These days, running a manufacturing business typically entails spending as much time on HR concerns as on production.
One day, you’re dealing with a workers’ compensation issue; the next, you’re dealing with OSHA paperwork, payroll questions, or trying to figure out why a talented employee departed for a firm with better benefits. These tasks can quickly take firm owners and managers away from the plant floor, where they need to be the most.
That’s why a lot of manufacturers are getting help from a Professional Employer Organization (PEO). Companies may get rid of complicated HR tasks like compliance, payroll, and employee benefits by working with a PEO. They can also get tools to recruit and keep qualified staff, which lets management focus on production, efficiency, and business growth.
Manufacturing adds around $2.9 trillion to the U.S. GDP and employs more than 13 million people. But this is what’s keeping you up at night. Manufacturing Dive says that by 2033, there will be a shortage of over 2 million trained people. According to a Deloitte report, 2.1 million industrial positions could go unfilled by 2030 if the skills gap keeps getting bigger.
You already feel this. You can’t find CNC operators who are qualified. Your veteran welders are leaving quicker than you can train new ones. The younger workers you do hire want more than just solid salaries. They want to learn new skills and advance in their careers.
At the same time, you’re up against organizations that offer great perks, training programs, and up-to-date HR methods. You are continually losing good candidates in the last rounds or seeing good employees go for greater pay and benefits at other companies.
HR outsourcing for manufacturing fixes this by offering you access to enterprise-level HR tools without the high fees that come with it.
A Professional Employer Organization (PEO) collaborates with businesses through a co-employment model. The manufacturer is in charge of day-to-day operations and personnel, while the PEO is in charge of administrative HR tasks.
These responsibilities often include:
Manufacturers can get help from a PEO without having to hire a full-time HR team. This includes access to experienced HR personnel, innovative HR technology, and knowledge of compliance. This way of doing things lets executives focus on growth, productivity, and efficiency.
Larger organizations frequently have better benefits packages that smaller companies can’t match. When bought separately, health insurance, retirement plans, and wellness programs can be very expensive.
But PEOs put together staff from thousands of different client organizations. Because they have so many employees, they can get higher prices from insurance companies.
Because of this, manufacturers can offer employee benefits through PEO programs like:
Companies that offer these incentives are much more likely to hire qualified individuals and keep them.
It might be hard to handle payroll in manufacturing. You need to keep a close eye on shift differentials, overtime rules, and hourly pay structures.
A PEO makes these jobs easier by using integrated HR systems that handle payroll, time tracking, and benefits all in one place.
Companies that use manufacturing PEO services make fewer mistakes in their administration and can see labor costs more clearly. Accurate payroll processing also helps you stay in line with tax and wage standards.
This kind of automation can save business owners who are used to dealing with spreadsheets and manual methods a lot of time each month.
One of the most regulated industries in the US is manufacturing. The Occupational Safety and Health Administration (OSHA) has severe rules for safety that include procedures, paperwork, and training.
If you don’t follow the rules, you could face costly fines. For repeated infractions, OSHA fines can be more than $165,000 for each violation.
The rules are hard to understand and change all the time. You don’t have the time or knowledge to learn how to be safe. To keep costs from getting out of hand, workers’ comp claims need to be handled by professionals. Most small manufacturers can’t handle the coordination that return-to-work programs need.
Manufacturing companies that work with a PEO may make sure they follow all the rules set by the federal, state, and municipal governments. PEO experts keep an eye on changes in the law, make sure that the company follows best practices, and update HR policies.
Many PEOs also offer safety training and help with workers’ compensation claims. This help lowers dangers at work and keeps both employees and employers safe.
Finding skilled people is now one of the hardest things to do in manufacturing. Reports from the sector suggest that 77% of manufacturers claim that not having enough workers is their biggest worry.
A PEO helps businesses get the best employees by making the overall experience better for workers.
Businesses can use Manufacturing HR outsourcing to get products that help with:
Employees are more inclined to stay with a company for a long time if they feel encouraged and see chances for progress.
It might be expensive for smaller enterprises with few employees to hire an internal HR team.
Businesses can save money by using PEO services, which provide a comprehensive HR team for a set monthly fee instead of paying the salaries of several HR specialists.
Studies demonstrate that companies that use PEOs often have:
These savings come from lower costs for running the business, better prices for benefits, and fewer faults in following the rules.
Most PEOs charge between 2% and 12% of payroll or $100 to $200 per employee each month. If you run a manufacturing company with 40 employees and a $2.4 million yearly payroll, you might expect to pay between $48,000 and $288,000 a year for services.
But here’s what you’re getting and saving:
Group health insurance can save mid-sized manufacturers $40,000 or more a year on premiums, which is 15–30% off. Professional claims management and pooled rates for workers’ comp can save businesses $25,000 to $50,000 or more each year. Most manufacturers save $70,000 to $90,000 by not having to pay for HR staff’s salaries and benefits. Lower turnover (10–14% lower for PEO customers) saves more than $30,000 a year in replacement costs. Better safety programs that lower the cost of injuries save thousands more. Time saved on production management instead of HR has benefits beyond just saving money.
According to data by NAPEO, the average return on investment (ROI) for organizations that use PEOs is 27.2%. Most manufacturers say that they are paying less on HR overall while obtaining much better results.
The PEO business has risen quickly in the last ten years. Today, more than 208,000 businesses in the U.S. cooperate with PEOs to help about 4.5 million workers in a variety of fields.
One of the biggest groups of PEO clients is manufacturing. About 13% of PEO customers are from the manufacturing sector. This shows how much the industry needs HR expertise and help with its workers.
A lot of manufacturers know that managing HR in-house is no longer a good idea.
OEM America can help if your business is spending too much time on HR chores or having trouble finding and keeping skilled individuals. Make an appointment with an expert to start saving money and getting your time back. The team offers a free HR assessment to look over your present costs, find hidden hazards, and find ways to make things run more smoothly. This can save you up to $1,000 per employee.
OEM America is a member of NAPEO and a BBB-accredited organization. It offers trustworthy manufacturing PEO services that help businesses save money, lower their risks, and focus on what matters most: running and developing their business. If you want to know more, contact 860-528-5555 or send an email to the team.
Yes, for sure. PEOs usually cost 2–12% of payroll or $100–$200 per employee per month. However, your overall HR costs go down because you don't have to pay for separate HR staff ($70K–$90K+ per year), higher health insurance premiums (15–30% savings through group rates), expensive workers' comp insurance (savings of $25K–$50K+ through pooled rates), multiple HR technology licenses, and consultant fees. 27.2% is the average return on investment (ROI) for PEOs.
Integrated payroll systems, automatic management of shift differentials across multiple shifts, accurate and compliant piece-rate pay calculations, real-time tracking of labor costs to specific projects, overtime calculations across complicated shift patterns and workweeks, certification and skill-level tracking for pay differentials, and integration of time tracking that gets rid of the need for manual data entry are all part of manufacturing PEO services.
Yes, a lot. By 2033, there will be a predicted shortfall of 2 million skilled workers in manufacturing. PEOs help with hiring by offering competitive benefits packages (52% of PEO users with 10–49 employees offer retirement benefits, compared to 23% of non-users), professional onboarding that makes a good first impression, salary benchmarking that makes sure employees are paid fairly, training and development programs that attract candidates who want to grow, and better employer branding through comprehensive total compensation.
Yes, easily. Expanding into more than one state makes it harder to follow the rules for unemployment insurance, income tax withholding, paid leave, wage and hour laws, and safety standards. PEOs that work throughout the country can manage multi-state registration, compliance, tax filing, benefits administration, and regulatory monitoring automatically.