Despite Automation Labor is Still Key to Logistics

The labor market isn’t great right now, but logistics continues to be a bright spot, according, Steven Hussain, director of Community Workforce at Prologis, a global logistics REIT that handles more than $2 trillion of goods a year. 

“What we’ve seen through the pandemic has just accelerated growth,” Hussian said on CBRE’s The Weekly Take podcast. “And, in many of our customers the need for talent has grown. And despite high unemployment numbers, the availability of that labor just hasn’t changed much.”

While automation may seem like an obvious answer to these labor issues, that isn’t always the case.

“What we see today from automation is that even the most heavily automated facilities actually require the most labor and talent,” Hussain says. 

Over the next five years, Prologis wants to help train 25,000 individuals to enter the logistics industry and connect them with its customers. CBRE’s Chairman of Americas Research and Senior Economic Advisor Spencer Levy says many of the specialized skills in the industrial and technology space are still in demand. But some companies are still looking to cut costs. He sees “a refocus on where there might be some labor cost arbitrage plays and opportunities to reduce their bottom line.”

While distribution centers have to be in the US, there is a lot more flexibility around where manufacturing facilities can be located. Cost is often the main factor in determining where these factories are built, which is why manufacturing has moved to Asia and Latin America. After COVID, Mark Seeley, executive vice president of CBRE labor analytics group, thinks manufacturers could diversify regionally.

“So instead of having maybe all of their eggs in a market like China, perhaps they do diversify their risk,” Seeley says. “But does that mean they will come to Texas or Alabama? I think it’s more likely that it may be that they diversify within the region.”

Whether a company is deciding to locate a facility in the US or abroad, labor is only part of the equation. 

“The infrastructure of those communities in terms of the community infrastructure, the education system, the workforce system, the demographics and the needs are all very complex,” Hussian says. “So there’s not a one size fits all approach that you can apply when you’re talking about talent and labor. It’s very complex.”