critical initiatives.
Upskilling And Cross-Training
Upskilling benefits both the employer and employee. When an employee has a skill set that isn’t just relevant to their own role but allows them to pivot to meet changing business needs, their employer benefits. At the same time, by investing in an employee’s growth potential, an employer signals the employee’s value to the company, which increases employee engagement, loyalty, and retention.
Career Growth And Internal Mobility
Establishing pathways for career growth and internal mobility is a cornerstone of successful retention initiatives. When employees know that there are opportunities for advancement, they are more apt to stay.
Employer Branding
Branding may seem like a buzzword, but it’s an important strategy for success in today’s world. A compelling employer brand advertises your strengths, attracting talent that fits well with your culture and ultimately encouraging retention.
How Manufacturers Can Proactively Mitigate Talent Challenges
There is no quick fix for the recruitment and retention issues the manufacturing industry is facing. The problems are complex and industry-wide. However, there are several practical strategies that leaders can develop and implement as they work to future-proof their workforce and bridge the widening talent gap.
Bring Back Retired Talent Through Strategic Payrolling
Talent that has left the workforce through retirement is valuable – and not only for the work they can perform on the shop floor. Experienced retirees who return to the workplace can:
- Act as mentors to those entering the sector as well as to those transitioning to leadership roles;
- Support knowledge transfer; and,
- Guide process improvements and leadership transitions.
By leveraging payrolling partners to bring back retirees in part-time or advisory roles, manufacturers strengthen their workforce in multiple ways – without adding full-time headcount or benefits obligations.
Deploy Consulting Talent For Specialized Projects
As manufacturers strive to improve retention, the idea of working with consultants may seem counterintuitive. After all, a consultant is hired on a short-term contract basis. However, there are several benefits to hiring consultants, and this is particularly true in manufacturing as Industry 4.0 continues to evolve.
As manufacturers implement new technology, they may encounter highly specialized needs such as automation system integration, robotic cell design, or cybersecurity compliance (e.g., CMMC readiness). Since it can be difficult to find talent with those specialized skills, consider partnering with consulting firms that can supply talent on a project basis.
Bringing consultants onto your team temporarily can quickly add expertise and cost efficiency to your operations without long-term hiring risks.
Invest In Apprenticeships And College Partnerships
According to NPR, about half of all open jobs in the manufacturing sector require a bachelor’s degree. The other half do not – but they may require specialized skills that can take a year or longer to acquire.
To ensure that needed talent is being developed and to speed up the development of competency in new hires, manufacturers should consider building structured apprenticeship programs in collaboration with local community colleges, technical schools, and trade programs.
Apprenticeship programs are widely beneficial. They provide:
- Students with hands-on, paid experience and a valuable career pathway;
- Employers with a dedicated talent pipeline that allows them to shape future employees from the ground up; and,
- Local communities with the socio-economic benefits of workforce development.
By developing apprenticeships, manufacturers address their skills gaps while also building long-term loyalty and creating a resilient workforce. While apprenticeships can be a hiring solution, they’re also critical to retention.
Partner With A Specialized Recruitment Agency
Generalist staffing firms often don’t understand the nuances of engineering and manufacturing roles. By partnering with a recruitment agency that specializes in placing manufacturing and engineering talent, companies can:
- Reduce time-to-fill;
- Improve candidate quality; and,
- Access highly-qualified passive talent.
Partnering with specialized agencies can have other benefits as well. For example, agencies with deep manufacturing domain expertise can also help consult on compensation benchmarks, job structuring, and market realities.
Conclusion: Modern Problems Need Modern Talent Strategies
The labor challenge facing American manufacturers is not a short-term blip – it’s a structural shift. The future of manufacturing will be shaped as much by talent strategy as by technology. Companies that diversify their approach – through blended workforces, cross-generational mentorship, and specialized partnerships – will be best positioned to adapt and lead.
