Edited by Mark A. Spaulding
As growth in the US economy continues and manufacturers create more and more jobs in a thriving sector, the industry’s pre-existing workforce crisis could get even worse according to a new study by Deloitte and The Manufacturing Institute — the social impact arm of the National Assn. of Manufacturers (NAM). The widening manufacturing skills gap is expected to grow from about 488,000 jobs left open today to as many as 2.4 million manufacturing jobs going unfilled between now and 2028. In turn, $454 billion in manufacturing GDP could be at risk in 2028, or more than $2.5 trillion over the next decade.
“Manufacturers in the United States are experiencing some of the highest levels of growth we’ve seen in decades, yet the industry seems unable to keep up with the resulting rebound in job growth,” says Paul Wellener, vice chairman-Deloitte LLP, and US industrial products and construction leader. “With nearly 2 million vacant new jobs expected by 2028, compounded by 2.69 million vacancies from retiring workers, the number of open positions could be greater than ever and might pose not only a major challenge for manufacturers but may threaten the vitality of the industry and our economy.”
“While the manufacturing industry today is thriving and optimistic, the sector’s workforce crisis seems to be casting a dark cloud over the future. About 73% of manufacturers cite this crisis as their top concern according to the NAM’s latest “Manufacturers’ Outlook Survey,” and The Manufacturing Institute’s new study with Deloitte only underlines the urgency of taking on and solving this challenge,” adds Carolyn Lee, exec dir.-The Manufacturing Institute. “There are a variety of factors driving this crisis, from having the wrong perceptions about what modern manufacturing jobs look like to not having the necessary skills to get them.”
Understanding the skills gap crisis
Five out of 10 open positions for skilled workers in US manufacturing remain unoccupied due to the skills gap crisis. These “skilled positions” require specific training or skill sets and often take months to fill. These include positions for skilled production workers, supply-chain talent, digital talent, engineers, researchers, scientists, software engineers and operational managers. The study points to the top reasons these positions tend to go unfilled, with the negative perception of the manufacturing industry topping the list (45%), followed by the notable shift in desired skill sets due to the introduction of advanced technologies (36%) and retirement of baby boomers (36%).
Over the next three years, the inability to fill open positions is expected to have the greatest impact on manufacturing companies that are maintaining or increasing production levels to satisfy growing customer demand (51%). This will likely also pose a challenge for nearly half of manufacturers responding to new market opportunities and those increasing growth as measured by revenue (47% each).
Closing the gap
“To address the skills shortage, companies are trying new ways to fill the gap and appeal to candidates,” says Chad Moutray, dir.-Center for Manufacturing Research and NAM chief economist. “Some manufacturers are shifting their own policies to be more adaptive and flexible, such as allowing nonproduction work to be done from remote locations, while others are implementing new technology like automation to supplement the existing workforce.”
To mitigate the impact of the skills shortage and begin to shrink the gap, most companies surveyed are focusing efforts on several specific areas, including adopting broader HR management practices to hire and retain talent (37%) and building knowledge transfer programs to pass on skills between retiring and new workers (32%), notes the study. Others have turned to outsourcing certain functions (24%).
Additional approaches surveyed manufacturers are taking to solve the employment challenge include:
- Adopting learning and development programs – Along with building programs to transfer knowledge from retirees to new workers, 39% of respondents said they are implementing new learning and development programs both internally and externally to help mitigate the skills shortage.
- Increasing flexibility in the hiring process – More than three-quarters of manufacturers are willing to prioritize competencies and potential in job candidates over strict adherence to sometimes arbitrary factors like years of experience, and 65% are willing to fill a position and train on-the-job rather than demanding a certain skillset upfront.
- Tapping retiring, experienced workforce – The anticipated 2.69 million workers retiring from manufacturing jobs in the coming decade are expected to have a significant impact, but it can be turned into a competitive advantage for those manufacturers who are savvy. Developing knowledge transfer programs and creating short-term project opportunities for retirees are ways to potentially retain the value of the most experienced employees.
- Turning to automated technologies and embracing technology --Thanks to technological change, the industry overall is trending quickly toward jobs — including entry-level jobs — that are high-skilled and require irreplaceable human skills, such as creativity, critical thinking, design and innovation. When it comes to more production-focused positions, however, automation is becoming increasingly important in light of the skills gap challenge. Currently, 1 in 4 (26%) manufacturers are investing in productivity-enhancing technologies and nearly 60% said that they also plan to rely more on automation over the next three years.
- Increasing wages and offering signing bonuses – The majority of companies (83%) are prepared to pay more to attract and retain skilled talent, and 8% offer signing bonuses.
My Thoughts: Before I spent the last 35 years writing about manufacturing for a range of B2B magazines, I too had a mistaken, negative perception of working in a "plant." Changing that impression, along with communicating how important high-tech skill sets are to today's manufacturing, will go a long way to help solve the employment shortfall. Apprenticeships starting at the high-school level are key. I'm happy to say our local school district is on the leading edge of offering such programs, as well as having a middle and a high school dedicated to STEM.