Manufacturing HR strategies shift as budget pressures mount 

With rising costs and ongoing skills shortages, manufacturing HR leaders are under more pressure than ever. This article explores how they’re adapting and stepping into a more strategic role. 

The current business climate for manufacturing HR professionals is tough. The recent UK Budget introduced higher Employer National Insurance contributions on top of rising National Minimum Wage (NMW) and Living Wage (NLW) rates, compounding existing skills shortages. In the wake of inflationary pressures and ongoing global trade uncertainty, manufacturing organisations are under growing pressure to balance cost control with workforce stability. 

In this article, we explore how HR professionals are rethinking their priorities- offering practical manufacturing HR solutions to tackle today’s economic and workforce pressures head-on. But first, let’s take a closer look at the challenges manufacturers are facing…

The insights below are drawn from What’s the Mood? HR’s Take on Business 2025 – a survey conducted by the HR Ninjas community, featuring responses from 490 UK-based HR professionals across diverse industries. 

In this blog

Key challenges in the manufacturing sector 

Top priorities for manufacturing HR

Conclusion and key takeaways

Key challenges in the manufacturing sector

1. Economic pressures

A recent survey conducted by the HR Ninjas community found that 66% of manufacturing HR professionals feel recent government budget changes have made their roles significantly more difficult. 

This comes as no surprise, given that 70% of manufacturers saw their costs rise by up to 20% last year, with nearly 1 in 10 experiencing hikes of up to 50% 

For HR professionals, this isn’t just a financial challenge, but a workforce one. Budget constraints are now influencing every conversation around hiring, pay, and workforce planning. 

2. Skills shortages

Alongside economic pressures, we have skills shortages. Hiring in manufacturing has never been straightforward, but over the past year, it’s been even tougher. 66% of HR professionals in the sector are rethinking their hiring approach entirely.  

Whether it’s reworking agency agreements, focusing on internal progression, or casting the net wider to attract fresh talent, it’s clear that traditional hiring methods aren’t delivering like they used to. 

We’re seeing this shift because the talent pipeline is under serious strain. Younger generations are less likely to pursue careers in manufacturing, while older, highly skilled workers are leaving the workforce. 

Add the pressure to meet increasingly complex production demands to the equation, and it’s no wonder HR teams are being pushed to find new ways of working. 

This isn’t just about filling shift gaps. The manufacturing sector is calling for what many describe as a full-blown skills revolution. With experienced staff retiring and specialist roles opening up, the skills shortage isn’t just slowing down growth – it’s making it hard for some manufacturers to meet basic operational demands.  

So, how are HR professionals in the manufacturing sector adapting their strategies and priorities to tackle today’s economic and workforce challenges? 

Top priorities for manufacturing HR

With budgets tightening and skills gaps widening, HR have found themselves at a crossroads. What are they focusing on as their top priorities in 2025 to balance both the employee experience with overarching business goals? 

Employee wellbeing investment is on the rise

With skills hard to come by, manufacturers are realising that looking after their people is a strategic asset. As such, 41% of HR teams are putting more money, time, and energy into employee wellbeing. 

And rightly so. From physical safety on the shop floor to mental health support, wellbeing is becoming a core part of workforce strategy. Not because it’s fashionable but because it is the lever that can keep skilled people engaged, healthy, and in it for the long run. 

What’s more, employee wellbeing initiatives can ultimately save money by boosting retention and reducing recruitment and training expenses. This underlines their capacity to be a critical cost-saving strategy. 

Diversity, equity, and inclusion (DEI) is a priority

As the focus on wellbeing grows, HR professionals are increasingly taking the view that supporting their people also means prioritising equity, diversity, and inclusion (DEI). With that, 53% of HR professionals say DEI is now high on their agenda. 

Inclusive teams spark better thinking, stronger collaboration, and safer working environments. And when you’re dealing with fast-paced production, tight deadlines, and a reliance on close-knit teams, that kind of environment is essential. 

AI adoption is increasing

With rising costs, leaner teams, and more complexity in workforce planning, it’s no surprise that 63% of manufacturing HR professionals are turning to AI to help lighten the load. 

It’s about freeing up time. Automating admin-heavy tasks like rota planning, onboarding, and workforce reporting means HR can stop firefighting and start focusing on the things that move the dial: engagement, business strategy, and retention.  

And that’s where AI comes in – playing a pivotal role in delivering effective manufacturing HR support through helping individuals work smarter and more strategically. 

HR’s strategic influence is growing

HR’s role in manufacturing isn’t what it used to be: 69% of HR professionals confirm their role has become more strategic.  

Rising costs, a shortage of skilled workers, concerns about employee wellbeing, and the pressure to cut labour expenses are impinging on manufacturing HR professionals. But, instead of just maintaining the status quo, they’re stepping up to take a more active role in guiding workforce decisions and drive change. 

Conclusion: What’s next for HR in manufacturing

HR in manufacturing has never carried more weight, or more opportunity. As cost pressures rise and skills shortages widen, HR leaders are being called on to do more than respond. They’re being asked to reimagine how work gets done. 

From redefining how teams are built, to embedding wellbeing and inclusion in every touchpoint, to exploring AI as a genuine support mechanism, HR isn’t just part of the conversation – it’s leading it. 

The question now isn’t whether HR in manufacturing has a seat at the table. It’s what they’ll do with it.  

Key takeaways

• With rising skills shortages, manufacturing HR professionals must explore new ways to attract, upskill, and retain the right people. 

• 41% of manufacturers are putting more money, time, and energy into employee wellbeing. 

• 53% of HR professionals in manufacturing say DEI is now high on their agenda. 

• 63% of HR teams in manufacturing are turning to AI to help lighten their workloads. 

• 69% of manufacturing HR professionals confirm their role has become more strategic.  

“What’s the mood?” Read the full report

Discover more about how manufacturing HR professionals are stepping up and proving their value as strategic business partners.