Approximately 60 percent of today’s unfilled manufacturing jobs are due to a shortage of applicants with sufficient proficiency in science, technology, engineering, and math (STEM) skills. This estimate is according to responses provided by 83 percent of the manufacturing executives who participated in a survey conducted as part of an industry study by the Manufacturing Institute and Deloitte Consulting LLP. To compensate for staff shortages resulting from the skills gap, current manufacturing employees have been routinely working overtime (an average of seventeen percent more hours than employees in other lines of work). Indicators are that the worker deficit could rise to over 2 million unfilled jobs in the next decade. Industry data for 2004 – 2013 shows an annual loss of at least $17 billion due to vacant positions, with shocking losses of around $45 billion in both 2012 and 2013. Even more alarming is the news that 69 percent of the executives surveyed said they expect the problem to worsen over the next five years.
The skills gap is a dense compound of pervasive problems in education, employment market demographic shifts, social currents, and in the national economy. IMPO Executive Editor, Anna Wells provides insights into the complicated issue in her article “Why The Manufacturing Skills Gap Is Serious”. Wells writes, “In an industry that has yet to recover the jobs lost in the recession, we’re dealing with vacancies in the skilled trades that threaten to derail production growth and sector expansion.”
The executives surveyed identified these positions as those they believe currently most affected and that they expect will present even more severe staffing difficulties by 2020.
- skilled production workers
For a microcosmic sampling, the CMAP report published by the Illinois government (widely reputed as a resource for broader industrial indicators), reveals an acute shortage of qualified candidates to fill essential manufacturing positions in the Chicago region, including CNC Programmers, CNC Operators, Industrial Machinery Mechanics, and Welders.
Nationally, the health care and technology industries have been especially hard hit by the staffing deficits. And, there is a nationwide shortfall of candidates prepared for work in the modern manufacturing environment of computerization, sophisticated robotics, 3D printing, and other technologies designed to streamline systems and automate processes. Further, manufacturing employees need rapid adaptability, critical thinking skills, and aptitude for creative problem-solving. But, the Illinois report exposes a failure by companies in Chicago metro to find enough workers with even more core competencies like strong reliability and ability to work well on teams.
Causes of Deficiencies
Of the 3.4 million total manufacturing job vacancies that will result from the looming mass retirement of 2.7 million Baby Boomers and 700,000 new openings due to business growth, as many as 2 million of these jobs could remain unfilled. The misalignment between applicants’ skills and the requisite skills for work in today’s technologically advanced manufacturing industry are expected to leave these millions of jobs in the skills gap. Averting this outcome depends upon business leaders and government policymakers to actually implement measures to reverse the present trend.
The primary reasons for the growing problem in the U.S. appear to include the following.
- Mass retirement — As those millions of aging workers leave the workforce over the coming years, the unprecedented rates of retirement will add significantly to the diminishing U.S. capacity to keep pace with needs of manufacturing.
- Increase in manufacturing — Modest expansion of the U.S. manufacturing sector following recent years of reshoring and great slow-down of new off-shoring by major manufacturers, and gradual economic recovery from the 2008 financial markets disaster, appear likely to increase the workforce deficiency over coming decades, in light of ongoing staff shortages.
- Inadequate education of youth — Per PISA test scores, U.S. American students perform below children in other countries, especially in reading, math, and science. Annually, 3.2 – 3.5 million high school students graduate, however, of students who express interest in STEM careers, only 16 percent demonstrate requisite levels of proficiency in math.
- Insufficient on-the-job training — Over the period from 2002 to 2013, investments in internal training programs such as apprenticeships, company classroom training, and other structured on-the-job skills development for current manufacturing employees were cut from 469,000 to 288,000 (nearly 40 percent).
- Poor image of work-life in manufacturing — A stark decline in interest in manufacturing careers is partly due to unawareness of the evolution of manufacturing into the current state-of-the-art facilities and systems that characterize the industry today. A broad misperception of the competitiveness of income and benefits also contributes to loss of interest in industrial careers.
Global Labor Market Status
Developing nations have been striving over the past 60 years to build an industrial labor base capable of competing successfully in global markets. By capitalizing on their regions’ very low labor costs and extremely liberal regulatory policies, manufacturing has grown in these rigorously competitive countries—realizing an 800% increase in exports over the past 20 years.
Nevertheless, indicators are that by 2020 there is likely to be a worldwide shortage of around 85 million skilled manufacturing workers. This is in staggering contrast to the prediction that there will be a surplus of 95 million unskilled laborers at that time. For example, in China alone, where the last decade brought millions of new participants into the workforce, a skills gap is expected to cause a deficit of 23 million sufficiently skilled workers there by 2030.
Meanwhile, the U.S. remains a strong international competitor, but the widening skills gap jeopardizes growth of innovation and the nation’s competitive effectiveness over coming years. In recent decades, U.S. manufacturers, along with many in other developed nations, eagerly moved numerous operations off-shore. Ultimately, numerous companies found reshoring the most practical solution to overcome extreme unforeseen costs, and logistical and service issues in operating abroad. A monumental after-effect has been the subtraction of years of training knowledge from the domestic U.S. labor force that has instead been passed on to foreign manufacturing competitors.
Filling the Skills Gap
The good news is that, over the past six years, the manufacturing sector has performed better than the national economy as a whole. The economic rebound from the 2008 financial crisis, reductions in energy costs, and reshoring of major manufacturing operations have generated industry growth. Additionally, notwithstanding predictions, the shortages of job candidates may improve as education costs are reduced, and industry incomes are increased. However, industry analyses consistently indicate that unless leaders in business, labor, government, and education work together to employ a comprehensive strategy that is effective in all of the following initiatives the skills gap will continue to widen, and the losses to GNP can be most reasonably predicted to escalate.
Improving relevant education — The U.S. government is undertaking initiatives to motivate businesses and educators to create workforce development programs. For example, job training grants totaling $450 million were distributed among approximately 270 community colleges in 2014. And, development of 100,000 specializing STEM teachers in the next decade has been prioritized as a federal initiative, as well as programs to permit STEM majors for an additional one million college students. Additionally, the Manufacturing Institute can share its system of certifications (which are endorsed by the National Association of Manufacturers) with colleges and vocational schools to help align curricula with employment requirements.
Changing conceptions of manufacturing careers — Many of today’s optimized manufacturing facilities consist of robots and computerized machinery run by human operators who synchronize the functions of hardware, software, and tooling to work per specifications with materials. The challenge now is to change public misperceptions manufacturing work and raise awareness of these stimulating professional environments and of the abundant personally rewarding and financially attractive career opportunities they present to qualified applicants.
Updating recruiting methodologies — It is clear, based on analyses linked herein, that manufacturers should market the career opportunities they offer in ways that innovatively feature these resources and methods:
- Social media supplies prospective job applicants with an exceptional array of information about manufacturers’ business profiles, including personnel practices, operating models, corporate culture, and much more.
- Women account for almost 50 percent of the workforce but make up under 25 percent of the industrial workforce. The Manufacturing Institute promotes opportunities for female leaders in manufacturing through its STEP Ahead initiative.
- Programs like “Get Skills to Work,” are facilitating placement of veterans entering the civilian job market.
- Millennials (ages 19-33) indicated on the Manufacturing Institute survey their preference to work for companies featuring technology, software solutions. Marketing should angle toward these business aspects.
- As in most generations, today’s young newcomers to the employment market naturally say they want to contribute to making a better world through their work and want to advance their own careers. A typical successful company can make a strong case that providing its products and services benefits civilization and the futures of its many employees and their families.
- Millennials also favor open work environments where flexibility and collaboration are the modes of operating. This is good news for companies that have configured shared workspaces and information systems by this functional model.
Enriching corporate training programs — Manufacturing requires much learning through experience. Personnel development must be cultivated by ongoing training for workers. Training Magazine‘s annual survey indicates that from 2006-2013, average investment in training per manufacturing employee was reduced by 31 percent. This may be partly due to broadened availability of on-line training, and, if so, it is despite the publication’s 2015 survey results reflecting that 80% of respondents said they believe “virtual” training is less effective than classroom training. Further, with continual technological and systemic advancements, even employees who’ve completed vocational training need frequently updated training.
A Note On The Broader Scope Of Manufacturing Concerns
Manufacturers have historically been confronted with numerous complex ongoing challenges. For the foreseeable future, these will include no less a task than resolving the complications in reducing shortages of adequately skilled workers while staying steadily on track to fulfill the corporate mission. At a minimum, such a feat requires the maximizing development of the company’s core competencies in current personnel as well as indirectly cultivating prospective applicants before they ever enter the job market.
We will note here that at Cerasis we recognize that addressing these and many other pressing issues in changing times, and keeping pace with characteristic consumer market shifts and supply chain contingencies, all while striving to optimize the additional very extensive and intricate operations of efficient and cost-effective transportation management can unnecessarily divide focus and energies. Manufacturing management is therefore met with a fundamental question about the most practical uses of leadership and staff resources in this regard.
Freight transportation management is, in most cases, most reasonably viewed as a separate business operation from all of the integrated processes of manufacturing, requiring a vast range of very different kinds of specialized knowledge and expertise than can be acquired through the best of training and experience acquired in any positions on the manufacturing team. Top success in transportation services, logistics, the transport components of reverse logistics systems, and reaching financial goals set for transportation management demands a complete commitment of professionals passionate exclusively about excelling in the freight transportation field.
One powerful move toward smoothing operations overall, improving services to internal and external customers, realizing significant cost savings, and permitting full concentration of manufacturing management and staff on building the most productive and innovative team possible is to ground these critical initiatives in a policy of enabling all staff to precisely focus on optimizing efficiencies in its particular business domain and avoiding frustrated pursuits of managing peripheral businesses such as freight transportation, in which core competencies are foreign to those of the manufacturing company. In this organizational conception, it is optimal to assign major operations such as transportation, that are clearly unique from the business’s production and service activities, to experts in successful transportation operations models, who can thus most efficiently serve the manufacturing company’s big picture interests by functioning as a strong appendage of the organization.
Need help in focusing back on your core compentancy and dealing with these forces distracting you from reducing transportation costs? Contact us today and inquire about Cerasis services.