The Future of Manufacturing Talent

The manufacturing sector continues to encounter familiar talent challenges: a skilled labor shortage, workforce shifts, and rapid technology adoption. In our most recent industry report, 32% of manufacturers cite high employee turnover as a top challenge and 25% say the skilled labor shortage is a key challenge to growth.

For mid market manufacturers, these challenges feel especially prevalent. Unlike large enterprises, mid market organizations rarely have unlimited budgets or dedicated innovation teams. Yet unlike small shops, they operate complex production environments, manage multiple locations, and are expected to deliver enterprise level speed, quality, and reliability. The result is a growing tension: how to increase output and resilience without proportionally increasing headcount.

To thrive, mid-market manufacturers must rethink how they attract, retain, and empower talent, and the role technology plays. Solving talent challenges no longer starts with hiring alone; it starts with rethinking how work gets done.

The Impact of Technology

Manufacturers are turning to technology to address labor constraints. Over 70% of those surveyed indicate an increased investment in industrial automation and robotics in the next year.

Take skincare manufacturer and distributor Skin Script as an example. Skin Script was struggling with inventory management, financial planning, and agility. We helped implement an updated ERP system with real-time visibility that allowed them to scale and triple their volume without needing to hire or add space.

Here are other ways technology can support growth:

Automation and AI: Cobots (collaborative robots), AI-assisted quality control, and smart inventory systems allow manufacturers to scale without hiring at the same rate.
Modern ERP and MES platforms: Replacing legacy systems with modern tools streamlines supervisory and frontline work.
AI-driven scheduling and predictive maintenance: These tools optimize production and reduce downtime, freeing up talent for higher-value work.
Tech-enabled training and upskilling: Digital platforms support workforce development, safety monitoring, and human-machine collaboration.

Manufacturers are seeing the application of AI in quality assurance and predictive maintenance. Companies anticipate that quality inspection will be most impacted by AI in the next three years (40%) and will also be the top target for their next AI investments (37%). This could lead to more consistent outcomes by reducing time, addressing workforce shortages, and allowing resources to be deployed to other value-added roles.

Dive Deeper: AI in Manufacturing: What to Fix Before You Invest

Empowering Employees with Modern Tools

Labor turnover continues to be high for frontline employees (55% average), managers and supervisors (49% average), and senior leadership (51% average).

In mid market manufacturing environments, turnover doesn’t just create open positions, it disrupts production schedules, strains supervisors, and increases quality and compliance risk. When institutional knowledge leaves, it’s often replaced by overtime, temporary labor, or manual workarounds that compound burnout.

Today’s workforce expects modern, well integrated systems that remove friction from day to day work. Accordingly, more than 70% of manufacturers plan to increase investments in core systems like ERP platforms in the next year.

Other opportunities manufacturers are embracing include:

Deploying new technologies (39%)
Upgrading machines (32%)
Increasing use of AI and automation (31%)

In fact, updating technologies is the top growth strategy for mid-level manufacturers this year. And it makes sense: upgrading or replacing current technology systems allows you to meet modern workforce needs while improving productivity and profitability.

Upskill Your Workforce

As advanced technologies evolve, almost 40% of workers face an unavoidable reality — their existing skill sets will be transformed or become outdated between 2025 and 2030, according to the World Economic Forum. Companies must take an active role in upskilling or reskilling their employees in the latest technological tools to create mutually ensured success.

Encouragingly, 61% of manufacturers say their companies are upskilling or reskilling employees in the latest technologies. Ongoing training can take many forms:

35% of manufacturers are prioritizing leader/supervisor development programs.
32% are looking at formal training programs.
33% of manufacturers are investing in continuous-improvement programs.

For mid market manufacturers, upskilling serves a dual purpose: it prepares the workforce for new technologies while strengthening retention and succession planning. Promoting from within, building frontline leadership capability, and creating clear growth paths help preserve institutional knowledge and reduce reliance on an increasingly competitive labor market.

Dive Deeper: What Manufacturing Executives Should Prioritize in 2026

The Future of Talent in Manufacturing

While manufacturers overwhelmingly cite labor challenges as significant inhibitors to growth, only 28% are focusing on employee retention as a top business goal.

This could be because nearly all executives report making good hiring and staffing investments, including:

Highly engaged and efficient employees.
An up-to-date talent strategy.
Investment in upskilling employees.
An employee engagement system for problem solving.

For mid market manufacturers, the future of talent depends on tighter alignment between workforce strategy and technology investments. Organizations that modernize their systems gain a competitive advantage in recruiting, onboarding, and retaining skilled employees — while also reducing costs and operational risk.

Ready to future-proof your talent strategy?

Connect with our manufacturing advisors today to discover how data-driven strategies, advanced technology solutions, and industry expertise can help your business optimize efficiency, minimize risk, and stay ahead of disruption.

Contact Eide Bailly Manufacturing Advisors | Access the 2026 Manufacturing Outlook Report

Frequently Asked Questions

What are the biggest workforce challenges for manufacturers in 2026?

Manufacturers face persistent skilled labor shortages, high turnover rates, an aging workforce, and rapid technology adoption. In 2026, 32% of manufacturers cite employee turnover as a top challenge, while 25% report skilled labor shortages as a critical barrier to growth.

How are manufacturers using technology to address labor constraints?

Manufacturers are leveraging automation, AI, and modern ERP/MES platforms to scale operations, optimize scheduling, and reduce manual tasks. Technology also supports workforce training, safety monitoring, and human-machine collaboration.

What are the top strategies for attracting and retaining manufacturing talent?

Key strategies include competitive pay and benefits, skills-first hiring, authentic employer branding, upskilling, internal mobility, and a focus on diversity, equity, inclusion, and well-being. Providing predictable schedules, transportation stipends, and childcare support also improves retention.

How do mid market manufacturers compete for talent without enterprise level budgets?

By investing strategically in modern systems, supervisor development, and internal mobility. Mid market manufacturers that reduce day to day friction and provide clear growth paths often see stronger engagement and retention than peers relying solely on compensation.

How is AI changing the manufacturing workforce?

AI is becoming the backbone of supply chain operations, handling forecasting, inventory optimization, and exception management. Manufacturers are investing in reskilling programs to prepare teams for technical and analytical roles, and digital twins are reshaping planning and execution.

Why is employee retention so important in manufacturing?

High retention preserves institutional knowledge, ensures consistent productivity and quality, and reduces costs associated with recruiting and training new employees. Effective retention strategies include onboarding improvements, collaborative culture, ongoing training, and employee recognition.

What future workforce trends should manufacturers watch?

Key trends include AI-native supply chains, strategic reskilling, digital twins, robotics, autonomous logistics, and hybrid/flexible work models. Manufacturers who invest in technology and talent development will build resilient, future-ready teams.