December 9, 2022
Renewed focus on tight labor market ahead of IBIE 2022

Renewed focus on tight labor market ahead of IBIE 2022

Well before the coronavirus (COVID-19) pandemic and the “Great Resignation,” bakers were focused on addressing chronic labor difficulties. At least back to 2009, surveys conducted by Cypress Research on behalf of Baking & Snack magazine showed labor issues ranked atop baking industry challenges.

In 2018, leading up to the most recent International Baking Industry Exposition (IBIE), the issue remained front and center for bakers, particularly with unemployment rates at the lowest levels in decades.

“The competition in manufacturing — frankly, everywhere now — for skilled associates and employees is higher than it’s ever been,” Robb MacKie, president and chief executive officer of the American Bakers Association (ABA), said at the time.

Two years earlier, the ABA and the American Society of Baking commissioned a report, “The Workforce Gap in US Commercial Baking: Trends, Challenges and Solutions,” conducted by Cypress, to investigate the widening workforce gap. The findings showed 40% of baker respondents in the study said there was a shortage of machine operators, and 59% cited a shortage of salaried engineering/maintenance employees. 

By at least one important measure, the baking industry has been chipping away at the problem. Commercial bakeries showed wider productivity gains than many segments of the manufacturing sector between 2018 and 2020, according to data from the Annual Survey of Manufactures, from the US Bureau of the Census. In the two years ended 2020, the commercial bakeries sector saw a 12% increase in sales (value of shipments, or revenue) per production worker vs. a 4.5% gain for food manufacturing overall and a 9% decrease for total industrial manufacturing. The 12% improvement was better than a 7% gain generated by the meat processed from carcass sector but lagged a 15% improvement for cookie/cracker manufacturers.

It should be noted that 2020 figures could be skewed by challenges facing many industrial sectors during the worst phases of the COVID-19 pandemic, but in any event, there was plenty of data demonstrating that the 12% productivity gain over a two-year period still left the commercial bakeries business lagging overall manufacturing and by a wide margin.

At $315,000 of sales (value of shipments/revenue) per production worker, productivity of the commercial bakeries industry in 2020 was less than half of the $676,000 of sales per production worker in food processing overall and $644,000 for manufacturing overall. Commercial bakeries also lagged the cookies/crackers industry, at $511,000 and the $598,000 for the meat processed from carcasses segment — a sector often highlighted as excessively labor intensive.

Exacerbating the effects of the gaping productivity deficit of the commercial bakeries industry is the upward pressure on wages that has emerged over the past year. Benefit costs also continue to see upward pressure.

While the 12% productivity improvement between 2018 and 2020 suggests that bakers are taking steps to automate processes where possible, more needs to be done … and faster. At a rate of roughly 6% improvement per year (12% over two years), the productivity of the typical commercial bakeries worker would not reach the current food manufacturing average of $676,000 until 2033. If food manufacturing productivity were to continue improving at a rate of roughly 2.25% per year, it would not be until 2042 that commercial bakeries were as efficient as the overall food sector.

The productivity gap for bakery workers compounds the challenges the industry already faces filling positions both among production workers and supervisors. In the age of COVID, the industry’s reliance on a large workforce leaves baking plants with greater susceptibility to shut down production lines or even an entire plant in the event of an outbreak of illness. Amid supply chain challenges, bakers increasingly are exploring increasing capacity of ingredient storage while automating ingredient handling.

As bakers visit IBIE in 2022, they will evaluate equipment investment options with a sharper eye than ever on automation. Even as they carefully seek opportunities to maximize near-term return on investment, bakers also should be mindful of ways to make more meaningful progress toward narrowing its productivity deficit and reducing the vulnerabilities of relying on such a large workforce. 

https://www.bakingbusiness.com/articles/57164-renewed-focus-on-tight-labor-market-ahead-of-ibie-2022