Talent crisis accelerates as carmakers embrace automation

The findings are critical. Automotive manufacturing faces a workforce conflict that threatens to constrain production growth - despite rising vehicle demand projections. Labour and skills shortages rank as the second-largest manufacturing challenge according to the latest AMS/ABB Automotive Manufacturing Outlook Survey 2025, with 30% of industry decision-makers identifying growing labour costs and skills shortages as a critical concern, coming in only behind obvious cost pressures.

This concern proves crucial to automotive production. The talent deficit is driving manufacturers towards a tipping point - where human capital constraints are spurring technological investment whilst simultaneously limiting the sector's ability to navigate other pressing challenges. Among the 473 survey respondents spanning original equipment manufacturers, tier suppliers, and engineering specialists across global markets, the workforce crisis emerges as both symptom and catalyst of broader industry transformation.

The automation production imperative

The findings reveal that labour shortages are propelling increased investment in automation and robotics - creating a feedback loop that further transforms required skillsets. When asked to identify specific areas of skills deficit, respondents overwhelmingly pointed to robotics and automation expertise, with 28% citing this as their primary concern. Battery and electric vehicle expertise followed at 18%, alongside electrical engineering and electronics at 16%.

This insight highlights a fundamental recalibration of vehicle manufacturing competencies. Traditional mechanical engineering capabilities, whilst still valued, are giving way to demand for specialists who can program collaborative robots, manage autonomous mobile systems, and integrate artificial intelligence into production environments. The survey data also reveals that 47% of respondents identified the need for new skillsets, whilst an equal proportion highlighted specific technical skills shortages that existing training programmes have so far, failed to address.

Educational institutions and internal development initiatives appear unable to match the pace of this technological change. Some 44% of survey participants identified lack of education, training, and qualifications as a barrier to building adequate workforce capability. This educational gap is compounded by competition from other industries, cited by 35% of respondents, as technology sectors beyond automotive vie for the same talent pool.

Investment patterns reveal strategic priorities

Manufacturing companies are responding to workforce pressures through selective automation investment, though adoption rates vary significantly across the supply chain. New OEMs, technology specialists, and tier one suppliers are embracing robotics most aggressively. Among these groups, between 51% and 62% report robust automation implementation, compared with just 23% of tier three suppliers operating further upstream.

The disparity suggests a bifurcating industry where capital-intensive downstream manufacturers can afford to substitute technology for labour, whilst smaller suppliers remain constrained by both financial limitations and the technical expertise required to deploy sophisticated systems. This divergence could intensify supply chain vulnerabilities as upstream component producers struggle to match the productivity gains achieved by their larger customers.

Autonomous mobile robots and collaborative systems represent the fastest-growing robotics categories. The survey indicates that 65% of manufacturers expect increased deployment of autonomous mobile robots over the coming year, whilst 58% anticipate greater use of collaborative robots. These technologies require fundamentally different operator skillsets compared with traditional fixed automation, demanding workers who can supervise, programme, and troubleshoot rather than simply operate machinery.

The electrification talent challenge

Vehicle electrification compounds workforce pressures by introducing entirely new manufacturing disciplines. Despite widespread perception that electric vehicle demand growth is moderating, survey respondents maintain optimistic projections for battery-electric and plug-in hybrid production. Some 66% expect passenger electric vehicle manufacturing to increase over the next year, whilst 52% forecast commercial vehicle electrification growth.

Manufacturing these vehicles demands expertise in high-voltage systems, battery assembly, thermal management, and power electronics. The industry must simultaneously maintain proficiency in internal combustion powertrains whilst building electric vehicle capabilities, creating what respondents identified as growing complexity from powertrain variant proliferation.

Technological developments in battery and component manufacturing emerged as the dominant factor influencing electric vehicle production efficiency, cited by 41% of survey participants. This suggests that as battery technology matures and manufacturing processes improve, the barrier to entry will shift from capital investment towards access to workers who understand these evolving systems.

Regional responses to global pressures

Labour cost pressures are shaping strategic responses beyond simple automation investment. The survey reveals that 39% of respondents rank labour as a top three cost concern, trailing only tariffs at 45% and raw materials at 42%. This positioning highlights how workforce expenses compete with macroeconomic and commodity pressures for management attention.

Regionalisation and localisation strategies, cited by 30% of respondents as a significant supply chain challenge, partially reflect efforts to optimise labour costs across different markets. The trend towards production closer to end markets serves multiple objectives including tariff mitigation and supply chain resilience, but also enables manufacturers to access diverse labour pools with varying cost structures and skill concentrations.

Some manufacturers are pursuing workforce development as a strategic response to skills shortages, with 19% of survey participants reporting expanded employee training and upskilling programmes. However, this figure lags significantly behind the 31% investing in automation and robotics, suggesting many companies view technology as a more reliable solution than human capital development.

Smart factories and the data literacy imperative

The emergence of smart manufacturing environments introduces yet another layer of workforce requirement. When asked about the benefits of smart factory implementation, 44% of respondents identified improved data-driven decision-making capabilities, whilst 42% pointed to maximised productivity and 41% to real-time operational visibility.

Realising these benefits demands workers who can interpret complex datasets, respond to algorithmic insights, and troubleshoot when automated systems encounter unexpected scenarios. The survey data indicates that artificial intelligence and generative AI represent the fastest-growing manufacturing software category, with 79% of respondents expecting increased adoption over the coming year.

This technological trajectory suggests the industry is shifting from a workforce that operates machinery to one that manages intelligent systems. The transition introduces workforce adaptation challenges identified by 29% of survey respondents implementing smart factories, alongside concerns about cybersecurity and data protection raised by 34%.

Honing the human side of industrial transformation

Manufacturing executives face uncomfortable decisions about workforce strategy. Automation offers a compelling response to labour shortages and rising costs, yet implementing these systems requires precisely the technical expertise that is in short supply. The survey reveals this tension through multiple data points showing simultaneous skills deficits and accelerating technology adoption.

Some 95% of respondents view automation and robotics as extremely or quite significant over the next five years, placing it alongside cybersecurity and cost reduction as top strategic priorities. This near-universal recognition suggests the industry understands that workforce transformation is inevitable rather than optional.

The challenge for manufacturers will be managing the transition period when traditional skills remain necessary for existing production lines whilst new capabilities must be developed for emerging technologies. Survey data showing relatively modest investment in training programmes compared with automation spending suggests many companies are choosing to buy their way out of workforce constraints rather than build internal capabilities.

Whether this approach proves sustainable depends partly on labour market dynamics beyond the automotive sector's control. As technology industries continue expanding and demographic trends reduce available workers in key manufacturing regions, the competition for qualified talent will likely intensify.