Ahmed Salem would hire a dozen machinists — if only he could find them. A maker of automobile pistons in Ajman finds business is growing quickly, but his shop is short-handed.

“I need more people.”

Today, factories are humming as technology firms lay off hundreds (or freeze hiring). Manufacturers need more skilled workers amid a record number of expats coming to work in the Middle East. 

Hiring will intensify in the next few months as the industry, which must access skills at all levels, will likely employ more workers to meet demand. 

Amid this, Saudi Arabia will ride the sustainable electronics-manufacturing wave in the region as it pulls out all the stops to lure global and local manufacturers through its newly-formed tech company Alat.

Alat, partnering with global companies, including Softbank Group and Carrier Corp, to manufacture industrial robots, electronics, and semiconductors for advanced industries, intends to create 39,000 skilled jobs by 2030 and eventually export its hardware. The first batch of products will roll out at the end of 2024.

“39000 is not a small number, but we have a plan to achieve this,” Nick Reynolds, CMO of Alat, told Fast Company Middle East last month.

Alat is working with the Ministry of Education and partnering with technology and science institutes in the kingdom on finding talent, added Reynolds. 

Its aim is to create thousands of “good paying jobs” in manufacturing.

“We are bringing world-class talent. The idea is to lift the base of Saudi Arabia and encourage people to return to the country and get good, high-paying jobs. Good paying manufacturing jobs,” he said.

The kingdom’s industrial sector is experiencing sustained growth, with investments in manufacturing reaching $132 billion. It aims to increase the number of factories to 36,000 by 2035.  

BUSINESS NEEDS AND AVAILABLE TALENT

Last year, Abu Dhabi embarked on an economic transformation with a $2.7 billion investment plan to bolster its manufacturing sector. The total capital investments by manufacturers operating in the emirate have increased to over $100 billion in the year ending June 2023.

“The Middle East, particularly UAE and Saudi Arabia, strives to become manufacturing hubs, but workers in state-of-the-art factories require new skills in advanced technologies. These skills are in short supply worldwide, not just in the Gulf,” says  Razan Akrouk, Chief People Officer at GMG.

Global and regional companies are pledging to spend billions on more than 100 projects, creating thousands of jobs and taking advantage of the region’s infrastructure, connectivity, and abundant opportunities.

For now, it’s a workers’ market. 

And as you’d expect, in the buzzing region, home to electric vehicle manufacturers, industrial equipment, chemicals, metals and plastic, and several others, the usual pulls and pressures of a talent-starved market are in full display.

“The gap between growing business needs and available talent has become more acute over the past three years,” says Matteo Mancini, senior partner who leads McKinsey’s Operations Practice in the Middle East. “Many CEOs are now faced with tough operations-related questions that prompt discussions on how companies will get the skilled, digitally savvy workforce needed in the coming years.”

The manufacturing growth signals a turning point, with countries putting a fresh focus on the industry. That growth will be crucial if the overall economy in the region is to expand rapidly in the months ahead.

But the sector, which has a lot of challenges, like a rise in raw material costs, supply chain disruptions, and logistics bottlenecks, also has talent shortages.

Businesses are increasingly aware of the impending impact of this on their operations. 

“Human capital is a critical enabler to achieving economic growth ambitions. Businesses in the region are facing talent shortages, particularly in the high-skill segment,” says Marco Vasconi, Partner at Kearney Middle East & Africa – Public Sector Practice. 

“To achieve their economic ambitions, these countries are investing in developing their domestic human capital and making efforts to attract global talent,” he adds.

According to LinkedIn’s latest data, job postings in manufacturing have remained relatively stable over the last year. 

“While manufacturing has not seen an increase in job postings over the past year, it has seen more talent remain in the sector,” says Najat Abdelhadi, Career Expert at LinkedIn EMEA. “Our data shows that when manufacturing employees are looking for their next opportunity, they are more likely to look for a job within their own sector.” 

IMPACT OF AI INTEGRATION 

AI integration is impacting the manufacturing sector. Most manufacturing professionals in the UAE and Saudi Arabia already use AI in their daily work. The penetration of AI into the industry is expected to grow over the next five years as 84% of manufacturing professionals in the UAE and 82% in Saudi Arabia anticipate AI to significantly impact their work within the next five years.  

“The embrace of AI is viewed overwhelmingly positively by professionals in this industry,” adds Abdelhadi. “In fact, UAE and KSA professionals within the manufacturing sector believe that AI will be an invisible teammate.”

Companies say that they are hiring as fast as they can, but have had to invest in workforce training for their highly specialized jobs.

To prepare the workforce for the increasing demand and lack of personnel, upskilling and reskilling become imperative. It’s crucial to provide workers with the necessary skills through training programs and educational initiatives, ensuring they are equipped to handle the industry’s evolving demands.

“Our research suggested that governments could consider reforming education systems, reviewing and updating curricula to focus more on certain elements of talent,” says Mancini. “Also, introduce a skills-based certification system,” Mancini adds, since occupation-based qualifications risk becoming rapidly outdated as occupations requiring new skills emerge.

Many positions in highly technical sectors like semiconductor or EV are predicted to be added by 2030 but may go unfilled because of the relatively small number of students who have completed degrees in engineering and other science and technology subjects.

These roles require very different skills from those in traditional manufacturing — a factor in companies’ struggles to find qualified workers.

AUTOMATION BRIDGING THE GAP?

With the industry moving into such a huge transformative phase, automation is becoming instrumental in tackling talent shortages and the need to streamline operations. Companies also say they are struggling to find workers with the know-how to operate high-tech facilities.

“When we look at the increasing demand for manufacturing jobs along with the difficulty to fill them (thus impacting the ability to produce products needed), we’ve potentially reached an inflection point where automation has moved from a word reflecting negative connotations to a more positive solution for how we get the work done,” says Mancini.

New technologies are applied effectively in all sorts of capability-building programs – companies use 3D simulation systems to create interactive models of factories and production lines, and VR technologies offer immersive experiences demonstrating the end-to-end digital transformation of a factory. 

“Video conferencing technologies allowed learners to interact remotely with full-size model factory facilities, having their improvement ideas implemented by on-site staff and observing the results of their changes in real-time,” adds Mancini.

According to Vasconi, automation can help increase employees’ efficiency by changing labor’s task composition. The emergence of GenAI is further accelerating this impact. Robotic automation leverages intelligent automation technologies to perform repetitive tasks for human workers. 

“The impact of automation may vary based on the respective manufacturing sector, and it comes with challenges as well, including significant capital expenditure for automated systems and tools and human capabilities required to interact effectively with such technologies.”

However, Akrouk says, automation will not replace human capital. “Our Himalayan pink salt manufacturing facility in Jebel Ali is fully automated but relies on skilled workers for optimal performance, showcasing the harmonious integration of technology and human capabilities.” 

Meanwhile, many companies are launching their own training programs and are working with colleges to boost technical expertise as part of efforts to expand workforces in the region. 

“Strategic collaborations with international companies can be used to bring specialized skills and knowledge transfer,” says Akrouk.

Governments are incentivizing companies to facilitate upskilling and reskilling efforts and have targeted visa schemes to enable increased global talent flows. 

Despite their ongoing nationalization process, Qatar and the UAE are actively seeking foreign professionals, and they make this known through their policies and outreach efforts. 

In 2022, the UAE launched the Golden Visa program, allowing highly skilled workers, including engineers, to apply for special residency status. Saudi Arabia, which could emerge as the Middle East’s largest electronics exporter, has recently launched a set of targeted visas to attract highly skilled talent. 

“These efforts will help mitigate talent shortages and unlock potential economic growth,” adds Vasconi.