Despite incremental improvements in the greater labor market since the start of 2022, hiring and staffing still appear to be very challenging aspects for employers in the distribution industry.

Overall, labor conditions have improved since last year, but on somewhat of an inconsistent basis. Employment in the wholesale trade sector was up a solid 2.3% year-over-year in March, according to the Bureau of Labor Statistics, though that followed an insignificant 0.1% year-over-year increase in February.

One of our rotating questions in the 2023 1Q Baird-MDM Industrial Distribution Survey asked distributors, “How would you rate your current staffing situation compared to a year ago?”

The approximately 500 respondents, primarily consisting of distributors, illustrated the unsteady state of the industry’s labor market: 12% said their staffing situation is “much better” compared to a year ago; 30% said “slightly better”; 43% said “about the same”; 14% said “slightly worse”; and 1% said “much worse.”

This rotating question also featured an open-ended response component, which garnered commentary from over 100 distribution executives regarding their staffing situations. Responses were kept anonymous.

A theme among polled distributors is that they are now able to better retain staff compared with the past few years, but hiring remains difficult.

“Prices have gone down a little, and people are not looking as much at leaving,” one executive said. “I think inflation has caused this change.”

“Competitive pressures seem to have abated,” another said. “Retaining/attracting still requires a lot of focus and resources, but it is not as frantic as it once was.”

“From my view, companies that went into 2020 with cashflow weaknesses or thin margins are now (2023) ‘leaking’ employees who are looking for better pay, better bennies, more opportunity for advancement, better company culture and more stability,” an executive suggested.

The following includes additional commentary from the survey’s open-ended response component:

• “Considering a reduced or shared work (schedule).”
• “Lack of applicants. Highest wages we (have) ever paid and can’t attract enough employees.”
• “Hard to find people to keep up with growth.”
• “We are getting more, better applicants for the positions we are looking to fill with the exception of sales engineers – those continue to be tough.”
• “Hard to find qualified people for skill positions. They are happy where they’re at or if an offer comes in, their current employer will give them whatever they need to stay.”
• “Quits have slowed somewhat, but it’s still very difficult to find new people.”
• “Budgets tight to rehire and fill positions including backfills and planned hires.”
• “Company has not met the salary needs of managers, so lost many.”
• “Retention has improved and finally have all the right players in the right seats.”
• “We have had no discernible staffing issues for several years now other (than) one retirement.”
• “Compensation pressures appear to be easing with the number of layoffs increasing.”
• “We still have openings, but fewer.”
• “We seem to be past the worst in terms of retention and recruitment challenges – still not easy but there seem to be more candidates available and our turnover rate is beginning to normalize.”
• “Staffing is very fluid. Of 4 hires in 2022, only one is still with us.”
• “Salaries remain elevated, talent availability and retention improving.”
• “Have had turnover, but replacing with better talent.”
• “We have no major staffing-related issues, and do not expect any for the remainder of 2023.”
• “We continue to hire due to growth. The labor market remains tight and finding qualified candidates is difficult.”
• “The overall quality of candidates has definitely improved.”
• “We are getting more qualified applicants for all job postings.”
• “Definitely harder to find warehouse employees but we have been successful so far.”
• “Identifying, recruiting and retaining talent remains a challenge.”
• “Able to add incremental headcount to support growth, but attracting, and retaining good people is getting harder.”
• “We are not intending to add to total head count until later in the year pending results.”
• “Very similar to last year. We are a bit heavy currently as we prepare to fill roles to eventual retirements.”
• “Have caught up on our backlog so we currently are good with staffing.”
• “Even though we hired more people, the pick of the pool is not what it once was. The talent is coming from outside the industry too.”
• “Difficult to keep talent, especially in analytics and eCom.”
• “A year ago we would routinely fail to meet our hourly staffing headcount levels. Today we are always able to meet those targets, although hourly worker quality is still down from Pre-2020 and turnover remains elevated.”
• “It’s difficult to find suitable people (especially) in areas like Conover, NC, where our plant is.”
• “Job applicants are much better and easier to find than last year.”
• “We are fortunate to find qualified candidates for our open positions, but we continue to have a lot of turnover in the hourly worker areas as people often look for that slight increase in pay somewhere else. I feel like we are competitive and generous in our benefits but some people don’t look at the full picture.”
• “Difficult to get good people who are committed to (a) full work week.”
• “Most of our roles are filled, but still having issues trying to find service people to work on cleaning equipment. Trying to find qualified service technicians has been an issue for the past couple of years.”
• “Still understaffed by about 5%.”
• “It seems people are finally willing to work entry level jobs again.”
• “We were able to increase our staff with quality hires.”
• “Invested in training for both sales and management.”
• “We’re fully staffed for the first time since 2020.”
• “Between the job market opening up and sales trending more moderate, employment situation has improved greatly.”
• “Our workforce has been fairly stable in sales and back-office functions. The highest employee turnover has been in our warehouses.”
• “Still have open positions. Turnover of unskilled labor has lessened.”
• “You just cannot find and hire competent people that actually want to show up and work.”
• “Labor availability has greatly improved, while wage rates have largely stabilized.”
• “Still finding it very difficult to find quality candidates even with a rich offering of salary and benefits.”
• “The gig jobs like Uber and Lyft have given people other ways to have a job that accommodates his or her situation.”
• “Companies need to ensure their culture is positive, supportive and constantly reinforced and staffing takes care of itself.”
• “More applications and better quality.”
• “Staffing situation stabilized by second half of 2022.”
• “We are having a difficult time matching our labor force to flow of material from supply chain.”
• “When we can get people, we can’t get parts and when parts are available, we have trouble getting people.”
• “Overworked last year, finding skilled help is nearly impossible.”
• “We continue to struggle with hiring drivers. However, we have seen improvements in staffing levels in other areas (admin, accounting and equipment operators).”
• “Lost a few people to higher paying competitors.”
• “Difficult to find college educated with up to 10 years experience.”
• “We added sales staff in 2022 and plan to continue adding through 2025.”
• “As we hear from various business sectors we are finding it difficult to staff.”
• “Fully staffed with better people this year.”
• “Improved candidate flow and follow-up.”
• “As we grow, we are staffing more critical/strategic roles that are harder to find.”
• “Using more outside services.”
• “We have found more qualified candidates are available in the past few months.”
• “We have not had significant challenges hiring or retaining employees.”
• “Short staffed but taking our time replacing.”
• “Especially warehouse workers are hard to find.”
• “The talent shortage coming out of the pandemic forced us to develop better recruiting, onboarding, training and career pathing processes. We are hiring a higher caliber of employees and our retention has increased dramatically.”
• “Still hard to hire staff, getting easier but good candidates disappear almost immediately.”
• “We’ve hired 10% more people in the last year. Huge headcount increase. Positions are mostly filled now.”
• “No one returns phone calls promptly.”
• “Recruiting and maintaining staff still a challenge.”
• “Issue continues to be not only recruiting for the industrial distribution industry but retaining current staff!”
• “Our recruiting efforts are much improved, we are finding more eager to work and qualified candidates. Our retention efforts during the past 1-2 years have helped improve the situation a lot in terms of hiring and retention.”
• “Still having trouble finding people to work a full 40 (hours) in the plant. We have our senior crew, but newer team members come with a high turnover rate.”
• “Last year we had challenges finding people for all positions, with all the challenges of 2022 and growth staffing was critical. We had to establish a clear strategy, change our recruiting methodology, and hiring philosophies but now we have staffed with quality people, without over hiring.”
• “Currently looking to hire 2-5 people but with little to no success so far in the process.”
• “We have lost a couple employees, but have not been pressed to replace them due to less business volume.”
• “We are looking to cut staff for the first time since Covid as our customers are doing the same.”
• “We have a source of young people from the Technical School. Not all work out and we get an occasional genius.”
• “Non-tech workers are (still) in short supply.”
• “We are ahead of schedule for our 2023 hiring plan.”
• “Hard to find good talent.”
• “Had some turnover but were able to backfill quickly with well qualified hires.”
• “Entry-level staffing is tougher and more expensive; higher-level positions are easier to fill.”
• “Staffing is still an issue. Many schedule interviews and never show up or return calls. The unemployment policies require them to look for work, but not to take it apparently. Temp agencies are still reporting the same feedback. People are still getting benefits from the government to not work… so they are hanging on to that for as long as possible.”
• “Several retirements that we need to fill with younger individuals.”
• “We are considering moderate reductions due to slowing sales.”
• “Finding and keeping hourly employees continues to be a challenge. Accessing salaried employees is taking longer but we have been pleasantly surprised by the quality of available people.”
• “Many of our current co-workers increase their efficiency every year.”
• “Slight improvement in finding warehouse staff and entry-level positions; sales & management positions unchanged.”
• “We have issues maintaining our warehouse staff along with truck drivers.”
• “Slightly lower turnover and less chaos related to wage inflation.”
• “2022 was a very challenging year for small businesses. Many suppliers accepted orders. Then failed to deliver and increased prices on the open orders. This has never happened previously. It was a challenging year to make profits.”
• “We’ve been very successful in adding new talent in 2022 and YTD 2023.”
• “Staffing numbers have improved, but our new hires are not up to speed yet.”
• “We are having a particularly tough time sourcing good CSR candidates. Those that do apply are very weak candidates.”
• “We have had only regular attrition and have been able to fill slots quickly.”
• “Have reassigned some roles and personnel as well as adding some new people.”
• “Warehouse worker availability and wage increases.”
• “Staffing is varying by region. We’ve struggled in Florida more than any other area, and have had to increase the base wage by ~20% on average to increase retention and attraction of new applicants. It’s too soon to tell how effective the results of this are.”
• “Although more applicants to choose (from), quality of applicant is about the same or worse. I also am amazed how many people receive government assistance, while earning a combined annual gross $80k income.”
• “Still hard to find good people.”
• “Economic uncertainty and profitability concerns pressuring headcount.”
• “Recruitment is still challenging.”
• “Strong markets are allowing employees to seek higher pay.”