Small and mid-sized manufacturers across Tennessee are facing a critical question in today’s tight labor market:

Should we hire new talent, or invest in training the people we already have?

While both approaches have their place, understanding the true costs and benefits of each can help you make a smarter decision for your operation.

The Hidden Costs of Hiring

Hiring may seem like the fastest way to fill a skills gap—but it often comes with hidden expenses that add up quickly:

• Recruitment costs: Job postings, background checks, onboarding, and HR processing

• Lost productivity: Open roles can lead to delayed projects and slower output

• Training time: New hires typically take weeks or months to become fully effective

• Turnover risk: If the fit isn’t right, you may find yourself hiring again soon

According to industry benchmarks, replacing an employee can cost between 30% to 200% of their annual salary.

The Case for Upskilling

Upskilling involves training your current workforce to take on new roles, technologies, or responsibilities. It’s often a more cost-effective and sustainable solution. Benefits include:

• Lower costs: Targeted training is typically less expensive than recruiting

• Faster ROI: Existing employees already understand your systems and culture

• Higher retention: Investing in employees builds loyalty and improves morale

• Workforce agility: Cross-trained teams can adapt to shifting business needs

According to the TMEP Talent Pipeline Guide, small manufacturers that prioritize upskilling see measurable gains in performance, retention, and operational flexibility—all without expanding headcount.

When Hiring Still Makes Sense

Of course, hiring is still the right move in certain situations:

• You’re entering a new area of specialization

• Your current team is maxed out

• You need leadership experience or technical knowledge not currently on staff

The most effective manufacturers take a blended approach: hiring strategically while continuously developing their existing workforce.

Build a Smarter Talent Strategy

In today’s environment, small manufacturers don’t have to choose between upskilling or hiring—but leading with upskilling often delivers faster, more affordable, and more sustainable results.

Download our free guide to explore practical, proven strategies for strengthening your workforce without breaking the budget: How Manufacturers Can Expand Their Talent Pipeline