By Mark Williams, Managing Director EMEA at WorkJam
The manufacturing sector is under mounting pressure from geopolitical instability, rising fiscal demands, and various operational challenges, testing the resilience of even the strongest organisations. As a result, workforce agility is becoming increasingly important to manufacturers as they try to navigate these disruptions while maintaining production.
The escalation of geopolitical tensions, including instability in the Middle East and the wider implications for energy markets and global supply routes, has reinforced the need for greater operational agility. Disruption is no longer limited to sourcing and logistics; it can quickly translate into changing production requirements, shifting workforce demands and, ultimately, increased pressure on frontline teams.
In practice, responding to these changes depends on whether manufacturers can deploy the right people and skills where they are needed. This requires a clear understanding of the capabilities already available across the workforce, particularly when rising costs limit the scope to recruit additional employees.
Recent WorkJam research helps illustrate the scale of this challenge. It found that manufacturers are under growing pressure to reduce costs, but that the challenge is not simply one of headcount; it’s about how well businesses can make use of the unique skill sets at their disposal.
Cost pressures are impacting workforce strategy
It will come as little surprise to learn that more than half (52%) of manufacturers said they have reduced or slowed hiring over the past six months, with issues from cost and regulatory pressures to production capacity constraints, all contributing to the trend. For instance, nearly 40% have already changed how they manage their workforce in response to the Employment Rights Bill and wider labour regulation.
More specifically, employment legislation is encouraging manufacturers to review long-established approaches to workforce management, ensuring day-to-day processes remain compliant while supporting operational flexibility. As a result, compliance is becoming more closely linked with day-to-day workforce management rather than being treated as a separate HR exercise.
These pressures make workforce agility more important, because manufacturers have less room to rely on additional recruitment when operating requirements change. Instead, they need to make better use of existing skills and give managers the flexibility to adjust workforce deployment as circumstances dictate.
Workforce capability is a competitive advantage
At the same time, the sector remains intrinsically dependent on skilled frontline employees. Many roles require specialised capabilities and experience that can be extremely difficult to replace, as evidenced by the chronic, long-term skills shortage that continues to impact business performance, regardless of economic circumstances.
Last year, Make UK estimated that there are currently 55,000 long-term vacancies across UK manufacturing, costing the economy £6 billion in lost output each year. Its more recent research found that half of manufacturers regard skills shortages as their biggest barrier to growth, reinforcing the importance of retaining and developing the people already in the business.
Manufacturing productivity depends heavily on accumulated workforce knowledge and experience. Any deficiency in these commodities has a knock-on effect on operational resilience. For example, many manufacturers will have firsthand (and painful) experience of how much more expensive it is to replace specialist employees than to retrain existing staff.
In this context, workforce capability becomes a strategic asset rather than simply a labour cost. For some organisations, this is a difficult adjustment to make, while for others, it has become central to their long-term strategy.
Smarter workforce management delivers operational resilience
Businesses that invest in smarter workforce management are also finding opportunities to improve productivity and reduce operational costs simultaneously. Modern workforce management tools can help manufacturers optimise scheduling, improve frontline communications and ensure employees have access to the information and training they need in real time, strengthening both efficiency and employee engagement.
These capabilities also give manufacturers greater freedom to adapt when production requirements change. Better visibility of workforce skills allows managers to identify where relevant expertise is available, while more responsive scheduling makes it easier to redeploy that capability across shifts or sites. Training can then be directed towards emerging requirements, enabling manufacturers to address some skills gaps from within.
This also helps explain why, as our recent research shows, beyond the need to cut costs, manufacturers view employee engagement (16%) and employee retention (15%) as their next-biggest workforce challenges. If cost-saving decisions weaken either of these areas, organisations risk losing the knowledge and experience on which workforce agility depends.
Adding value with AI
In contrast to previous periods of uncertainty, manufacturers have another weapon in their efficiency armoury: AI. Our survey reveals that just over three-quarters (76%) of manufacturers are already using AI to support workforce or production operations.
However, only a tenth (11%) say AI has been deployed at scale. Indeed, most organisations remain in the early stages of adoption, with AI confined to pilots or limited use cases. To unpack this a little further, manufacturers primarily view AI as a way to improve efficiency and productivity, with 53% citing these as the main investment drivers. Far fewer (7%) are investing in AI to improve the shopfloor experience.
More specifically, AI is being used by manufacturing businesses to reduce the administrative burden on frontline supervisors by automating routine workforce tasks. It is helping to optimise shift scheduling, recommend or allocate training and provide relevant information to employees at the point they need it; the list goes on. Used in this way, AI can support workforce agility by making it easier for managers to respond to changing requirements.
So, why is there such a pronounced implementation gap? Let’s be clear, running pilot projects is important, but these are generally designed to test individual use cases rather than transform operations. When a pilot needs to be extended across multiple sites and teams, increased organisational complexity is inevitable. So, as AI deployment expands, consistent processes become more important. Ultimately, scaling AI successfully requires organisational readiness as well as technical capability.
Another big part of the challenge is that AI implementation is about more than introducing new technology. Employees need to understand how new tools fit into existing workflows, and they must also feel comfortable that it supports their work, rather than complicates it. Similarly, managers need confidence that AI helps them achieve operational objectives without adding unnecessary complexity.
People and technology must work together
AI can automate processes and improve decision-making, but it is skilled frontline employees who ultimately drive productivity, quality and innovation on the factory floor.
This means that workforce engagement and technology adoption should therefore be viewed as complementary priorities rather than separate initiatives. If we accept that AI adoption will continue to increase, it’s imperative that businesses don’t lose sight of their workforce. After all, technology can improve how work gets done, but it is people who ultimately determine how much value it delivers.
Workforce investment is now an operational and strategic imperative. Manufacturers that combine skilled people with intelligent workforce technology will be better equipped to deploy their capabilities where they are needed, respond to market volatility and build sustainable long-term resilience.
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