Manufacturing companies are entering a period where retirements threaten not just workforce size but overall productivity. McKinsey warns that “seasoned workers are retiring at rapid rates, leaving manufacturers with a shortage of experts who can bring new-joiners up to speed.” This creates a situation in which experience and tacit knowledge vanish, while new employees require longer learning curves to reach proficiency.
For leaders in cost engineering and product development, this challenge requires urgent attention. Knowledge retention has become essential for protecting productivity and safeguarding processes as demographic shifts accelerate.
An Aging Workforce Is Reshaping Manufacturing
Across manufacturing, the proportion of employees over the age of 55 has steadily increased since the 1990s. In the United States, the share of older manufacturing employees has almost doubled in thirty years.
With nearly 15 million people working in U.S. manufacturing, the aging workforce will continue to influence performance. When experienced employees retire, they take decades of expertise in processes, cost structures, and supplier management with them, thereby leaving significant gaps in operations.
Retirement Rates Are Rising Faster Than Expected
The pandemic accelerated an already pressing issue. McKinsey notes that retirement rates in manufacturing “spiked during the COVID-19 pandemic and have remained elevated since.” Companies are now dealing with faster workforce exits, which in turn makes continuity harder to maintain.
The data confirms that retirements are not only a demographic trend that unfolds over decades but also a short-term disruption with immediate consequences for productivity.
Why Retirements Hurt Productivity
Every retirement means the loss of embedded expertise that cannot be replaced overnight. New employees must climb a steep learning curve before they can handle processes independently, which extends training timelines and lowers productivity in the meantime.
The productivity impact becomes more severe in highly complex roles. McKinsey’s research demonstrates that “the productivity gap between high- and low-performing employees grows significantly as job complexity increases.”
In jobs with very high complexity, productivity differences can reach up to 800 percent. Losing just one highly skilled worker in cost engineering, tooling, or supplier negotiations can therefore have disproportionate effects on organizational performance.
The Risk of Losing Key Knowledge
The expertise at risk extends beyond documented procedures. It is tacit knowledge: the intuition that guides troubleshooting, the understanding of how technical design changes influence costs, and the familiarity with supplier dynamics that improves negotiations. When this knowledge disappears, companies face:
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Higher error rates and rework
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Longer development cycles
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Inconsistent costing approaches
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Reduced competitiveness in sourcing and pricing
These risks highlight why knowledge retention must be treated as a business priority with measurable outcomes.
Four Strategies to Protect Knowledge Before Employees Retire
Manufacturers can take several measures to reduce the impact of retirements and preserve institutional knowledge:
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Codify tacit knowledge by documenting critical processes, creating structured digital SOPs, and recording calculation methods.
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Facilitate mentorship programs that pair experienced staff with newer employees for hands-on transfer of expertise.
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Implement digital systems that centralize data, models, and assumptions so they remain available after employee turnover.
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Monitor time to proficiency as a KPI and adjust training programs to accelerate new-hire readiness.
Such actions ensure that organizations retain continuity and reduce the productivity drag associated with workforce transitions.
Safeguarding Cost Engineering Expertise Against Retirements
In cost engineering, retirements place particularly high pressure on organizations. Experienced engineers hold essential knowledge of cost breakdowns, supplier benchmarks, and links between design choices and profitability. Many organizations still manage this information in spreadsheets, which makes it fragmented and difficult to preserve. When employees leave, their models and assumptions often leave with them, thereby weakening cost transparency and decision-making accuracy.
Tset enables manufacturers to address these challenges by embedding expertise directly into a centralized platform. Cost models, supplier data, and calculation logic become structured and reusable, which ensures that expertise remains part of the organization even as employees retire. By doing so, companies reduce time to proficiency for new hires, maintain consistent costing approaches, and safeguard productivity.
Conclusion
The wave of retirements in manufacturing is already reshaping the workforce and will continue to do so in the coming years. McKinsey’s research shows that productivity losses are amplified in complex roles and that organizations must act quickly to preserve expertise. Companies that capture and systematize knowledge will sustain performance, while those that delay will face mounting inefficiencies.
Tset helps manufacturers retain knowledge and protect productivity. By turning expertise into structured, accessible data, Tset ensures continuity in cost engineering and product development processes.