How Food and Beverage Companies Can Reduce Risk by Addressing Labor Shortages

For the food and beverage industry, the COVID-19 pandemic has exacerbated an existing labor shortage in manufacturing and distribution.

Many employees are retiring early, and companies are having difficulty replacing them. Workers are demanding better working conditions and know that there are other opportunities, if their current situation doesn’t suit them.

The industry’s labor shortage does not exist in a vacuum: Labor shortages, supply chain disruptions and the industry’s typically small margins are having a marked effect on risk management and liability exposure.

The risk in the labor shortage

Without a full complement of workers, food and beverage manufacturers may be tempted to run shifts longer or speed up production. Distributors may inadvertently overtax their drivers or warehouse workers. This all creates greater risk of an accident.

For as many as 45% of food companies, according to Deloitte, retaining talent is currently the top workplace challenge.¹

Some meat packing companies are ponying up $3,000 bonuses for new workers,² offering better and more predictable hours, and a better work environment overall.

Remote work isn’t possible at a food processing or bottling plant, and workers see the potential for making more money in a better environment elsewhere. Paying higher wages isn’t the only answer, and companies are developing better voluntary benefits packages that include perks such as accident insurance, telehealth options, dental insurance and financial education for employees needing help.

How can food and beverage businesses reduce risk?

There are several ways food and beverage manufacturers can reduce risk in an environment where labor is scarce. Some involve improved recruiting, and others involve learning to thrive with fewer workers.

For example, technology and automation can help relieve labor shortages and reduce risk. One food processing plant fully automated menial tasks in a single facility, leading to a major reduction in workers’ comp claims.

Not all food processing tasks can be automated, however, and not all tech investments are warranted. From a risk perspective, food and beverage companies may be best served by automating tasks that cause the highest number of workers’ compensation claims.

In some instances, automation may work best in packing and moving finished goods to cargo bays for shipping. Improved safety and working conditions will also help attract and retain workers, while minimizing risk.

These steps go beyond COVID-19 precautions like PPE, masks and social distancing. Workers want hearing protection, cut-proof clothing, equipment guards and jackets for work in cold-weather environs. They are willing to switch companies in order to obtain better work conditions, proper ergonomics and better job rotations that will reduce burnout and injury.

An often overlooked aspect is that immigrant workers may need slightly different onboarding. Providing instruction and safety documentation in their native languages — and giving them holidays off that might not be standard — can actually provide a competitive advantage.

While this might seem like a squishy “culture” aspect of HR, having employees properly trained and feeling respected will give them more incentive to stay, which can give them long-term work experience that leads to fewer workplace accidents.

Contact your HUB Food and Beverage industry expert for more information on how to tame the labor shortage and reduce risk.

¹ Deloitte, “Deloitte and FMI – The Food Industry Association: New Study Examines the Future of Work in the Food Industry,” July 27, 2021.

² Bloomberg, “Meat prices will continue to surge if meatpackers can’t find workers fast,” November 4, 2021.