Richard Tester, CEO of red zonehelps manufacturers unlock the potential of their workforce through technologies and behavioral coaching.
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The food industry is currently facing some major hurdles. While almost every industry has seen increased employee turnover amid the ‘great layoff’, manufacturing has been hit particularly hard. The baby boom generation has long made up the majority of manufacturing workers, and as they retire and leave the workforce, manufacturing is disproportionately affected compared to other industries. To compound the problem, younger generations are not filling those vacancies at the same rate as other industries. Additional factors such as rising energy and commodity prices exacerbate the problem and affect the global food supply.
For all these reasons, food inflation is rising at an alarming rate and showing no signs of slowing down in the near term. This is hitting consumers well as their other bills – rent, gas and energy – skyrocket, virtually eliminating discretionary spending and leading to rapidly changing grocery shopping habits as consumers look to stretch their food budget a little further.
Where are the workers?
Studies show that the manufacturing industry could have a shortage of 2.1 million jobs by 2030, which could cost the economy up to $1 trillion. Couple that with the “big layoff” delivering unprecedented sales rates of 40%, and manufacturing sees the shutdown rate skyrocket, nearly double compared to pre-pandemic.
Millennials and Gen Zers grew up as the tech revolution gained prominence, leaning them toward tech-advanced jobs. For many younger generations, manufacturing represents the outdated, “dirty” jobs of their parents — or grandparents. To confront young generations’ vision of the industry, manufacturing must do its part to give a much-needed reputation revamp.
Food inflation is here to stay.
Last month, the consumer price index reported a 12.2% increase in food prices in the past year, the largest increase in 12 months since April 1979. Food inflation for all of 2022 is expected to average between 8.5% and 9.5%, the latest USDA Food Price Report said:.
The food industry is affected by many other external factors that may be related to supply chain issues. Farmers are trying to control production while controlling the rising costs of things like labor, machinery, fuel, fertilizer and more. The Federal Reserve Board recently voted to raise interest rates by 75 basis points in an effort to curb price inflation. This is usually a good indication of a longer-term problem that requires government action to correct it.
How can the manufacturing industry take action?
Businesses must do what they can to try to offset inflation for consumers, and one solution is productivity improvements. Productivity acts as an antidote to inflation and takes the costs out of the ‘system’. But how do companies achieve incremental changes in productivity if they needed these results yesterday? The answer may lie in personnel technology. Import costs such as fuel, energy and raw materials are largely out of the control of manufacturers. Instead, companies should focus on what they can control: how best to convert those resources by using their labor and materials more effectively.
By looking inward to the employee experience and making better use of the institutional knowledge already present on the factory floor, manufacturers can start a chain reaction that ultimately leads to increased productivity and higher output. As employees become connected, problems can be solved where needed, right now, on the front lines, giving teams a sense of ownership and choice. This increased engagement can lead to better retention of those same frontline teams.
This huge labor shortage is not something that can be solved by higher compensation or nice new benefits; Businesses face is a combination of outdated stereotypes, new expectations around technology, and employee priorities such as the potential for growth, collaboration and connection. Factories and factories need to invest in digital solutions that enable their frontline teams to collaborate and communicate in new ways. This gives workers the autonomy and freedom to play a greater role in their day-to-day work than what Gen Z envisions when imagining a factory floor.
The introduction of technology could capture the attention of our digitally indigenous generations and breathe new life into an industry that urgently needs to renew outdated processes. Arming employees with tools they can use to take ownership of their day-to-day processes makes factories more efficient as employees quickly identify problems and come up with solutions. Investing in our workforce can have a huge external effect as we contribute to the fight against inflation.
Inflation and labor shortages are no small problems to solve. However, there are steps companies can take now to start the knock-on effect of economic impact. Investing in our production staff ultimately means that the weekly trip to the supermarket can be less of a headache for consumers across the country.
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