North America is in the midst of the largest exodus of skilled labor in its history. According to current research, within manufacturing and industrial America, the talent areas that will be hardest hit by retirements are skilled tradespeople and production/operating technicians. Although it is not well recognized in America, the U.S. Bureau of Labor Statistics estimates that these skilled trades and operating occupations account for more than 50% of the total manufacturing workforce.
According to a report1 by Deloitte and The Manufacturing Institute, within the next decade 3.4 million skilled trades and production manufacturing jobs in the United States will need to be filled, yet it is estimated that 63% of these jobs will not be filled because of a talent shortage. In short, manufacturing and our ability to remain on the competitive edge in the United States could suffer due to two million unfilled jobs. The Manufacturing Institute further suggests that for every unfilled job, a company loses $14,000 in average annual earnings. With two million lost or unfilled jobs, the potential loss comes to $28 billion!
To make matters worse, within the skilled trades and operating ranks, we have a “vacant” generation. The emphasis over the last 25 years has been to push secondary school graduates toward a university track. In addition, industrial manufacturing companies continue to report that high school graduates lack technical skills that include math, problem-solving, and basic hands-on technical know-how.
As in the perfect storm, this all falls on the heels of an incredibly competitive global environment where the ability to profitably produce manufactured goods has been severely thwarted with imported products. When we add to this the shortfall loss of decades' worth of field-embedded skills knowledge, future sustainable manufacturing performance levels become suspect at best.
While the solution would seem clear-cut in approach and direction, some interesting facts shed light on current thinking within education and manufacturing. Let’s start at the high school level. In a poll2 by the Fabricators and Manufacturers Association’s Nuts, Bolts & Thingamajigs Foundation:
- 52% of all high school students polled indicated they have zero interest in a manufacturing career
- Of the students polled, 61% perceived this type of career as “a dirty, dangerous place that requires little thinking or skill”
- Students also believe that these types of positions “offer minimal opportunity for personal growth or career advancement”
Manufacturers should not have to change this culture alone; however, they must lead by example and influence where they can. Legislated education also has a responsibility to meet the needs of the country. American middle and high schools have shifted their focus to prepare students for a four-year university degree while de-emphasizing alternatives for advanced vocational/technical colleges or employer-sponsored apprenticeship training.
At the manufacturing level, the U.S. Bureau of Labor Statistics indicates that the average worker stays at a particular manufacturing job for only 4.2 years.1 Manufacturers state that for this reason, they are reluctant to invest in training and workforce development. The catch-22, of course, is that when respondents were asked why they left a company, they stated that they felt they added little value to the organization, their jobs were not secure, their future was unstable, and there was little job skill training or career path development.
Senior management has a huge responsibility in closing this gap. But how can this be accomplished and who will it get done? Part of the problem is that organizations rarely create a planned approach to what is required or how is it applied on the field floor. Consequently, there is little urgency as to the application of training, and even less as to understanding what level of execution is required to drive business value.
Senior executives recently responded as to what strategies they believe should be used to resolve the skilled trades’ shortfall while maintaining production and profit margins.1 These executives believe the five most important strategies to move skills forward include:
- Internal employee training and development (94% agreement)
- Involvement with local schools and community colleges (72%)
- External training and certification programs (64%)
- Use of overtime (58%)
- Creation of new veteran hiring programs (49%)
Figure 1. Senior-level executives were surveyed on how they thought the skills shortage will impact manufacturing. (Source: National Association of Manufacturers.)
Research also indicates that 12% of employers are providing hard skill set training and development to current employees, implementing alternative work models, and exploring new talent sources; however, 20% of those surveyed are not pursuing any strategies at the moment.3
We do not have a manpower shortage; we have a “hands-on, hard trade and production skills” shortage. The solution to sustainable manufacturing improvement and increased profitability is not to reduce wage compensation, employee benefits, or employee headcount. Rather, the solution is to produce best-in-class products with the highest-skilled workers in such a manner that the performance of production lines and the reliability of site assets creates profitable margins so as to lead to a U.S. manufacturing resurgence.
The institutional approach and delivery of hard skills knowledge should include:
- Standardizing skill sets
- Improving hard skill set planning and execution
- Measuring field-based work improvements
- Developing and applying sustainable precision practices on the manufacturing floor
- Recognizing workforce improvement strategies as a core business value.
Many companies have not started, and even fewer are developing and employing long-range skilled workforce plans. The choice is yours as to how you begin your journey. Determine now to lead and act from the top.
- Deloitte and The Manufacturing Institute, 2015. “The Skills Gap in U.S. Manufacturing: 2015 and Beyond.” plnt.sv/1603YS-01
- Maxwell, Locke and Ritter, 2012. “Will Today’s Youth Fill Millions of Future Job Openings?”
- ManpowerGroup, 2015. “2015 U.S. Talent Shortage Survey”