Tariffs and the Tech Talent Squeeze in Manufacturing

As the Trump Administration imposes a dizzying array of tariffs, and countries respond in kind, the mounting trade war is upending decadeslong economic norms and sending ripples throughout the economy. While the true impact of tariffs can be debated – especially as it relates to their effect on domestic jobs – there is one industry whose workers are commonly cited as benefiting from tariffs: manufacturing.

Behind the supposedly rosy prospect of increased demand, however, lurks a looming manufacturing workforce shortage that is keeping many leaders up at night. Currently, 27% of manufacturing workers are aged 55 or older, meaning many are soon to retire. When you combine this aging workforce with declining birth rates and tepid labor force participation in the U.S., it creates a perfect storm of demographic challenges that threaten to drive a wedge between supply and demand for manufacturing workers for decades to come.

The potential for long-term talent shortages is boosting demand for new technologies and skillsets that enable manufacturing workers to be as productive as possible. If demand for domestic production does indeed rise because of tariffs, this will only accelerate the need to boost worker productivity. In turn, this will increase demand for IT workers who can help build, deploy, and maintain productivity enhancing technologies.

Manufacturing Already Struggles to Attract IT Workers

Even before tariffs hit the economy, manufacturers have long struggled to find IT talent. In the past twelve months, job openings for IT workers in manufacturing remained open 14% longer than the average across all sectors, and hiring has been an even greater challenge for many firms that are most likely to see an uptick in demand from tariffs.

For example, IT job openings in machinery manufacturing remained open 29% longer than IT jobs overall, while IT job openings in nonmetallic mineral product manufacturing and leather manufacturing remained open 48% longer – the longest average opening duration for IT workers in any industry.

The heightened hiring difficulty for IT teams in manufacturing is not due to a lack of willingness to pay. On the contrary, tech jobs in manufacturing advertise average salaries close to $9,000 more than IT jobs across all industries. However, this isn't nearly as high as IT salaries in some sectors, such as information, suggesting manufacturing employers will still struggle to compete with salaries at the top end of the market.

Manufacturers are Constraining their IT Talent Pipelines

At least some of these IT hiring woes may be self-inflicted, as manufacturers appear to be artificially constraining the pools of IT talent from which they recruit:

• Manufacturing employers are 14% less likely to offer remote work in IT job openings
• 19% less likely to offer entry-level IT jobs
• 26% less likely to offer IT jobs for workers without a four-year degree
• Women comprise only 26% of existing IT workers in manufacturing compared with 32% across all industries

Taken together, these hiring practices constrict talent pipelines and likely contribute to hiring difficulty for IT jobs in manufacturing. This suggests that manufacturers need to expand their talent pipelines to attract tech talent, whether tariffs measurably increase demand or not.

Tech Skills are Dispersed Across Manufacturing Jobs

As manufacturers struggle with talent shortages driven by tectonic demographic shifts, they are increasingly turning to new technologies and digitization to make workers as productive as possible. As a result, IT skills are more dispersed across non-IT jobs in manufacturing compared to other industries. Specifically, non-IT jobs in manufacturing are 54% more likely to request IT skills than non-IT jobs across all sectors.

Currently, the largest non-IT job families requesting IT skills are production, business and finance, and sales. This means that tech skills will become even more important across a diverse set of roles, requiring broad reskilling initiatives in many organizations.

What Actions Should IT Leaders in Manufacturing Be Taking?

Whether tariffs boost demand for domestic production or not, IT leaders and HR teams in manufacturing will need to expand their talent pipelines to combat these workforce challenges. Even if tariffs lead to an economic downturn that stifles hiring in the short run, manufacturers will still benefit from revised hiring practices that better support their long-term talent needs.

One meaningful approach that many employers in other industries are taking is shifting towards a skills-based approach to hiring and advancing workers. This involves assessing individuals based upon the skills needed for particular roles, rather than relying upon legacy screening mechanisms such as strict degree or experience requirements. This can dramatically expand the potential pool of candidates.

Employers can also evaluate which tasks are best suited for augmentation or automation versus tasks that are best left to humans. This type of task-based approach to automation leads to more targeted deployments of AI and related tools, which increases alignment with business outcomes and enables employees to focus on activities where they can have the greatest impact.

The Bottom Line

Regardless of whether tariffs increase demand for domestically produced goods or not, there remain significant talent challenges for IT teams in manufacturing. Looming demographic threats will cause these challenges to become mission-critical hurdles in the near future, and if tariffs do ramp up demand then those hurdles will arrive even sooner than anticipated. Firms that proactively expand their talent pipelines with strategies such as skills-based hiring and task-based automation will be more adaptable and resilient in the long run.