The manager’s apprentice: Developing the workforce of the future
Why is workforce development important?
INSIGHT ARTICLE |
During a recent visit to a shop floor, a group of Colorado high school students faced a compelling proposition: Higher education is expensive, “so, if you could earn up to 40 to 50 credit hours for college by working in a business like this, and get paid, and get your high school diploma, who wouldn’t want to do that?” asked Noel Ginsburg, chief executive officer of Intertech Plastics1, which hosted the visit.
Apprenticeship programs are gaining popularity among employers and potential employees across the country, driven by a tight labor market, aging baby boomers and demand for new technical skills. In a Chicago suburb, manufacturer Otto Engineering is dedicating space in its new facilities to a program that combines on-the-job training with night classes provided through a local manufacturing association. The company is growing, says Otto’s president, Tom Roeser, and “it cannot grow without good employees.”2
The rise of apprenticeship programs
Interest in apprenticeship programs is not due to any single cause or relegated to a single industry. But a number of factors are converging to make such programs appealing:
- Aging workforce: The aging demographic can challenge any industry, but is particularly problematic in trades like construction that require physical strength and endurance. According to the Manufacturing Institute, the median age of the manufacturing workforce in 2000 was 40.5; by 2012, it reached 44.7. In prior generations, an aging workforce was replaced by younger workers through apprenticeships.
- Attracting and retaining skilled labor: For some time, employers have cited a skills gap—that is, a lack of qualified workers with the skills they need—as the reason so many open roles go unfilled. Some have noted that fewer high schools are offering shop or other trade classes,3 resulting in fewer skilled workers to employ. But skills are only part of the workforce dilemma of how to attract personnel. Millennials and Generation Z—in other words, the ones who will be replacing retiring boomers—have different priorities. Economists have noted little evidence that the U.S. economy is experiencing an unusually large skills gap.4 Nevertheless, the need for skilled workers exists and many employers are having difficulty finding and attracting them.
- Decline in appeal: Young workers are less interested in construction and manufacturing than they once were. A recent survey noted that less than one-third of Americans encourage their children to pursue careers in manufacturing.5 Instead, they encourage their offspring to get a college education, a path that may not be for everyone and often not necessary for a well-paying job in the trades.
- Less investment in training: A report by the ADP Research Institute suggests that a lack of training, combined with a more transient workforce, is among the reasons that companies are facing a skills challenge.6 Middle market companies are beginning to recognize this shortfall, and are investing in training in order to retain employees. But others are slashing training budgets and cutting apprenticeship programs.
Registered apprenticeship programs that meet national standards are found in myriad industries, including manufacturing and construction, but also health care, media, agriculture and professional services—the list goes on. Unfortunately, middle market companies operating on thin margins may not be able to afford such programs, whose costs can include training, classroom work, training equipment and program management in addition to wages.
For employers, the benefits are clear and often outweigh the costs. According to one study by the Economics & Statistics Administration, apprenticeships improve overall company performance and provide a competitive advantage over other firms.7 Specifically, companies gain the following:
- Production: The value of output by apprentices and a reduction in errors
- Workforce: Reduced turnover, improved recruitment, and a pipeline of skilled employees and future managers
- Soft skills: Improved employee engagement, greater problem-solving ability, flexibility to perform a variety of tasks and a reduced need for supervision
For employees, registered apprenticeship programs provide a path to a career, college and high school credit hours, technical instruction, and certification as a qualified journeyman, among other benefits.
Thomas Hacker is the president of C&L Supreme, a Midwest manufacturer of precision CNC-machined (also known as computer numerical control) components and assemblies. His company has had an apprenticeship program for about six years in partnership with the local Technology & Manufacturing Association. “We’re a small business,” he says. “We don’t have the depth or personnel bandwidth to supply a classroom and other resources.” Through the TMA, however, the program has a hands-on training facility, trainers and a curriculum. Ultimately, the program provides credentialing for participants that meets National Institute for Metalworking Skills standards.
The results for C&L Supreme are in some ways modest; so far, only four employees have been through the three-year program. Yet for both the company and the participants, success is already measurable. One individual, for example, came out of the military without a clear idea of what he wanted to do. He was hired at C&L as an operator, says Hacker, and was eventually put through the apprenticeship program. Within five years, he was promoted to supervisor and is earning three times his original salary—and, presumably, is teaching others similar skills.
“Obviously, this satisfies a need for us,” says Hacker, by providing skilled and dedicated personnel to its workforce and making the company more attractive to potential hires. The employees themselves build the skills needed for a career.
Support for the programs
In the fall of 2016, the Department of Labor (DOL) released grant funds to jump-start state innovation to expand access to apprenticeships.8 Taking its cue from President Donald Trump’s executive order to establish standards for industry-recognized apprenticeships, in June 2017 the DOL announced its initiative to expand apprenticeships in the United States. This was to be accomplished in part with the help of a task force representing companies, trade and industry groups, educational institutions, and labor unions.9 But as of January 2018, the DOL had not announced how it would use the $95 million set aside by Congress for these initiatives to promote apprenticeships.
Hacker notes that his company has received state assistance for their program in the past. “On the job training money is available,” he says, but it may involve more red tape that some companies can tolerate. Yet he points out that programs can get as much as 50 percent of the cost reimbursed through government funding.
There are, in fact, a number of initiatives and partnerships focused on launching and maintaining apprenticeships, many at the state level. For example:
- The website of the Associated General Contractors of America, for example, list numerous apprenticeship programs from Hawaii to Virginia.
- In the Midwest, the Industrial Manufacturing Technician Apprenticeship is an “earn and learn” program established in 2014 with a broad coalition of labor unions and manufacturing employers and supported with grant funds from the DOL.
- A program for community health workers sponsored by Bronx-Lebanon Hospital, the New York Alliance for Careers in Health Care, La Guardia Community College and health care workers’ union 1199 SEIU is another example of a collaborative effort to provide participants with the means to gain the skills for the jobs they seek.10
Can apprenticeship programs help US workers?
One need only look overseas for examples of apprenticeships playing key roles in the success of a country’s industries:
- Nearly half a million Germans enter the workforce through apprenticeship programs, which have been cited as a critical element in the success of the country’s manufacturing industry.11
- In Switzerland, where two-thirds of young people go into apprenticeship, their youth unemployment rate is 3.2 percent,12 while at the end of 2017 that rate in the United States was 8.9 percent.
These two countries have different cultures, histories and economies, so what works there might not catch on in the United States to the same degree.
In addition, the focus for many apprenticeship programs—indeed, the reason proponents of these programs say they are needed—has primarily been on growing middle-skill workers. But economists have warned that the jobs requiring these middle skills—such as machinists, technicians and other roles—have been on the wane since the 1980s, while job growth has been in the low and high ends of the skills spectrum.13
According to the DOL, there are some 550,000 apprenticeships across the country, and more than 150,000 businesses have integrated the apprenticeship model into their talent development strategy. Yet this may not be enough to replace those who are leaving the trades. According to a number of sources, for every four people who leave the trades, by retirement or otherwise, only one new person is supplied by apprenticeship programs to enter the trades.
“It is an investment by the company and the employee,” says Hacker. Participants must work a full, eight-hour day, and then go to class for three hours twice a week. Employers need to be engaged with employees and instructors on a regular basis to monitor progress.
“Without that commitment by both parties, it’s not going to work.”