Tackling the Labor Shortage from Within
Originally published in Manufacturer, ARB’s Manufacturing Industry newsletter.
Manufacturers continue to face a serious labor shortage. According to The Manufacturing Institute, “By 2030, manufacturers will need to fill 4 million jobs, 2.1 million of which could go unfilled if we do not inspire more people to pursue modern manufacturing careers.”
A big part of the problem is a “skills gap,” driven by the rapid pace of technological development in the manufacturing industry. Two important ways to close this gap are upskilling and reskilling, which focus on developing the skills of your existing workforce rather than recruiting new hires.
Why the Skills Gap?
Recent technological changes in manufacturing — particularly in the area of automation — have advanced at a dizzying pace, accelerated by the COVID-19 pandemic. One innovation transforming the industry is the industrial “internet of things” — that is, the integration of smart sensors, internet-connected devices and advanced analytics into manufacturing processes and infrastructure.
Artificial intelligence, machine learning, robotics, virtual reality, advanced data analytics and 3D printing have also impacted the workforce. All these innovations require workers with the skills necessary to work with these technologies effectively.
What Are Upskilling and Reskilling?
Upskilling means helping existing workers adapt to new technologies, tools or processes to enable them to perform better in their current roles. For example, you might train a machine operator to use a new 3D printer or automated production line.
Reskilling is helping your workers develop completely new skill sets, enabling them to transition to new roles or career paths. An example might be training a warehouse worker, whose job is being phased out due to new technologies, to be a robotics technician.
What Are the Benefits?
Upskilling and reskilling offer several advantages over hiring new talent, including:
- Bridging the skills gap. Given the current labor shortage, upskilling and reskilling may be the most effective way to ensure that your workforce has the necessary skills.
- Saving money. Recruiting and onboarding external hires can be expensive and time-consuming. Often, it’s more cost-efficient to develop the skills of existing workers.
- Enhancing productivity and creativity. Skilled workers are usually more productive and more likely to innovate and identify process improvements.
- Gaining a competitive advantage in hiring. Offering opportunities for training and career advancement can be powerful recruitment and retention tools, helping to distinguish your company from the competition.
What Are Some Disadvantages?
These strategies aren’t without challenges. They include:
- Upfront costs. Quality training programs can be expensive, particularly for cutting-edge technologies that require specialized skills.
- Disruptions. Training workers can disrupt your regular operations and cause productivity to temporarily decline. Of course, hiring new workers can also be disruptive.
- Lack of engagement. Whether from resistance to change, fear of failure or complacency, a lack of worker engagement can derail your upskilling and reskilling efforts.
- Employee turnover. There’s a risk that retrained employees will take advantage of their newly marketable skills to look for opportunities elsewhere.
Identifying the right candidates for upskilling or reskilling can overcome many of these challenges. You’ll also need to promote a strong learning culture throughout your company and offer flexible training options (including online training). Consider creating incentives (monetary and otherwise) to help retain upskilled/reskilled workers.
To minimize disruptions, some manufacturers adopt a hybrid approach. They use skilled contract workers to meet their immediate needs while developing existing workers for their new roles.
5 Tips for Combating the Labor Shortage
In addition to upskilling and reskilling, manufacturers should consider the following five alternative strategies to address the labor shortage:
- Financial incentives. Besides competitive compensation and benefits, consider offering signing and stay bonuses as well as “voluntary benefits.” These include life and disability insurance, financial and legal counseling, and employee assistance programs.
- Intangible benefits. Nonfinancial benefits, such as flexible work arrangements and mentoring programs, can be attractive to employees.
- Referral bonuses. Satisfied current employees can be effective recruiters. Consider offering referral bonuses or other incentives to entice workers to participate in recruiting.
- Internships and apprenticeships. Establishing internships, apprenticeships and skills certification programs can help attract potential future workers from local high schools, community colleges or trade schools.
- Recruit online. Younger, tech-savvy workers often focus their job searches online, so take advantage of online job sites, social media and other digital recruiting tools. This strategy also allows you to expand the reach of your search beyond your geographical market. Skilled workers may be willing to relocate for the right opportunity.
Are You Ready?
If you’re considering an upskilling or reskilling program, choose your training provider carefully. Be sure the provider can customize the program to meet your company’s unique needs. Too often, these initiatives fail because workers receive generic training that’s not tailored to provide them with the specific skills their jobs require.
Done right, upskilling and reskilling efforts can help manufacturers address the labor shortage and bridge the skills gap, while enjoying the benefits of the latest technological innovations. Contact your CPA to discuss whether the benefits of upskilling and reskilling outweigh the costs.
This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and, accordingly, assume no liability whatsoever in connection with its use. ©2025
Manufacturing Team Spotlight
Robin Cyr joined ARB in 2010. She is a Tax Director specializing in providing comprehensive tax compliance and consulting services to corporate and individual clients. Robin primarily serves industry leaders in the manufacturing, construction, and nonprofit sectors. As both a CPA and a lawyer, she provides exemplary tax and consulting services related to estate and succession planning.
