The manufacturing industry in 2025 faces a challenging landscape characterized by labor shortages, increasing operational costs, and complex regulatory requirements. Manufacturers must balance multiple priorities to stay competitive. Many owners are finding that one of the smartest strategies they can pursue is partnering with a professional employer organization (PEO).
If you’re a manufacturer struggling to manage human resources, keep pace with changing labor laws, or find and retain skilled workers, this blog will demonstrate how a PEO can be a game-changer.
The Current Manufacturing Landscape
Manufacturing remains the backbone of the U.S. economy, employing over 13 million workers and contributing nearly $2.9 trillion to GDP. However, the sector is under pressure, with 77% of manufacturers citing workforce shortages as their primary concern. Beyond headcount, modern factories demand workers proficient in automation, robotics, and data analytics.
Other top challenges include:
- Skilled labor shortage: Over half of manufacturing executives report difficulties finding qualified workers, exacerbated by an aging workforce and a lack of tech-savvy talent.
- Rising operational costs: Manufacturers expect raw material prices and other input costs to rise 5.5% over the next year. Increased expenses for raw materials and labor have tightened profit margins, making cost management more critical than ever.
- Supply chain unpredictability: Despite improvements since the pandemic, global disruptions still impact operations.
- Regulatory and compliance burdens: From Occupational Safety and Health Administration (OSHA) and Equal Employment Opportunity Commission policies (EEOC) to new state-specific wage and hour laws, manufacturers must keep up with a growing patchwork of regulations.
With so much at stake, business owners cannot afford to let human resources (HR) and compliance fall through the cracks. That’s where a PEO steps in.
How PEOs Can Address Manufacturers' Workforce Challenges
A PEO partners with businesses to handle critical HR responsibilities. This includes:
- Payroll and tax administration
- Benefits procurement and management
- Regulatory compliance support
- Workers’ compensation and safety programs
- Employee onboarding and HR best practices
Through a co-employment relationship, the PEO legally shares certain employer responsibilities, allowing businesses to outsource their administrative burden while maintaining control of day-to-day operations.
For manufacturers, that means less time worrying about paperwork and legal updates, and more time focusing on production, efficiency, and growth.
Key Benefits of a PEO for Manufacturers
Recruiting and Retaining Skilled Workers
The labor shortage isn’t going away. A Deloitte study estimates that nearly 2.1 million manufacturing jobs could go unfilled by 2030 if the skills gap isn’t addressed.
A PEO helps manufacturers:
- Offer attractive benefits packages typically reserved for larger corporations
- Streamline hiring and onboarding processes
- Benchmark compensation to remain competitive
- Improve employee engagement through training, development, and HR support
Risk Management and Safety Support
Manufacturing has one of the highest rates of workplace injuries. OSHA compliance is critical but managing it internally can be overwhelming.
PEOs provide:
- Safety training programs tailored to your environment
- Assistance with workers’ compensation claims and audits
- Guidance on building a proactive safety culture
- Help implementing return-to-work programs
Compliance Expertise You Can Count On
From new 2025 federal labor law updates to state-specific wage mandates and training requirements, manufacturers must stay informed and compliant to avoid penalties.
A PEO’s compliance team helps by:
- Monitoring regulatory changes at every level
- Ensuring employee handbooks, policies, and procedures are updated
- Managing paperwork and documentation for audits
- Providing legal guidance on employee relations issues
HR Technology That Simplifies Operations
PEOs offer integrated software that combines time tracking, payroll, benefits, and onboarding tools into a single platform.
This helps manufacturers:
- Improve workforce visibility and data accuracy
- Reduce administrative errors
- Maintain employee records securely and efficiently
- Scale operations with ease
Why Choose GMS as Your Manufacturing HR Partner?
At Group Management Services (GMS), we understand the unique demands of manufacturing because we’ve supported hundreds of companies just like yours. Our tailored PEO services are built to handle the heavy lifting of HR so you can get back to the floor and back to growth.
Here’s how GMS stands out:
- Industry-specific expertise: We’re not a one-size-fits-all PEO. Our team works directly with manufacturers to address industry-specific concerns, from OSHA regulations to seasonal workforce needs.
- Dedicated HR support: With GMS, you get a dedicated Account Manager and access to our HR experts. You’ll never face a regulatory issue or compliance question alone.
- Scalable solutions: Whether you have 10 employees or 200, our solutions grow with you, ensuring you’re always equipped to manage your workforce efficiently.
- Cost-effective benefits: We leverage our collective buying power to offer premium benefits, health insurance, 401(k) plans, vision, dental, and more, without the big-business price tag.
Manufacturing companies that partner with a PEO are better equipped to tackle today’s workforce challenges and tomorrow’s growth opportunities. You don’t have to be a Fortune 500 company to provide top-tier HR support, maintain compliance, and build a culture that attracts talent. You simply need the right partner.
At GMS, we take the burden of HR off your plate so you can focus on what you do best. Contact us today to learn how GMS can help your manufacturing business thrive.