Tackling the Skilled Labor Gap in Manufacturing With EOR Solutions

The manufacturing industry is the backbone of many economies, driving innovation, production, and supply chains worldwide. However, this critical sector faces a significant challenge: a growing shortage of skilled labor. 

This labor shortage has intensified in recent years due to demographic shifts, evolving job expectations, and gaps in training and development. As manufacturing companies look for innovative ways to close this gap, one solution is proving to be both effective and efficient — an Employer of Record (EOR). 

In this post, we’ll explore how the skilled labor shortage emerged, its impact on the manufacturing industry, and how an EOR like G-P can help companies of all sizes build a resilient, adaptable workforce.

Addressing the skilled labor shortage in manufacturing

The labor shortage in manufacturing is a multifaceted issue driven by several key factors. The following challenges pose significant risks to the industry’s future, especially as technological change accelerates:

1. An aging workforce

The most pressing challenge manufacturers face today is the retirement of skilled workers. As employees in the manufacturing sector reach retirement age, they take decades of experience and institutional knowledge with them. This creates the urgent need to pass on this knowledge to emerging talent through apprenticeships, mentoring, and on-the-job training.

2. Difficulty in attracting new talent

There simply aren’t enough younger workers interested in or prepared for manufacturing careers. According to a recent McKinsey study, Gen Z and younger generations view manufacturing as an outdated or unappealing profession. This generational shift is leaving manufacturers in a tough spot. They are losing their most experienced employees while struggling to attract fresh talent to take their place.

The perception of manufacturing as a low-tech, labor-intensive field has persisted for decades despite significant advancements in automation, robotics, and digital technologies. As manufacturing becomes more tech-driven, workers with strong STEM backgrounds are increasingly needed. However, these skills are also in high demand in other sectors, making it difficult for manufacturers to compete on salary and prestige alone.

3. Gaps in training and development

Automation, digitalization, and the integration of AI into production processes are revolutionizing how manufacturing companies operate. However, many training programs have not kept pace with these changes, leaving a significant skills gap in the workforce.

Continuous learning and development is crucial, but manufacturers often find it challenging to offer adequate employee training programs. Without proper training, workers may struggle to operate new technology or maintain production lines, resulting in inefficiencies and slowdowns.

How an EOR can help

Manufacturers need innovative solutions to address labor shortages and future-proof their workforce. An EOR handles the administrative burden of employment, enabling easy access to global talent pools and streamlining hiring processes.

Here’s how an EOR can make a tangible difference in mending the manufacturing labor shortage.

1. Access to global talent pools

As local talent pools become depleted, manufacturers must think globally to find the workers they need. With an EOR, manufacturers can tap into global talent pools to fill these skills gaps. EORs not only handle legal and logistical challenges of hiring across borders, but they also provide market insights like employer burden costs and talent supply data by region to help companies make informed decisions.

2. Ongoing compliance

Hiring globally involves complex regulatory requirements like tax codes, employment contracts, and labor laws that vary by country. By acting as the legal employer, EORs ensure compliance with local employment laws. This allows companies to focus on integrating new hires into their teams and getting them up to speed on production processes.

3. Flexibility in workforce management

The manufacturing industry’s workforce needs can fluctuate rapidly based on demand, market conditions, and production cycles. EORs offer a flexible solution by allowing manufacturers to expand or contract their workforce as needed without the complications of direct employment. This agility is critical in industries where production timelines can vary based on market conditions.

Manufacturers can use an EOR for temporary hiring, bringing in contractors for specialized projects. G-P Contractor™ allows companies to engage and pay contractors in 180+ countries, quickly and easily.

4. Onboarding and global mobility assistance

In the manufacturing industry, there are certain roles, such as engineering, design, and management, that can be done remotely. But what if the perfect candidate for an in-person job lives in another country?

EORs provide employee relocation assistance, ensuring compliance with local labor laws and visa requirements. This enables businesses to tap into global talent and fill critical roles, regardless of where professionals are based.  

Moreover, EORs also streamline the onboarding process by handling essential tasks like paperwork, background checks, and benefits administration. This helps manufacturers ensure a smooth transition for all new hires.

5. Support with localized health and safety regulations

Manufacturing involves strict health and safety standards that vary by country. Ensuring compliance with local safety regulations, including those related to workplace conditions, equipment use, and employee training, is critical but hard to manage across multiple regions without the right EOR partner.

An EOR like G-P supports compliance with localized health and safety regulations by ensuring that work is carried out in accordance with local employment laws. This includes managing payroll and benefits to provide a secure and legally compliant work environment for professionals.

Real-world example: How G-P helped AmbioPharm bridge critical skills gaps

To illustrate how impactful an EOR can be in addressing labor shortages, let’s look at a case study. AmbioPharm, a global leader in peptide and New Chemical Entity (NCE) manufacturing, needed to expand its global presence to support its growing customer base. 

To achieve this, AmbioPharm turned to G-P. With tools like our Employment Contract Generator, AmbioPharm was able to create region-specific contracts, helping them secure top talent in different countries, quickly and compliantly. Additionally, our best-in-class payroll offering enabled AmbioPharm to handle payroll in multiple currencies, further simplifying global operations.

G-P’s ongoing support continues to help AmbioPharm navigate the complexities of international employment, empowering the company to remain a global leader in the NCE sector. 

Hire skilled talent quickly and compliantly with G-P.

Build global teams faster and hire for critical roles in manufacturing with the #1 suite of global employment products: G-P Suite™.

With us, you can maintain your competitive advantage and start hiring in minutes with our unmatched EOR solutions — G-P EOR Prime™ and G-P EOR Core™ — and global guidance from the industry’s largest team of HR and legal experts. 

Hire, onboard, and manage global teams in 180+ countries quickly and compliantly, without setting up new entities.

Contact us today or book a demo.