Industry executives and experts share their predictions for 2024. Read them in this 16th annual VMblog.com series exclusive.
The Human-AI Collaboration: Manufacturing’s Future in the Face of Labor Shortages
By Jacob Olson, Director, Solutions, Cleo
The pandemic pointed a global spotlight on the burgeoning labor shortage across industries, particularly stark in the supply chain and manufacturing sector. Despite manufacturers adding over 500,000 jobs every month, studies project around 2.1 million unfulfilled manufacturing jobs by 2030 from a lack of skilled labor. This is forcing manufacturers to adapt to a new landscape, one where attracting and retaining talent is paramount and innovation holds the key to navigating the increasingly shallow pool of skilled workers. I predict this challenge will only grow more complex.
The United States will experience a long-term shortage of labor, due to low birth rates, baby boomer retirees and shifting immigration policies.
These deep-rooted societal trends will require businesses to focus on productivity, signaling a potential increase in automation and digital transformation to improve efficiency and operations. At the same time, reports show that the use of generative AI will not be as prolific in manufacturing as once thought. Though many have feared the potential of AI to push human labor out of the workforce, this shows that any increase in AI will be due to the shrinking labor market, filling a gap in labor that would have had no human counterpart to complete.
Acceleration of AI adoption
While the demographic labor trends in the United States and the AI revolution are not causally linked, one may provide a counter-balancing effect to the other in the long term. AI adoption in manufacturing is expected to accelerate in the next few years, with reports indicating that 96% of organizations predict an increase in AI usage and adoption by 2030. Though AI cannot replace the work of humans, it can be used to supplement repetitive, predictive tasks which can reduce errors, increase productivity and improve quality.
As AI grows to fill the gap in labor, employers must make strategic decisions to mitigate this long-term shortage of employees. Companies can take a two-pronged approach to address the issue:
1. Companies must prioritize becoming more desirable employers and harvest the pipeline of new workers, especially younger workers, more effectively than the competition.
Many manufacturing roles are not able to be filled remotely. However, as all companies become increasingly technology-powered, there will be an increasing blend of IT and tech office workers in remote-friendly positions. While remote work is appealing to many, others, especially employees newer to the work force, also benefit from working in an office environment as they learn and develop their skills.
2. Prepare to shift the manufacturing process and supporting roles to be less reliant on human workers.
Businesses must not only find a new equilibrium in how goods are manufactured and priced, but also change how they manage their operational and overall costs. This includes labor and capital costs in areas like automation, AI or other technologies.
We’re already seeing this in the service industry where mobile apps and kiosks have replaced cashiers and order takers at fast food establishments from McDonald’s to Shake Shack. Tesla learned in the early Model 3 days that some manufacturing steps remain most efficiently performed by humans while others can be automated. In this scenario, the “line cooks” are still human. However, AI and associated advancements in automation will perhaps shift the equilibrium point further.
The Crossroads of the Manufacturing
The manufacturing industry stands at a crossroad. The juncture of demographic shifts, a global pandemic and technological advancements have created a critical need for modern strategies. Though responsibilities may change, humans are still a critical piece of the puzzle in the manufacturing industry. Through human guidance, AI will mitigate labor shortages while improving quality and productivity. The integration of AI in manufacturing also presents the workforce with an opportunity to harness new skills, expand their knowledge base, and potentially further their career all while improving operations and automation with the assistance of this technology.
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