How AI Is Solving America’s $1 Trillion Manufacturing Labor Crisis

This story was originally published by Forbes.

The American manufacturing sector is experiencing a paradox. On one hand, it’s booming: companies have announced trillions in new U.S. manufacturing investments since 2020 across EVs, semiconductors, defense, nuclear, and clean energy. Apple, Micron, GE, Philips, and dozens more are doubling down on U.S. production, creating hundreds of thousands of jobs. But there’s a catch: we don’t have the workforce to fill them.

As of early 2025, more than 450,000 manufacturing jobs remain unfilled, with projections that 2.1 million roles could go vacant by 2030—at a cost of up to $1 trillion in lost output each year. The shortage isn’t just an economic issue; it’s also a national security one. Shipbuilding programs are delayed, clean energy projects are bottlenecked, and aerospace and automotive companies face widening skills gaps as older workers retire faster than younger talent enters the pipeline.

The question is urgent: how can emerging companies help solve this labor crisis—and is venture capital willing to back them?

“The most critical workers at companies like SpaceX, Boeing, and Ford aren’t in offices. They’re on the floor cutting metal, wiring machines, and honing precision parts,” says Simba Jonga, Founder and CEO at Laborup. “But the way we hire these millions of workers is fundamentally broken.”

Simba’s revelation came during his early career as a manufacturing engineer in industrial towns across the South. Plants ran shorthanded constantly; one missing machinist could idle a multimillion-dollar production line for weeks. The paradox? Those skilled workers existed—certified, experienced, and eager to work—but remained invisible to traditional hiring systems built for white-collar professionals. “Every factory runs on two kinds of capital: physical and human,” Jonga explains. “You can buy the best machines in the world, but without the right people, nothing moves.”

The industrial labor market has been dominated by legacy agencies using decades-old methods: phone calls, paper applications, and manual screening processes that can take weeks to place a single worker. Meanwhile, platforms like LinkedIn and Indeed capture white-collar talent but miss the machinists, welders, and technicians who don’t have polished digital profiles.

Mark Horton, former Head of Talent at SpaceX, confirms the gap is widening. “The U.S. industrial labor shortage is real and accelerating,” he says. Aging demographics and the shift to digital production are making the gap worse. The biggest challenge is still people: too few qualified applicants, too many hard-to-fill roles, and high retention risk.

Dr. Marianne Wanamaker, Dean of University of Tennessee’s Baker School and former White House Chief Domestic Economist, frames the challenge the following way:

“For most of the last century, American companies lived in a world of labor surplus—more workers than jobs. That relationship has fundamentally changed. Workforce growth is slow, and companies now face a world of permanent labor shortages.” She adds that industrial roles are particularly vulnerable, as they lack the flexibility of white-collar jobs offering remote work or nontraditional schedules.

This structural shift has created an opening for technology-first solutions—and venture capital is starting to pay attention.

To build the right system, we became recruiters ourselves

Simba’s path to solving the industrial hiring crisis began with an unconventional decision: leaving Stanford’s engineering program to become an expert in recruiting himself. “To build the right system, we had to understand every bottleneck firsthand,” he explains.

Moving from Silicon Valley to Tennessee—closer to aerospace and defense manufacturing hubs—Jonga and his team spent months manually placing workers to decode the industry’s hiring DNA.

The insight led to Laborup’s core innovation: an agentic, voice-first AI that sources, interviews, verifies, and routes under-networked machinists, welders, and technicians in days, not weeks. Unlike platforms designed for office workers, Laborup’s system understands the nuances of industrial work—from crane operator certifications to specific welding techniques.

The results have been dramatic. Tonya Shortt, Talent Acquisition Specialist at Colortech, one of Laborup’s customers, describes the transformation:

“Laborup has been instrumental in helping us find skilled talent like maintenance technicians. They took the time to meet with our hiring managers, tour our facility, and truly understand our needs. That attention to detail paid off—within days, they delivered qualified candidates who not only met our criteria but were ready for job offers.”

Teams hire 5–10× faster, at approximately 70% lower cost, with 2–3× higher retention than legacy staffing. As Simba puts it, “We move the human capital where it is needed, fast.”

Industry leaders are also taking notice. Michael Gomez, Director of Manufacturing Research and Technology at MSC Industrial Supply, highlights the difference, “Instead of forcing manufacturing workers into platforms designed for white-collar professionals, Laborup has created a dedicated ecosystem where skilled workers can showcase their capabilities, certifications, machinery expertise, and demonstrated skills. This goes far beyond what a traditional job board can offer.”

Supercharging how people and plants work

In manufacturing, AI isn’t always viewed as a replacement for people—it’s also seen as a tool to help people and plants work together more effectively.

Brittany Burton, a manufacturing HR executive who has led workforce efforts at Colgate, Oshkosh Defense, and Mahle, says: “By using AI to source, screen, and surface the best-fit candidates in record time, recruiters can do more, faster. That speed matters when a facility is sitting idle because it can’t staff up.”

Mark Horton, former Head of Talent at SpaceX, takes the point further. He notes that combining expert recruiters with an AI-powered platform to find and screen skilled tradespeople, who aren’t on LinkedIn or job boards, is a way to solve the labor crisis.

Still, the industrial sector isn’t always quick to adopt new technology. Convincing leaders to embrace innovation requires proving that it’s both sustainable and profitable. Yet momentum is shifting. Advanced technology is increasingly solving problems faster and more efficiently, reshaping how factories think about workforce growth.

Marshall Ramsey, President of the Morristown Chamber of Commerce, adds: “Speed to market will be a key driver of adoption—consumers demand it, and profitability often depends on lower costs and faster delivery. Our most successful companies tend to be early adopters of new technology, while older, lower-paying industries that are slow to change often find themselves at the end of their life cycle.”

For Laborup, that’s exactly the edge they’re betting on—turning AI into a force multiplier for speed, talent, and productivity across America’s most critical industries.

Two things matter in fundraising: momentum and fit.

Raising money for solutions in traditional industries may seem difficult in the middle of an AI hype cycle, but the reality is that this market is massive, under-digitized, and ripe for disruption. The industrial sector has long been underinvested compared to software and developer-focused AI, yet momentum is shifting as AI adoption accelerates and reshoring drives urgent demand.

Laborup has raised $7.7M in total to become the hiring engine for modern American industry, with the latest Seed round led by NVP, with participation from Torch Capital, Threshold, Heartland VC, and angels including Jeff Dean (Chief Scientist, Google DeepMind), James Slavet, and Evan Moore (co-founder, DoorDash).

They’ve taken a deliberate approach to fundraising, targeting investors aligned with their mission. “One lesson I learned early: if a conversation feels like you’re being deposed, it’s not going anywhere,” Simba notes.

Dan Borok, Managing Partner at NVP Capital, an early-stage venture firm backing founders transforming legacy industries, explains their decision to invest: “With American manufacturing reshoring due to supply chain fragility and global trade uncertainty—and AI now able to automate previously manual hiring tasks—we backed Simba’s vision to build a category-defining platform applying GenAI to industrial staffing.”

At NVP, they’re also investing in companies like Vulcan Elements (next-generation manufacturing automation for rare earth magnets), Optimal Dynamics (AI for trucking decision automation), and Ship Angel (AI for global shipping rate management). Together, these bets reflect a growing trend: applying AI to modernize mission-critical, under-digitized sectors.

Borok adds, “We’re at a point in the AI development cycle where the heat is on certain verticals—legal, financial, cybersecurity, developer tools. But as GenAI improves, we’ll see more automation use cases across other verticals. Strong downstream demand will follow as companies prove the technology works and scale revenue.”

One of Laborup’s earliest backers was Jeff Jordan, General Partner at Andreessen Horowitz (a16z), who invested personally, mentions, “I believe that the problem of hiring outside the white-collar job space is very large and has not yet been solved well by existing digital players. I’ve made a few investments in this area, including Incredible Health in healthcare.”

He underscores that the market is vast and underserved, with policy tailwinds providing additional momentum: “The current administration’s desire to reinvigorate the domestic manufacturing base provides meaningful tailwinds.”

For Simba, the focus remains close to the action: “As talent is the new supply chain, we’re on the ground where America’s reindustrialization is breaking first—the South and the Midwest.”

The combination of manufacturing growth, AI innovation, and workforce challenges has created an interesting moment for both entrepreneurs and investors. New companies are demonstrating that technology can help bridge the gap between skilled workers and the factories that need them. As America continues to bring manufacturing home, the question isn’t just about building new facilities—it’s about connecting them with the right people. For the startups tackling this challenge, success could mean not only building profitable businesses, but also helping secure America’s industrial future, one placement at a time.