8 ways that manufacturers can prepare a new generation of workers for a smarter and stronger manufacturing future.
The public may find it counterintuitive that even while the unemployment rate is persistently high, hundreds of thousands of manufacturing jobs go unfilled. But manufacturers are acutely aware that rapidly deployed new technologies, major demographic shifts, and corporate globalization have employers scouring for qualified candidates. It's estimated that as many as 600,000 manufacturing positions are currently unfilled in the U.S.
Without a domestic source of critical manufacturing skills, many firms have gone and will continue to go offshore, where the desired talent is abundant and affordable. But American producers can capitalize on these current conditions to cultivate the talent they need to stay competitive. Here are eight steps that manufacturers can take now to begin to narrow the skills gap and lay a foundation for growth.
- Take an Intergenerational Approach
The two biggest demographic pressures on the jobless rate are the bookends of the workforce: the 16-to-24-year-old would-be new entrants who need the skills to take on increasingly complex tasks but lack the experience and training to do so; and the 55-and-older mature workers who are seasoned and proven, and whose numbers are dominant.
The so-called "gray talent" will drive 90 percent of the increase in the U.S. labor pool between 2008 and 2018. Their younger counterparts have actually reduced their percentage of workforce participation in recent years -- some are staying in school longer to prolong the time when they have to seek gainful employment. Others have simply given up the job search.
The surge of more senior talent, the baby boomers returning to the workforce, is due in part to sheer demographics. Having come of age, the boomers are living longer, and they are extending their working lives. Financial pressures, exacerbated by pummeled pensions and the prospect of living 35 or 40 more years, have pushed many millions of boomers back into the job market.
Members of this fast-growing group may not necessarily want replacement earnings, but they need to supplement what so many have found to be meager retirement incomes.
C-suite executives, managers, and supervisors who see these seemingly competing forces as complementary recognize that the intergenerational workforce is not only inevitable, it will characterize American labor for decades to come.
Contrary to assumptions that manufacturing is anemic, the numbers clearly demonstrate that it is vigorous and vital to the economy's overall health. U.S. producers made a $1.8 trillion difference in the GDP last year, representing almost 12 percent of total economic output. They paid higher wages than employers in many other sectors, employed 11.5 million Americans, and supported almost 7 million jobs in other industries.
What accounts for this multiplier effect? Labor economists quickly point to manufacturing supply chains, which are larger and longer than in other sectors. The U.S. Labor Department's Bureau of Labor Statistics (BLS) calculates that for every dollar of value created in manufacturing, $1.40 is created in associated sectors of the economy. Manufacturers account for roughly two-thirds of U.S. R&D expenditures, and employ more engineers and scientists than any other private-sector industry. The sector's goods make up more than half of U.S. exports and drive more net-wealth creation than any other part of the nation's economy.
But the skills gap throttles back this important economic engine. Lacking adequate, if not superior supplies of human capital, and mired in a recession/slow-to-rebound economy, American manufacturing firms have focused on their survival and their shareholders, and sought the most expedient ways to address their talent shortages. And while many firms remain at the forefront of technology (think computers, medical devices, chemicals, machinery, aerospace, and military equipment), that lead is narrowing. The nagging U.S. manufactured-goods trade deficit portends tougher times, unless it is reversed. In 2010, the nation ran an $81 billion deficit in high-tech manufactured products alone. This was a reflection of the talent gap, as were the consequential 687,000 high-tech manufacturing jobs the U.S. labor market lost to overseas production. That's a 28 percent decrease in the base of talent capable of producing high-tech, high-value good.
That dearth of skilled workers threatens national infrastructure and industrial competitiveness. The American Welding Society estimates that by 2014, for example, there will be a 500,000-worker shortage in welders. This shortfall reflects a critical and growing need for a wide range of welding skills across many occupations, from the most rudimentary storm sewer repair jobs to the most sophisticated PhD-level positions at nuclear reactors.
It's the same story in the utilities sector -- from water to electricity -- which stands to lose half of its workers over the next decade. And those in conventional energy sector jobs, from power-plant operators to transmission and pipeline workers, are retiring at a much faster rate than they are being replaced.
And as the Council on Competitiveness' latest Competitiveness Index warned, many of these are middle-skills jobs. These are nuclear electricians, hydraulic and electrical systems workers, and the rich ecosystem of people who make and run what we use every day -- from life-saving tubing hookups in hospital rooms to the bridges we cross. These are not jobs that can be offshored.They must be filled right here. And despite the premium put on job creation through highway construction and smart-grid investments, we cannot build more infrastructure if we cannot even staff the maintenance and repair positions needed to care for what we've already erected.
Once manufacturers become authorities on this narrative, they will position themselves as a compelling career choice.
Manufacturers, from large multinationals to small businesses, can easily avoid setbacks in productivity and shortfalls in the talent they require by doing thorough assessments of their current human capital capacities and future needs.
According to Boston College's Sloan Center on Aging & Work, 40 percent of employers are worried about how the qualified worker shortage impacts their company's bottom line. Yet more than two-thirds of the employers surveyed by the center said they had not looked at changes in their firm's human-capital demographics makeup, nor had they made any assessments about just what those changes might mean.
Here's what every employer should be asking:
- Do you know who your current workers are? Their demographics? The tenure of your average employee? Is there a bifurcation of talent -- new entrants with limited skills and mature (post-50) workers who are more seasoned?
- With employee retirements, does your company suffer from the loss of institutional knowledge? Productivity losses? Systems compromises or failures?
- What is your current workforce's capacity to learn new skills? What is your employees' level of education? Do they need remedial help? Are they technically trained? Is English their second language?
- What are you doing to keep your company competitive in the next three to five years? How does your workforce figure into those plans?
- Will your operations become increasingly automated? What is the impact of technology on your current employees?
- Are you developing new products and services requiring a different or refined set of skills? Are you training incumbent workers and new hires internally, or do you rely on third parties for training? Have you examined the short-term costs of training? Have you determined the long-term benefits?
- How do temporary workers fit into your workforce equation? Statistics show that companies are hiring skills rather than people, hence the increasing reliance on contract engineers rather than full-time employees. Have you evaluated the true work-readiness of temporary workers, and conducted a cost-benefit analysis of paying the premium for temporary workers versus adding new staff ?
- Are there economies of scale that you, as an individual employer, can realize by sharing resources and costs with other local employers -- for training and even for workers themselves?
- If you do not have the workforce you need, are you tapping into a pipeline of talent?
A November 2011 Deloitte/Manufacturing Institute poll reveals that only 20 percent of American adults would advise their children to pursue manufacturing careers. Their bias is strong, their views distorted by old pictures of factory workers on the assembly line performing mind-numbing tasks.
Industry itself must seize its role as the most powerful force capable of changing the public's perception of manufacturing. You have an important message to convey: that your workplace is dynamic with the automated, high-tech, customer-specific functions that define much of manufacturing's landscape; that your managers increasingly demand a team of workers who can read plans, compute, analyze, problem-solve, and create; and that manufacturing today demands more flexible workers who can take on a much wider range of responsibilities. Your most important message: Greater skills mean more marketability. And that means more rewards and earning power for those who continue to meet the challenge.
Designate a new entrant and a mature worker on your payroll, both successful and well-spoken, to spread the word that coursework, certifications, and just-in-time training on the job, in the classroom, at experiential training centers, and online offer the most expedient and often the most effective way to gain the necessary skills. Advertise and dispatch this team to K-12 and other schools, training centers, workforce development boards, local grass-roots organizations, and the like. Or invite the public to your location and show them the facilities, the work, the mentoring, and the opportunities of working in manufacturing.
Engender interest and loyalty in your backyard by investing the time to develop partnerships with post-graduate learning centers, and reach into K-12 schools. The most effective community colleges have long been engaged with their local business communities, responding to the needs of employers by tailoring curricula to workplace demands. Among the exemplars: Washington state's Walla Walla Community College, Florida's Valencia Community College, and Illinois' Black Hawk Community College.
Deere & Co. is one of many manufacturing leaders closely engaged with a local college. Black Hawk Community College has become a training ground of sorts for Deere's incumbent workers and new prospects. To work with Black Hawk more effectively, Deere recently created a new management position for science, technology, engineering, and math (STEM) skills development.
Black Hawk and other market-savvy institutions have leaders who help drive regional economic development through workforce readiness. National advocacy organizations like the American Association of Community Colleges have growing lists of members who lead by example. Find one near you and work with it.
If the local community college is not local enough, or not the preferred partner, you can always use company resources by calling on mature workers' practical experience, their skills, and their wisdom to form a mature corps that trains local teachers, mentors middle and high school students, and creates a pathway to local manufacturers by connecting them to internships.
Also, take advantage of the growing interest among national and federal lab directors to become community resources. These massively funded and state-of-the art institutions can provide a range of access points, including student internship opportunities and training or fellowships for teachers in STEM instruction and the arts. They can provide access to simulators, labs, and scientists. Companies in their orbit can profit enormously by becoming part of the education equation.
Help bridge the technology gap. Approach county school superintendents and the local school boards, and propose that they give high school credit to students who train your mature workers to use technology. Youth can teach their older counterparts valuable time-saving skills such as the effective use of spreadsheets, keyboarding, graphics, social media, and networks. Youth can use this opportunity to fulfill community service requirements. And they also gain experience and confidence as they appreciate how their capabilities become "applied learning." And, by the way, they gain exposure to the manufacturing world.
An effective way to attract highly motivated students is to work with higher-education administrators to develop courses that qualify for college credit. (A number of community colleges already do this.) Reach out to local K-12 school superintendents to provide opportunities for high school students who have met graduation requirements and have the time for supervised internships that allow them to connect with a mentor and learn entry-level trade skills. An important by-product for students is that these measures will go a long way toward completion of college degree programs (two-year and four-year), and help bridge the gap between matriculation rates and graduation rates.
Your stock in the community will soar, as you become recognized as a corporate citizen actively interested in the local economy. Your talent pipeline will draw from a larger pool of inspired and qualified job-seekers.
Small and midsize businesses can thrive by exploring models of success, including economies of scale, derived from pooled workforce training programs.
Joining forces to address skills needs (such as the welder shortage) can allow smaller manufacturers to scale and tailor training programs to generate the wide array of required talent, present and anticipated.
The Council on Competitiveness' new partnership with the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada (UA) is a good example. The program helps newly returning veterans as well as older former military personnel to skill up for the manufacturing workforce. A key component is mentoring and cross-training between new entrants and grayer industry talent. Modeled after an existing UA partnership with the U.S. armed forces, these short-term apprenticeships accelerate welding training, equip trainees with marketable credentials, and position their graduates on a career ladder for powerful job prospects. (Welder salaries start at $30,000 a year, and with added experience and training, move past $100,000.)
The new UA/Council on Competitiveness program will give civilian purpose to veterans, allowing them to leverage the education and discipline they acquired in the armed services and enabling them to transition into productive non-military lives. And this will allow manufacturers to slip needed talent into openings without incurring productivity losses associated with gaps in human capital.
Given that the vast majority of manufacturers are in or bordering urban areas, most have access to many mentoring partnership options. Among the nation's oldest and most impressive is Junior Achievement (JA). Located in 120 cities and urban areas across the country and reaching some 4 million K-12 students a year, JA is the world's largest afterschool mentoring organization dedicated to STEM-infused financial literacy, work readiness, life skills, and entrepreneurship. Corporate and community volunteers -- mature workers and retirees -- guide students in their academic choices and job pursuits. JA's 2012 Teens and Careers Survey of 14-to-18-year-olds is encouraging for savvy manufacturers intent on cultivating young talent. Almost two-thirds of the respondents said they plan to pursue work in a STEM-related field.
JA's entrepreneurship programs teach youth about business plans, management, product development, marketing, ethics, and competitive advantages. Students learn how to mine and categorize data, how to write and speak with clarity, the importance of weighing consequences, and pulling together projects as a team. They design products, develop business plans, and compete for financial support to become the next generation of innovators.
- Perform effective entry assessments of students to determine the most realistic and effective career pathways.
- Expedite student connections to the job market with relevant coursework, certifications, and just-in-time training offered in the classroom, offsite, and online.
- Offer accredited programs that capture and cultivate student interest in STEM/manufacturing, and award post-secondary credits to high school students who work with mentors to learn entry-level trade skills.
- Enter into strategic partnerships with national and/or local industry that lead to well-informed curricula that reflect job market demands and offer access to an array of in-kind support. This support should include teacher training, industry professionals and tradesmen/women as teacher and student mentors, simulators, facilities, work-study programs, and internships.
- Track and report metrics that show the correlations between field of study/mentoring/job placement/employability of graduates.
K-12 Education That Works for Manufacturing
Located in the shadow of Lawrence Livermore National Laboratory, the Tracy Learning Center in Tracy, Calif., exemplifies the kind of K -12 school that creates talent for a robust manufacturing sector.
With 1,200 students wedged into a dilapidated old one-level building, the school is short on resources but long on creativity. Its experiential learning focuses on mastery, not pace, and its team-based, interdisciplinary classes turn out workforce-ready graduates who can think critically, compute, and create.
While Tracy does not "teach to the test," it boasts higher test scores than the California state averages. The school's dropout rate is zero; indeed, most students graduate with community college credits, some with a full year under their belts.
Graduates are bound for the trades or funneled into more education, significantly in the STEM fields. They are propelled by the school's requirement of 200 hours of internships and courses in finance, investment, and writing a small business plan. This summons a powerful sense of can-do in students, who engage with mature mentors in their chosen fields -- in science labs, on factory floors, in architectural engineering firms, with patent lawyers, in medical technology centers, and beyond.
The Tracy Learning Center also works closely with community resources including the nearby Livermore National Lab, where it networks with the lab's scientists and occasionally gets access to Livermore's facilities.
The school reports that 1,500 families are on its waiting list.
This article was originally published in the Manufacturing Executive Leadership Journal under the timte '8 Steps for Closing the Skills Gap'. To view the Journal, click here.