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HR Outsourcing: How a PEO Can Help Businesses in Manufacturing

Manufacturing is seeing a boom. It has recovered from the Great Recession to hit record-breaking output in 2018 (over $2 trillion), and many manufacturers have actually had to turn away business in 2018, according to The New York Times. “Midsize manufacturers are turning down lots of business,” Rick Lazio, a former Republican congressman and a senior vice president at Alliantgroup, a tax-credit consulting firm, told the paper, “because they can’t find the people and they can’t get the equipment fast enough.”

Indeed, labor issues are turning into a major headache for the sector and are likely to worsen into 2019. Automation and robotics help, but with historically low unemployment (3.2% in manufacturing as of October 2018, reports the U.S. Bureau of Labor Statistics), many manufacturers are still feeling the labor pinch. Analysts at Deloitte and The Manufacturing Institute expect a shortage of 2 million manufacturing workers through 2025.

Additionally, with an overall injury and illness rate for workers in manufacturing about 25% higher than for all U.S. workers, risk management and compliance remain top concerns in the industry.

How does a PEO help manufacturers?

A PEO can strengthen all aspects of recruitment and employee retention at all staff levels, from skilled knowledge workers to manual laborers. On a related note, HR experts can help with employer branding. Fewer than five in 10 Americans surveyed by Deloitte believe manufacturing jobs are interesting, rewarding, clean, safe, stable, or secure. An expert PEO partner can help manufacturing organizations start to turn that reputation around in the labor marketplace.

PEOs can help burnish employer brand and optimize recruiting strategy.

  • Recruiting and talent acquisition services
  • Application and interview procedures
  • Background screenings
  • Salary assessments
  • Onboarding toolbox

PEO services can develop the employee experience critical to retention.

  • Provide guidance on employee relations matters
  • Accurately pay employee wages
  • Leverage improved buying power to be able to offer better benefits

PEO services can bring scalability to organizations seeking or experiencing rapid growth.

  • Train staff on HR related topics
  • Outline a safety and risk program
  • Administer benefits programs
  • File appropriate employment taxes and maintain records

How should you prepare for a PEO partnership?

  • Identify your typical annual employee turnover. High turnover means high overhead (for recruiting and training costs), and your current situation will provide a good starting point to discuss talent acquisition strategies and cost-saving measures.
  • Similarly, consider if you’re facing any issues with your regulatory compliance efforts, be they recurring compliance violations or high costs to ensure compliance. A good series of safety training programs for employees can forestall issues before they arise, and a well-articulated set of compliance policies can get everyone on the same page and eliminate organization-wide compliance discrepancies.
  • Also note if you have overseas facilities or contracts with foreign workers or companies. Offshore operations come with their own compliance requirements, and a good HR provider will be well-versed in the ways that compliance requirements can vary according to nationality.


CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.

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