United States

Skills are only part of the workforce dilemma to attract personnel

INSIGHT ARTICLE

There is often said to be a so-called “skills gap” in the United States, which means manufacturing companies can’t find enough qualified workers to fill all their available jobs. On the other hand, the skills gap has also been called a myth, and that open positions in the manufacturing sector are actually due to a lack of interest on the part of today’s workforce, not any sort of mismatch between employers and employees. Still others say companies would rather offshore the work, where wages are lower, and the idea that there aren’t enough qualified people at home is simply a convenient excuse.

Although nearly 65 percent of manufacturing companies report they have no jobs available whatsoever, the Manufacturing Institute says this still means that there are more than 600,000 openings waiting to be filled.1 A recent report released by the Institute estimates a total of almost 3.5 million manufacturing jobs will need to be filled over the next 10 years, but predicts the skills gap will mean two million of them will go unfilled.

In the short term, the manufacturing workforce is aging and large swaths are set to retire in the next few years. Here’s what that looks like on the ground:

  • According to a recent study, older workers are projected to make up approximately 26 percent of the labor force by 2022, compared with 21 percent in 2012 and 14 percent in 2002.2
  • The average age of a highly-skilled American manufacturing worker is 56; just 22 percent of manufacturing workers nationally are between the ages of 35 and 44.3
  • 49 percent of manufacturing workers nationally are over the age of 45.

As manufacturing changes, so do the people working in it

The manufacturing sector is vital to the U.S. economy, accounting for about 12 percent of GDP.5 But the industry won’t look the same a decade from now, just as it doesn’t look as it did a decade ago.

Modern manufacturing isn’t the hot, dirty, often dangerous job is was just a few years ago. Today, most factories are filled with advanced technology, not masses of men swinging hammers. More often than not, one would be tasked with programming a machine to do the welding. This means employees today need to be trained differently than personnel in the past.

While the backbreaking factory work once done by people may largely be performed by robots now, human beings will be required to operate, maintain, troubleshoot and program them. And as Americans have become more and more educated over the past few generations, there now seems to be a need for those with slightly less than a bachelor’s degree, but more than a high school diploma.

In years past, vocational education was largely considered a route best suited for those with no college prospects. That model has, for the most part, gone extinct. Today’s high-tech manufacturing has more to do with using one’s mind than breaking one’s back. The creation of an entirely new class of jobs has spurred the creation of an entirely new educational paradigm that has seen success in countries like Germany and Japan.

New blood is important for the sector to evolve. In recent years, funding cuts to education have done away with industrial arts courses in most high schools.6 However, this is beginning to change.

There are “gadget camps” across the country for young people, where they learn how to code, use computer-aided design technology and create products from concept through production.7 In New York City and Chicago, a number of tech firms, including IBM, have sponsored Pathways in Technology Early College High School academies. Students earn a high school diploma while learning an industry-credentialed trade, and graduate with an associate’s degree to boot.8 In Kentucky, a partnership between Toyota and the Automotive Manufacturing Technical Education Collaborative has created a mechatronics curriculum for students interested in advanced manufacturing.9 And the interest created by television shows such as “Monster Garage” and “MythBusters” isn’t hurting, either.

Attracting young people, who want more than just a job

Millennials and Generation Z right behind them have been staying away from manufacturing work for a few distinct reasons. The sector doesn’t seem particularly hip, and many young people think it means a step back in time. They say they want plenty of interaction with their bosses and a highly collaborative environment, and they don’t want to be treated like nameless, faceless employees—all of which can be overcome with proper outreach and initiative by management.

Sixty percent of millennials say they look for a “sense of purpose” when choosing an employer to work for, according to a recent survey.10 And many say companies that offer employees ways to make work more personally satisfying will reap great rewards. For example, the Ecomagination Nation program at General Electric’s power and water business unit gives workers a chance to volunteer in areas they care about. Over the first three years of the initiative, over 8,000 GE staffers took part in volunteer projects that reduced greenhouse gas emissions in their communities by 31 percent, and water use by 42 percent.11

In addition, there is a desire among millennials and Gen Z-ers for a relatively flat organizational hierarchy, and work lives that align fairly seamlessly with their personal lives. They want clear career paths and to feel trusted, along with spontaneity and an institutional tolerance for risk-taking. They want transparency and honesty from management, and want their friends to respect what they do. This is why word-of-mouth has become increasingly important in recruiting— peer networks play a tremendous role in millennial decision-making, and knowing that other young members of the community enjoy working in manufacturing can add a bit of necessary luster to the field, as can plant tours and open houses.12

Keeping millennials interested is hard to do — but not impossible

No one wants to live a real-life “Groundhog Day,” where every day looks just like the last;, and management must be aware of this. And so far, thinking differently seems to be working for those companies willing to try it.

Gamification, the application of game-playing processes to business efforts, is one way manufacturers are trying to keep young workers engaged. For example, SCM Global teaches supply chain analysis using a SimCity-style online game, in which employees set up factories, warehouses, and retail outlets, which must all be connected by shipping routes. When new safety policies and procedures are introduced, employees are thought to pay more attention to a “gamified” experience. It can also be easily tracked, and winning teams are often eligible for incentives and rewards.13

Companies have also begun to offer more flexible schedules, which millennials and Gen Z-ers are thought to favor. Research has also shown that members of the millennial generation want more feedback from managers than any other group before them. One survey found that millennials want to hear from their boss every week, more than double that of the next closest cohort.14

Having co-workers and supervisors who are passionate about their work is also extremely attractive to millennials, and the excitement does rub off. But in a pragmatic sense, compensation could also be a draw if only more young job-seekers knew how lucrative manufacturing work can be. According to the Economics and Statistics Administration, total hourly compensation, which includes employer-provided benefits, was $38.27 for workers in manufacturing jobs and $32.84 for workers in non-manufacturing jobs, a 17 percent premium.15 The National Association of Manufacturers reports the average income for a manufacturing worker is $74,447—more than $10,000 higher than the national average for non-manufacturing workers.16

Still, there are concerns among young people about the security of the manufacturing sector; many of them have seen the mass layoffs and factory closures that swept across America during the mid-2000s. What most don’t realize, however, is that the United States is still the world’s second-largest manufacturer, accounting for 21 percent of worldwide production, and U.S. manufacturers have added more than 730,000 jobs since 2010.17 These job growth statistics are tempered somewhat by the fact that most have been non-union positions, with steadily shrinking wages: . A study by the National Employment Law Project, for example, found that real wages in manufacturing declined by 4.4 percent between 2003 and 2013.18

Investing in a workforce for the future

A generation ago, large corporations like Kodak, Xerox and IBM put extensive resources toward apprenticeship programs, which trained workers to work there for their entire careers. In recent years, operations were often overhauled to deliver short-term profits to investors and, in the process, long-term training initiatives tended to fall by the wayside.21

Industry insiders say there have been enough studies done, and that manufacturers know what types of skills and training are needed. Now it’s time to start putting that research into practice and making a commitment to long-term training. Some might ask what happens if a company spends a lot of money training someone who then turns around and leaves. Others would argue that the bigger danger is not training employees who then wind up staying for their entire careers.22

Manufacturers wouldn’t necessarily have to start training workers at square one. A deep bench already exists of amateur “makers” who have a running head start on everybody else. The independent cachet and do-it-yourself ethos of the maker movement might help restore some of manufacturing's appeal among younger workers—if the manufacturing sector proper can effectively leverage what it has to offer.

One Kentucky company is attempting to connect makers and manufacturers via an online platform.23 Another Kentucky company, FirstBuild, is also connecting makers and manufacturers, but in a physical space.24 What also makes it noteworthy is that FirstBuild is backed by GE Appliances.

In short, new thinking will create brand-new revenue streams for the sector, at least for those manufacturers willing to reorient their perspectives to keep up with the times. With changes in education and fiscal policy to help move manufacturing forward, the industry will continue its important contribution to the U.S. economy.

Manufacturing companies have built American industry over the past 100 years. Over the history of manufacturing in this country, companies have always sought to lower their costs of production, sometimes moving to lower-cost countries.  With the leveling of the playing field over the past eight years, the United States is more competitive in certain sectors of the industry than its overseas counterparts. Now, companies just need to manufacture the right opportunities for a new generation.

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Sources
[1] Giffi, C. et al, “The Skills Gap in U.S. Manufacturing: 2015 and Beyond” The Manufacturing Institute and Deloitte (2015)
[2] Schramm, J. et al, “Preparing for an Aging Workforce: Manufacturing Industry Report” Society for Human Resource Management (Jul. 2016)
[3] Middlesworth, M. “Ergonomics and the Aging Workforce” Ergonomics Plus (Jul. 2016)
[4] “A Look at New Hampshire’s Aging Manufacturing Workforce” The Associated Press (Jul. 31, 2016)
[5] Scott, R. “The Manufacturing Footprint and the Importance of U.S. Manufacturing Jobs” Economic Policy Institute (Jan. 2015)
[6] Robinson, K. “Why Schools Need to Bring Back Shop Class” (May 8, 2015) Time Magazine
[7] http://www.gizmogadgetlab.com/programs/camps/summer-camp/
[8] http://insideschools.org/component/schools/school/1724
[9] http://autoworkforce.org/
[10] Benson, T. “Motivating Millennials Takes More than Flexible Work Policies” Harvard Business Review (Feb. 11, 2016)
[11] http://www.gesustainability.com/building-things-that-matter/energy-and-climate/ecomagination-ghg-goal/
[12] Kim, A. “Not Your Grandfather’s Factories” The Governing Institute (Apr. 8, 2015)
[13] Mills, J. “5 Ways Gamification Can Boost Your Factory’s Performance” Industry Week (Dec. 9, 2014)
[14] Adkins, A. “How Millennials Want to Work and Live” Gallup (June 2016)
[15) Langdon, D. et al “The Benefits of Manufacturing Jobs” United States Department of Labor (May 2012)
[16] “Top 20 Facts about Manufacturing” National Association of Manufacturers (Jan. 2016)
[17] Levinson, M. “U.S. Manufacturing in International Perspective” United States Congressional Research Service (Apr. 26, 2016)
[18] Ruckelshaus, C. et al “Manufacturing Low Pay: Declining Wages in the Jobs That Built America’s Middle Class” National Employment Law Project (Nov. 2014)
[19] Sparrow, N. “CEO Argues for Expansion of H-1B Visa Program to Fill Manufacturing Skills Gap” Plastics Today (Mar. 25, 2016)
[20] Fernandez Campbell, A. “The Visa for People Officially Deemed ‘Extraordinary’” The Atlantic (Jul. 27, 2016)
[21] Davidson, P. “Companies' Training Cuts Add to Jobless Woes” USA Today (Aug. 9, 2012)
[22] Collins, M. “Why America Has a Shortage of Skilled Workers” Industry Week (Apr. 16, 2015)
[23] https://www.maketime.io/how-it-works/
[24] https://firstbuild.com/about 

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