Skilled Labor Gaps in Electrical Supply Chains

Skilled Labor Gaps in Electrical Supply Chains

The electrical supply chain is facing a critical shortage of skilled workers, leading to project delays, increased costs, and strained infrastructure. Here's what you need to know:

  • Who’s missing? Electricians, engineers, technicians, and foremen are in short supply. Nearly half of the current workforce is expected to retire within the next decade, leaving key roles unfilled.
  • Why it matters: Labor shortages disrupt power distribution, delay renewable energy projects, and drive up costs. For example, every unfilled role costs businesses $13,000 per month.
  • What’s causing this? An aging workforce, fewer young people entering trades, and surging demand for electrical infrastructure like EV charging stations and smart grids.
  • The impact: Manufacturing delays, rising wages, and increased competition for talent. By 2025, the U.S. will face an estimated 80,000 vacant electrician positions.
  • Solutions: Apprenticeship programs, upskilling current workers, and leveraging digital tools like online procurement platforms to streamline supply chains.

This labor gap is more than an inconvenience - it’s a challenge threatening energy security and economic stability. The time to act is now.

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What Causes Skilled Labor Shortages in the Electrical Sector

The electrical sector is grappling with a skilled labor shortage that has been years in the making. A mix of demographic changes, educational trends, and rising demand for infrastructure has created a perfect storm, disrupting supply chains and driving up costs.

Aging Workforce and Retention Problems

One of the biggest hurdles is the aging workforce. Seasoned professionals are retiring faster than new workers can fill their shoes. Nearly half of the current power sector workforce is expected to retire within the next decade. For instance, the National Electrical Contractors Association reports that while 10,000 electricians retire annually, only about 7,000 new electricians enter the field, leaving an annual gap of 3,000 skilled workers.

"The power industry is facing a critical workforce shortage, exacerbated by rising energy demands and the urgent need to modernize aging grid infrastructure."
– Matthew Carrara, President of Doble Engineering

Shortage of New Workers

The pipeline of new talent entering the electrical trades has also slowed significantly. A societal push toward four-year college degrees has overshadowed vocational training, leading to fewer students pursuing technical education. High schools have cut back on shop classes and vocational programs, leaving many young people unaware of the stable income and job security offered by skilled trades.

"I've seen a major shift over the last four or five years where parents and guidance counselors alike are realizing that not everybody is meant to go away to college, and not meant for white-collar jobs, and that blue-collar jobs can provide good incomes, and give people the job satisfaction that they need and that they want."
– Michael Krupnicki, President of the American Welding Society

Other barriers include limited apprenticeship opportunities and complicated certification processes, which slow down workforce development. The COVID-19 pandemic only compounded these issues by disrupting hands-on training programs, leading to enrollment declines and delays. While vocational training saw some recovery in 2023 - trade school enrollment grew by over 10%, and community colleges with vocational programs saw a 16% increase - these improvements haven’t been enough to close the gap. A survey revealed that just 16.7% of Gen Z students are interested in construction-related careers, even though clean energy jobs pay about 30% more than the national median wage.

Growing Demand for Electrical Infrastructure

At the same time, demand for electrical infrastructure is skyrocketing. Data centers, electric vehicles, and renewable energy systems are driving an unprecedented need for skilled electrical labor. U.S. electricity demand is projected to grow 50% by 2050, with data center energy consumption increasing by 300% and e-mobility power needs surging by 9,000% during that period.

The renewable energy sector is feeling the pinch, too. Solar installation jobs are expected to grow by only 22% by 2033, far short of the 48% needed. This mismatch has led to a 43% rise in average solar labor costs and a 30% increase in total solar system costs between 2021 and 2023. Jay Miles, VP of Customer Excellence at RP Construction Services, captures the urgency:

"The entire industry could use a 30% increase in head count to manage the current backlogs and current six to 12-month growth projections."
– Jay Miles, RP Construction Services

Battery storage projects, which depend heavily on specialized electrical labor (about 80% of the workforce), are adding further strain. Meanwhile, the push for energy-efficient solutions and green certifications is creating demand for electricians skilled in smart systems and renewable energy technologies, widening the skills gap even more.

These challenges are already causing delays and cost overruns, setting the stage for further discussion on how labor shortages impact project timelines in the next section.

How Labor Gaps Affect Project Timelines and Costs

Labor shortages in skilled trades aren’t just inconvenient - they ripple through the entire electrical supply chain, slowing down projects and inflating costs. When companies can’t find enough workers, delays in manufacturing, installation, and logistics pile up, creating a domino effect. And these delays inevitably lead to higher expenses, as detailed below.

Project Delays and Disruptions

Labor shortages create bottlenecks in manufacturing, warehousing, and construction. As of January 2024, there were still 622,000 unfilled manufacturing jobs. This shortfall means production of critical electrical components - like breakers, transformers, and power distribution equipment - can’t keep up with demand. The result? Backlogs, delayed shipments, and rising transportation costs.

In cities like New York, Los Angeles, and Chicago, construction and installation projects regularly grind to a halt because there aren’t enough skilled professionals to complete drawings or address required corrections. These delays ripple outward, disrupting the entire supply chain.

Higher Costs from Labor Shortages

Delays caused by labor gaps don’t just waste time - they rack up costs. On average, every unfilled role costs businesses $13,000 per month. And with 77% of companies reporting higher labor expenses due to talent shortages, competition for skilled workers is driving up wages, signing bonuses, and other hiring incentives.

Vacant positions also slow down operations, misalign inventory levels, and degrade customer service - all of which can lead to further employee turnover. It’s a vicious cycle.

"More than half of logistics companies now say labor is their #1 problem. That means it's ahead of fuel costs, ahead of delays, and even ahead of inflation. When you can't find people to move your product, nothing else matters." – WinSavvy

Inexperienced workers filling in for skilled roles can also lead to costly mistakes. Poor quality control during rushed or complex installations often results in rework, adding another layer of expense.

Comparison: Adequate vs. Limited Skilled Labor

The differences between having enough skilled workers and facing a labor shortage are stark. Here’s how the two scenarios compare:

Factor Adequate Skilled Labor Limited Skilled Labor
Project Timeline On-time completion with predictable schedules Frequent delays beyond planned timelines
Labor Costs Standard wages with minimal overtime Higher wages and extra costs (e.g., $13,000/month per vacancy)
Quality Control Reliable quality with minimal rework Increased errors and costly rework
Workforce Stress Balanced workloads, normal turnover Overworked teams with turnover up to 49% annually
Project Acceptance Can bid on all suitable projects Forced to decline projects due to staffing shortages
Supply Chain Flow Smooth production to installation Bottlenecks in manufacturing, warehousing, and delivery

The numbers paint a clear picture: areas with enough skilled labor operate more efficiently, while regions with shortages face mounting delays and expenses. The U.S. construction industry, for example, will need to add 439,000 workers by 2025 to meet demand. Yet, with nearly 40% of skilled workers expected to leave the industry by 2031, the gap between well-staffed and under-resourced regions is set to grow.

These challenges are forcing companies to rethink how they manage projects and supply chains. Relying solely on local labor pools is becoming less viable, prompting businesses to explore new strategies to stay competitive in a tightening market.

Understanding how labor shortages impact different regions across the U.S. is key to grasping their effect on project delays and rising costs. These shortages don’t affect all areas equally, and the variation adds another layer of complexity to supply chain stability.

Regions Struggling the Most with Labor Shortages

Manufacturing-heavy regions in the Midwest and Southern U.S. are facing the toughest hiring challenges. States like Kentucky, Alaska, and West Virginia are particularly hard-hit, with South Carolina reporting over 2.3 job openings for every unemployed person. Compounding the issue, nearly 25% of the manufacturing workforce is over the age of 55, and by 2030, the sector could see 2.1 million unfilled jobs. Rural areas, in particular, struggle to attract skilled workers due to limited infrastructure and educational opportunities. To counteract this, companies are offering incentives like relocation packages, signing bonuses, and even housing assistance.

The eastern U.S. is also grappling with supply challenges. The PJM Interconnection, which serves 65 million people in the region, is bracing for potential supply shortfalls. Jim Robb, CEO of the North American Electric Reliability Corporation (NERC), has urged action:

"I'm asking everyone in the electricity supply chain … to take all appropriate actions."

Rising Demands in High-Growth Sectors

The U.S. Electrical Services market hit $158.5 billion in 2023 and is projected to grow at an annual rate of 5.6% through 2032. Meanwhile, the global electric vehicle charging infrastructure market is expected to skyrocket to $452.2 billion by 2030. Renewable energy projects are also fueling growth, with electrical equipment manufacturing employment projected to increase by 38% between 2023 and 2033.

Despite this growth, labor shortages remain a pressing issue. The electrician workforce is expected to grow by 11% through 2033, but even with this increase, there will still be an estimated 80,000 vacant electrician positions by 2025. Similarly, the HVAC sector is already short 110,000 workers, a figure expected to double to 225,000 within five years. In 2024, nearly 90% of construction firms reported difficulty filling skilled positions.

One example of how businesses are adapting comes from Fort Worth, Texas. Acre Distilling partnered with Circle L Solar and Siemens to integrate renewable energy solutions. Tony Formby, the owner of Acre Distilling, shared:

"Now that I've got a surplus of electricity from my solar panels, I can actually sell it through the electric chargers to people that want to charge their cars."

Impact on Supply Chain Stability

Labor shortages are creating ripple effects that extend far beyond individual industries, destabilizing the broader supply chain. When manufacturing hubs can’t find enough workers, it slows the production of critical components, leading to bottlenecks that affect the entire economy.

Efforts to nearshore production to Mexico and Central America may ease congestion on the West Coast but bring new logistical challenges to Southern U.S. border regions. Weather-related disruptions add another layer of difficulty, with flooding alone accounting for 70% of weather-related supply chain interruptions in 2024. Labor-strapped areas are slower to recover from such events, exacerbating delays.

The PJM Interconnection’s supply concerns highlight how regional labor shortages can jeopardize grid stability. As the organization works to reform its capacity market, warnings of supply shortfalls loom large. Craig Piercy, CEO of the American Nuclear Society, emphasized the urgency:

"2024 was the year that we all woke up to the need for nuclear. 2025 is the year we really get down to serious business."

To adapt, companies are diversifying supplier networks and investing in technology. For instance, Tesla sources nickel from seven different suppliers across multiple regions to ensure steady battery production. Others are leveraging AI to fine-tune inventory management and reduce the risk of shortages.

Ultimately, these regional labor challenges mean businesses can no longer rely on traditional supply chain models. Companies that spread operations across multiple regions, invest in workforce training, and embrace technology for better supply chain visibility are better equipped to handle these ongoing disruptions.

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Solutions and Ways to Address Labor Shortages

Addressing skilled labor shortages in the electrical supply chain requires a mix of workforce development, targeted training programs, and smarter supply chain strategies. Many companies are adopting approaches that not only tackle immediate staffing challenges but also build a foundation for long-term resilience.

Education and Apprenticeship Programs

Apprenticeship programs combine paid, hands-on training with classroom learning to create a steady stream of qualified workers. These programs are a win-win, offering individuals better career prospects while delivering employers a strong return on investment. For instance, graduates of apprenticeship programs earn over $300,000 more during their careers compared to peers without such training, and 90% of apprentices complete their programs successfully.

The Independent Electrical Contractors (IEC) offers apprenticeship programs recognized by the U.S. Department of Labor and the Veterans Administration. These include both traditional four-year and faster two-year tracks, providing flexibility for participants.

Electricians also benefit from competitive wages, with regional averages ranging from $55,139 to $71,259. For employers, the numbers speak for themselves: a 150% return on investment and an impressive retention rate, with 89% of apprentices staying with their employer five years after completing the program.

Recent graduates have praised the program's impact. Teigon Shirley from IEC Rocky Mountain shared:

"It was amazing going to IEC. It opened my horizons to the entire electrical field".

Joe Stevens from Western Colorado IEC echoed this sentiment:

"Once I started at IEC, I understood how things work, and more important, why things work. School and work went hand in hand. Knowledge is power. By the time I graduate, I'll be up there with some of the better electricians around the nation".

The Biden-Harris administration has also made significant investments in Registered Apprenticeships to modernize and expand these programs across growing industries. This is especially critical as the demand for electricians is projected to grow by 11% from 2023 to 2033 - far outpacing the 4% average for all occupations - with approximately 80,200 job openings expected annually. These efforts directly address delays and cost overruns caused by labor shortages.

Training Current Workers in New Skills

Upskilling existing workers is another effective way to bridge skill gaps, particularly as technology evolves. Investing in employee development not only reduces hiring costs but also boosts retention. In fact, 94% of employees say they’d stay longer with companies that invest in their growth. And at under $5,000 per worker, reskilling is far more cost-effective than hiring externally.

Ohio’s electric vehicle (EV) workforce strategy is a great example of large-scale reskilling. The state aims to create 25,400 new EV-related jobs by 2030, with 12,700 in northeastern Ohio alone. Lieutenant Governor Jon Husted highlighted the urgency:

"For every new battery-powered car, that's one less gas-powered car that we're going to be producing. We have to transition that workforce to a new workforce".

Ryan Augsburger, president of the Ohio Manufacturers' Association, emphasized the adaptability of these skills:

"Much is at stake for Ohio in this transition. Ohio is in a race against other states and countries to supply the talent for EVs and their supply chain. The good news is that the skills needed to prepare our workforce to EVs is transferable to a host of different manufacturing readiness needs".

In the utilities sector, companies are focusing on areas with the biggest skills gaps, such as data analytics, artificial intelligence, digital literacy, and virtual reality. For example, workers are being trained to use smart grid technologies, administrative staff are learning data analysis, and trainers are being upskilled to use virtual reality tools.

The Electric Power Research Institute (EPRI) also recognizes the importance of workforce development. Liz Hunt from EPRI’s electrification of transportation group noted:

"We know that a skilled and diverse workforce will be needed to prepare the grid, support charger installations and grid interconnects for consumers and fleets, and to provide the highest possible level of reliability and resilience for the grid".

These efforts not only prepare workers for the future but also help alleviate the immediate impact of labor shortages.

Using Online Marketplaces for Better Supply Chain Management

Digital procurement platforms are playing a key role in addressing labor shortages by simplifying sourcing processes. These platforms make operations more efficient and connect users to a broader network of vendors, helping to offset regional labor challenges.

Take Electrical Trader, for example. This online marketplace specializes in electrical components like breakers, transformers, and power generation tools, allowing companies to keep projects on track even when local suppliers face staffing issues.

With the global electronic component market projected to grow from $186.38 billion in 2022 to $328.5 billion by 2031, efficient sourcing is becoming increasingly important. Many businesses are adopting hybrid approaches that combine direct sourcing with online marketplaces and traditional distributors to strengthen supply chain resilience.

Sourceability, a digital procurement platform, was recently recognized as "Outstanding Supply Chain Service Provider" by ASPENCORE Global Electronic Component Distributor Awards in 2023. These platforms offer advanced analytics, visibility into available parts, and sourcing solutions that help companies make better decisions.

The biggest advantage? Companies don’t need to scale up their internal teams. By partnering with third-party distributors and leveraging online marketplaces, businesses can shift sourcing responsibilities to platforms that already have the infrastructure and expertise in place. This approach helps maintain efficiency and project timelines while easing workforce pressures.

Focusing on strong supplier relationships and investing in reliable technology ensures that companies can navigate labor market fluctuations more effectively. This creates a supply chain that’s better equipped to handle workforce challenges and keeps projects moving forward.

Conclusion: Fixing the Skilled Labor Gap for Better Electrical Supply Chains

The skilled labor shortage in electrical supply chains goes beyond just a staffing issue - it's a challenge that costs the industry a staggering US$150 million annually in lost productivity and leaves 1.2 million middle-skill positions unfilled. Addressing this problem is not just about filling jobs; it's about safeguarding the future of the industry.

A well-rounded solution involves three key strategies: workforce development, technological advancements, and supply chain optimization. Together, these approaches could lead to impressive results - like cutting inventory costs by 20%, reducing logistics expenses by 15%, and improving supply chain flexibility by 50%.

Workforce Development: The Foundation of Progress

Investing in people is the backbone of any long-term solution. Programs like Kentucky's FAME have shown what's possible, with graduates earning nearly US$100,000 within five years. Similarly, Lincoln Tech's US$20 million in scholarships for 2024 highlights efforts to make education more accessible. As Jackie Robinson, Lead Instructor at Philadelphia's Energy Coordinating Agency, puts it:

"We try to create jobs here that make a great living. You get a good skillset that can change your life and give you … generational wealth".

Technology: A Powerful Ally

While workforce initiatives take time to bear fruit, technology can provide immediate relief. With 84% of supply chain executives ramping up their use of digital tools and smart factory adoption expected to rise by 35% by 2025, companies are finding ways to bridge the skills gap. Eva Wörnhörer from ENGEL highlights the potential:

"Digitalization provides the plastics industry with solutions for the shortage of skilled labor and energy efficiency. Digital assistance systems and smart processes make production more efficient, sustainable and future-proof".

Platforms like Electrical Trader further ease the burden by streamlining sourcing processes, helping businesses stay on track even when local labor resources are tight.

The Bigger Picture: Clean Energy and the Green Economy

The urgency is amplified by the rapid growth of clean energy jobs, which are expanding at twice the rate of overall U.S. employment. By 2030, the green economy could face a skills gap of 7 million workers. The good news? Three-quarters of the jobs created by the Inflation Reduction Act won't require a four-year degree, and clean energy roles are boosting incomes by 8–19%.

A Resilient Future

These efforts - ranging from education and upskilling to digital tools and industry partnerships - are laying the groundwork for a stronger, more adaptable electrical supply chain. By investing in both people and technology, the industry can meet today's challenges head-on and ensure a stable, prosperous future. Decisions made now will determine the resilience of tomorrow's supply chains.

FAQs

How can companies encourage more young people to pursue careers in electrical trades and help address the skilled labor shortage?

Companies looking to bring young talent into the electrical trades should focus on engaging early and presenting the industry as an appealing career choice. Getting involved in high school career fairs, teaming up with vocational schools, and promoting apprenticeship programs are great ways to introduce students to this field. Highlighting benefits like job stability, competitive pay, and clear opportunities for advancement can make the trade more appealing to younger generations.

Another key strategy is to showcase how rewarding and essential this work is. Programs like mentorships and hands-on training can spark interest and help students see the value of the profession. By presenting the electrical trade as a dependable and fulfilling career path, companies not only address the labor shortage but also help shape the next wave of skilled professionals.

How do apprenticeship programs and upskilling initiatives help address skilled labor shortages in the electrical supply chain?

The Role of Apprenticeship Programs and Upskilling in the Electrical Supply Chain

Apprenticeship programs and skill-building initiatives are key to addressing the shortage of skilled labor in the electrical supply chain. These programs combine practical, hands-on training with structured learning, equipping both new and experienced workers with the expertise they need to excel in the field.

By preparing more qualified electricians and tradespeople, these efforts help reduce project delays and keep costs under control. They also draw fresh talent into the industry, ensuring businesses can handle rising demand while keeping operations running smoothly over time.

How does technology, like digital procurement platforms, help address skilled labor shortages in the electrical industry?

Digital procurement platforms are stepping up as a solution to skilled labor shortages by automating tedious tasks and simplifying supply chain operations. This not only cuts down the need for specialized labor but also increases efficiency and precision.

Another major advantage of these tools is the improved visibility they bring to supply chain processes. With better insights, businesses can make quicker, smarter decisions and adjust more effectively to labor shortages. By keeping delays in check and managing costs, these technologies help ensure projects stay on schedule, even when workforce challenges arise.

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