manufacturing and logistics outlook: 2019 and beyond.

manufacturing and logistics outlook: 2019 and beyond.

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In light of recent headlines — the possibility of a global recession, say, or the longest partial government shutdown in U.S. history — you might expect manufacturing and logistics companies to be cautious about growth opportunities in the year ahead. Yet, in Randstad’s survey of select manufacturing and logistics clients, the opposite proved to be the case.

For example:

  • A full 95 percent of manufacturing and logistics companies are at least moderately confident about current economic conditions.

  • These same companies are nearly as bullish about their own performance forecasts, with 68 percent indicating that they expect business performance will improve in the year ahead.

That's exciting news for employers and employees alike. At the same time, our survey uncovered several common obstacles to growth, particularly around finding, hiring and retaining essential talent. In this article, we'll dig into the biggest pain points confronting manufacturing and logistics companies in 2019 and beyond, then turn to some actionable strategies for overcoming them.

talent shortages and skills gaps are critical challenges

Two factors — talent shortages and the skills gap — constitute the most significant external threat to business performance according to the largest percentage of respondents (43%) in Randstad's survey. Notably, the next-largest external threat, "issues related to customer demand — forecasting or sustaining," accounted for less than half that. Clearly, then, talent-related challenges dwarf all other external threats for manufacturing and logistics companies today.

As a consequence, many employers in this space have been forced into a difficult compromise: In need of talent today, they're no longer aiming for best-fit candidates, but simply hiring whoever they can — and frequently taking on less-than-ideal candidates as a result. Evidence of that is the fact that "absenteeism" was cited as the most pressing talent challenge by almost a fifth (17%) of respondents. And given the importance of output and productivity to overall performance for manufacturing and logistics firms, no-shows are a complete nightmare.

But the unfortunate outcomes associated with bad hires don't stop there. According to our survey, time wasted on training (39%), cost (37%) and increased stress on team members (20%) were also linked to poor hiring decisions. And effects like these can be felt throughout the organization, with wide-ranging negative impacts on everything from staff morale to the bottom line.

finding great candidates is hard — and retaining them is even harder

The full scope and impact of talent-related challenges for manufacturing and logistics companies becomes clearer when we turn to retention. Asked to rank their most pressing internal threats to growth, manufacturing and logistics companies named the following factors.

Worse yet — though perhaps unsurprisingly — respondents cited turnover as their biggest drain on productivity. Simply put, companies that don't have the right people in the right roles will likely struggle to realize performance goals.

lack of consensus about how to address talent pain points

Considering this backdrop, what should manufacturing and logistics companies do to move the needle on these and other internal and external talent-related threats?  

At the moment, unfortunately, there's no clear consensus on the answer to that question — manufacturing and logistics companies appear to be tackling the problem with a variety of different approaches. If we dig into some of the root causes of turnover, however, possible solutions begin to emerge.

  • Unsustainable workloads were the most frequently cited reason for turnover. This is a promising sign that the power to improve retention may be partially in the hands of employers — manufacturing and logistics companies should closely examine existing workloads and rebalance accordingly.

  • Poor relationships with colleagues or supervisors was the second-leading cause of turnover. For manufacturing and logistics companies struggling with chronic turnover, therefore, focusing on management training and feedback sessions to improve relationships could be a game-changer.

  • Better compensation from competitors was the third-leading driver of turnover. In that context, companies should take a critical eye to pay and benefits, and consider enhancing their offerings to convince employees to stay.

conclusion and key takeaways

Despite an overwhelmingly bullish forecast on the economy and business performance in the year ahead, manufacturing and logistics companies face a raft of common pain points — as we have seen. Those companies that address these challenges the most nimbly and effectively stand to gain a huge advantage on the competition. To help them get there, here are a few areas that should be priorities.

  • Developing more effective retention strategies can help manufacturing and logistics companies reduce the urgency of their hiring needs and mitigate a wide range of talent-related risks.

  • Businesses should consider partnering with talent providers that can flex and scale to accommodate variability in demand as well as talent needs.

  • Unsustainable workloads are driving turnover, so by rebalancing workloads many manufacturing and logistics companies will see improvements in overall retention rates.

  • With quality talent harder to come by than ever before, implementing more robust hiring processes will be a key factor in reducing the frequency — and overall impact — of bad hires for manufacturing and logistics companies.

Overcoming these obstacles isn't going to be easy — but it’ll be harder if you choose to go it alone. That’s why so many companies turn to Randstad Manufacturing and Logistics to support their talent needs. Our high-tech, high-touch approach to recruitment and hiring can help you avoid bad hires and solve workforce challenges, with clear bottom-line rewards as a result. Plus, we have specialized experts in nearly every field, and our local consultants can provide customized recruiting plans tailored to your market and competitive landscape.

Contact Randstad today to learn how we can power the success of your business — in 2019 and beyond.

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