In October 2007, the first baby boomer applied for Social Security benefits in the United States. Kathleen Casey-Kirschling was born New Year’s Day 1946, at one second past midnight, making her the first baby of a new generation. Her application to receive Social Security benefits signals the beginning of a drain on skilled workers that will result from the retirement of millions of baby boomers worldwide. You are likely already feeling the impact of these retirements as experienced engineers exit the workforce in droves and skilled replacements are difficult to find.
In addition, technology advances have impacted every step of the manufacturing process, from design to production to inventory management, delivery and service. Manufacturing jobs are now technology jobs, and employees must have skills required for today’s workplace. These competitive mandates put a high premium on the skills, morale and commitment of workers, and has created a drought of skilled labor. The good news is that you have options for attracting and retaining a skilled labor force.
Anyone working in manufacturing knows about this skilled worker shortage, but most of the general public does not — even though the numbers tell the story.
The U.S. Department of Labor forecasts that by 2012 the U.S. economy will have the largest workforce in the nation’s history — more than 162 million people. However, it will not be enough to fill the more than 165 million jobs that are projected to be available.
Of those surveyed, 81% of respondents to the Manufacturing Institute/National Association of Manufacturers (NAM) 2005 Skills Gap survey said they could not find qualified workers to fill open positions. Another 83% of manufacturers indicated that shortages are affecting their ability to meet customer demands, with more than half reporting difficulty achieving necessary production levels and 43% reporting difficulties increasing productivity.
The report predicts that by 2020 the U.S. manufacturing industry will need up to 10 million new skilled workers. Even though Asia and other developing areas generate four times the number of engineering students, companies can’t address the gap between worldwide staffing needs and the number of qualified production employees in the labor pool. Four areas in particular will suffer a mass departure of employees: health care, manufacturing, energy and the public sector, according to the 2003 NAM/Deloitte report, “Keeping America Competitive: How a Talent Shortage Threatens U.S. Manufacturing.” U.S. manufacturers face a shortage of qualified machinists, craft workers and technicians. Manufacturers are competing for talent from the same workforce pool that other industries are tapping.
According to estimates by ISA — The Instrumentation, Systems, and Automation Society — at least 200,000 automation professionals work in the United States. Based on an estimated 5% per year retirement rate, plus a 3% annual growth rate for the profession, that means 8% of those 200,000, or about 16,000 new people, will be needed each year in the future. The annual need for automation professionals will
exceed the supply in the pipeline today.
The baby boom hits
One of the biggest challenges affecting the shortage is the baby boom retirement wave. Baby boomers, born between 1946 and 1964, start turning 62 in 2008 — the average retirement age in the developed economies of North America, Europe and Asia. During the next 15 years, 80% of the workforce growth in these continents will occur among people 50 years or older, according to the 2004 “HRI Fortnight Report” from Eurostat.
The baby boom retirement wave will strongly affect Europe because of low birth and immigration rates, according to the Deloitte research report “It’s 2008: Do You Know Where Your Workforce Is?” With increasing pension obligations and shrinking workforces, Germany, Italy, Spain and Japan could face economic hardships. In China, the government’s policy of allowing couples to have only one child has led to a deficit of skilled workers, especially in urban areas. By 2050, 40% of Europe’s total population and 60% of its working-age population will be comprised of people over age 60, according to the Eurostat report.
According to U.S. Census Bureau projections, a substantial increase in the number of older people — retirement age — will occur from 2010 to 2030. The older population in 2030 is projected to be twice as large as in 2000, growing from 35 million to 72 million. This segment will represent almost 20% of the total U.S. population in just 23 years. Additionally, an AARP report, “The Business Case for Workers Age 50+,” prepared by Towers Perrin, found that human resources managers who may have once thought that older workers could be replaced by younger workers fresh out of school will find themselves creating flexible work schedules, telecommuting options, training and education, phased retirement and “bridge jobs” expressly designed to encourage workers over age 50 to remain on the job beyond the age at which they might otherwise retire. Without changed management practices, millions of jobs could go unfilled because there will be a shortage of workers who have the specialized skills required to fill the vacancies.
Skills gap and education
The Manufacturing Institute/NAM Skills Gap survey highlights the shortfall of highly qualified employees with specific educational careers. Educational trends are exacerbating the situation. In the United States, Germany and Japan, for example, the percentage of students graduating with science and engineering degrees is in the single digits, far below the percentages for India and China, according to the 2003 Deloitte report. In the United States, colleges will graduate only 198,000 students to fill the shoes of 2 million baby boomers retiring between 1998 and 2008, according to NASA projections. Declining student interest and failure to encourage young people to pursue manufacturing careers is a significant factor. This is largely affected by the general public’s outdated perceptions of manufacturing jobs’ working conditions and compensation. Too few students in large, developed economies are pursuing science and engineering. About 42% of students in China earn undergraduate degrees in science and engineering, but only 5% of U.S. students do so, according to a July 2004 article in The Wall Street Journal. In Germany, the number of engineering graduates has declined by almost a third since 1995, to about 36,000 — one-tenth the number produced by Chinese universities, the article notes.
The irony is that because of technology advancements, the level of education required for blue-collar jobs is higher than ever before. For example, tool and die makers must have four to five years of apprenticeship training after high school. They need to master algebra, geometry and trigonometry, as well as possess technical reading skills. Unfortunately, a recent study by the Society for Human Resource Management (SHRM) found that half of survey respondents said they are seeing many new workers who lack overall professionalism, written communication skills, analytical skills or business knowledge.
What are companies doing about it?
On many local, statewide and regional levels, grassroots activity to address this problem is growing. Some manufacturers are starting their own community initiatives to develop and obtain skilled workers. For example, Gonzales Manufacturing, owned by Cleaver-Brooks in Gonzales, Texas, is a provider of boiler room systems. The company partnered with nearby Victoria College to create a training class for welders. This hands-on, accelerated evening course has been well received. Victoria College also is creating a satellite campus near Gonzales’ facility to serve a variety of training needs.
Industry associations are trying to help. The National Institute of Metalworking Skill (NIMS, www.nims-skills.org) is a consortium of metalworking trade associations, national labor organizations, council of state governors, companies and educators developing skill standards and credential assessments. It offers educational training programs based on NIMS skill standards. By the end of 2006, the group awarded
13,383 credentials, with 162 accredited programs in operation.
The “Dream It. Do It.” campaign (www.dreamit-doit.com) was developed by NAM and The Manufacturing Institute, NAM’s research and education affiliate. The program targets the 18-26 age group to recruit and train the next generation of workers in science and math, helping young adults find careers that they can be passionate about in manufacturing. Whether someone is interested in cars, computers, music or art, the initiative demonstrates that there’s a great job waiting for him or her in manufacturing.
Industry expositions also are playing a part. The NIMS Student Summit at the biennial International Manufacturing Technology Show (IMTS, www.imts.com) is a good example. Educators, career guidance counselors and school administrators can join their students to examine machines at the expo. Through the Student-Friendly Exhibitors and the Career Awareness Area, students get a look at a variety of career opportunities available in today’s sophisticated, high-tech manufacturing industry. Teachers and their students consistently experience a positive change in their perceptions of careers in manufacturing.
The Fabtech International and AWS Welding Show (www.fmafabtech.com) features an annual job fair and Workforce Development Pavilion. Employers can meet and possibly recruit from a pool of thousands of welding and sheet metal fabricating professionals attending the event.
The time is now
The skills gap created by retirements is already open and quickly expanding in many parts of the world. To fill the gap, companies must proactively identify and implement ways to find and retain the technical skills required to meet their production requirements — whether in the form of full-time employees or through the resources and services of companies like Rockwell Automation.
Your strategy for finding these skills will likely depend on the size of the gap you are currently experiencing. If you have had many retirements in recent years, you may need to rely on a service organization more — unless you began to train younger workers well in advance of retirements so they could adequately replace older staff that left the workforce. Even if you’ve taken this approach, younger workers with 3-5 years of experience may still struggle to perform the same duties as someone with 25-30 years of experience. In this situation, Rockwell Automation is often leveraged to provide additional training, remote support or experienced field service professionals to augment the skills of internal maintenance and engineering staffs.
No matter how large your skills gap, the key to successfully overcoming it is proactively identifying and implementing the right strategy to narrow or close it. Failure to do so could result in an endless struggle to maintain a consistent production environment
that meets corporate goals and customer expectations.
What can you do?
You can conduct an Internet search and find thousands of programs offered by colleges, local and state governments, associations and trade shows. In addition to proactively getting involved in activities such as these, you have many other options to fill your workforce gaps.
An important step is to take advantage of the services that your suppliers offer. According to the ARC Advisory Group study, “Automation Supplier-Provided Services: Market Size and Forecast Through 2011” www.arcweb.com/res/autosvs, the lack of skilled labor is a primary factor in increasing user demand for automation services — especially maintenance services — for nearly all automation products and applications. Many manufacturers can no longer perform automation services in-house. Suppliers, including automation companies such as Rockwell Automation, offer you services and solutions that can be leveraged to help increase the experience of your employees and ramp up productivity and profitability with fewer resources than ever before. These services offer specialized experience across a range of technical domains, such as process, safety, networks and sustainability.
Technology-enabled services can help you implement programs that provide consistent quality and production levels across the globe. For example, remote monitoring allows companies to allocate their limited worker resources where they’re needed. Services like these bolster the bottom line because of decreases in downtime. Quality is affected as well; problems that can go unnoticed by busy operators are caught by remote engineers who understand the customer’s process for any deviation from normal operating parameters.
Another important step in filling the technical skills gap is to realize that recruiting talented workers is no longer just a human resources issue. Competitors can easily match rich compensation packages and “hot skills” bonuses. Today’s talent pool is motivated by more than just having a job; they want opportunities to continuously learn, to be challenged, to take on more responsibility and to contribute to the overall health of the organization. This also means you must rethink the ways you manage people. Identify the segments of the workforce that drive your growth. Then, rather than just focusing on metrics and outcomes (“acquisition” and “retention” of personnel), concentrate on determining the right combination of internal and external resources to meet your everyday technical needs as well as execute more strategic maintenance, asset management and system optimization activities to maximize the return on your automation investment.