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U.S. manufacturers can mitigate domestic labor shortage by offshoring

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27 Sep 2013

American manufacturing companies are reporting difficulty finding qualified workers, according to several sources. While companies are willing to hire new staff, they often find there are too few skilled candidates to meet their needs. Some firms hire temporary workers to fill the gap, which can be cost-effective, but there is a shortage of competent manufacturing workers in many parts of the U.S., even those with a reputation as manufacturing hubs. This puts companies in a difficult position, particularly as they try to remain competitive in the global market. A lack of talent to fill crucial roles impedes production, and can even raise costs as companies must create incentives for talented personnel to work with them instead of competitors.

A problem facing American manufacturers
According to Bloomberg, Kansas City, Kan., manufacturers have difficulty finding even general laborers, let alone educated workers. In a survey by the Kansas City Fed, manufacturers reported a labor shortage that is coinciding with wage pressures, creating a very difficult market in which to source manufacturing workers of any type. Oakland County, Mich., is experiencing similar difficulties, despite its history as a center of manufacturing for the automotive industry, according to CBS Detroit. Young people in the area are not considering careers in the manufacturing industry, and the problem is compounded by a lack of available training opportunities for young people who might be interested in jobs in the industry.

Yet one firm surveyed in Kansas City said it was tackling the talent gap head on by moving the bulk of its manufacturing operations to Mexico in response to the challenges it faces.

Offshoring is the solution
Manufacturing in Mexico can solve many of the problems companies are facing in the U.S. It can reduce costs significantly for a variety of reasons, including lower costs for employees. Wage pressures in the U.S. are rising, making it difficult to employ as many manufacturing professionals as may be necessary even if qualified candidates can be found. In China, historically a popular choice for offshoring, costs are rising as well, according to Mintpress News. In contrast, manufacturing centers in Mexico are often well-provided with skilled workers. There are training programs from the secondary to the post-secondary level in many locations, unlike in the U.S., and manufacturing is still a job that is on the radar of many young people. Many companies that have decided their future lies in expanding to Mexico have begun to offer training for their workers in the country.

It can be difficult for companies to source candidates in a new location, and the challenge can be compounded by barriers in language and culture. To counter this, manufacturers in Mexico should contact shelter companies, many of which offer recruitment and talent management services to their client organizations. This can prevent frustrations with acquiring employees manufacturers are currently experiencing in the U.S. There are also many benefits to using a shelter company beyond sourcing employees, such as helping navigate local regulations and the procurement of real estate and equipment.

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