Manufacturers Must Get Creative When It Comes To Talent
By the Manufacturing Institute and Deloitte
Editor’s Note: The following content is excerpted from the “Boiling Point? The Skills Gap In U.S. Manufacturing,” published in October 2011 by The Manufacturing Institute and Deloitte. This survey is the first in a series of studies. Permission to reprint granted by The Manufacturing Institute, www.themanufacturinginstitute.org.
American manufacturing companies cannot fill as many as 600,000 skilled positions — even as unemployment numbers hover at historic levels — according to a survey from Deloitte and The Manufacturing Institute.
The survey, “Boiling Point? The Skills Gap In U.S. Manufacturing,” polled a nationally representative sample of 1,123 executives at manufacturing companies and revealed that 5 percent of current manufacturing jobs are unfilled due to a lack of qualified candidates.
“The survey shows that 67 percent of manufacturers have a moderate to severe shortage of available, qualified workers,” says Craig Giffi, vice chairman and consumer and industrial products industry leader, Deloitte LLP. “Moreover, 56 percent anticipate the shortage to increase in the next three to five years.”
“These unfilled jobs are mainly in the skilled production category — positions such as machinists, operators, craft workers, distributors and technicians,” says Emily DeRocco, president, The Manufacturing Institute. “Unfortunately, these jobs require the most training and are traditionally among the hardest manufacturing jobs to find existing talent to fill.”
Giffi points out that the inability to find workers is taking its toll on manufacturers’ competitive readiness. Case in point: 64 percent of respondents report that workforce shortages or skills deficiencies in production roles are having a significant impact on their ability to expand operations or improve productivity.
When asked to look ahead three to five years, respondents indicate that access to a highly skilled, flexible workforce is the most important factor in their effectiveness, ranked above factors such as new product innovation and increased market share by a margin of 20 percentage points. It is not just that manufacturers are concerned about talent today. This has been a serious issue for years, which begs the question of what must be done differently in order to achieve the right results.
The manufacturing industry is undergoing a rapid evolution, spurred on by technology advances, globalization and shifting demographics. What do manufacturers expect to happen when it comes to talent in the future, and how are they preparing to come out on top? Are manufacturers taking the right steps to prepare for even greater skills gaps in the future?
The Changing Workforce
The changing nature of work, and the ensuing need for improved workforce skills, has become a focal point for companies as they plan for their future results. When asked which factors would help improve their businesses the most over the next five years, a highly skilled and flexible workforce topped the list for manufacturers, ranking ahead of product innovation, increasing market share, low-cost producer status, and even supply chain integration with suppliers, among other factors. In an era when many companies have spent significant time and resources to streamline operations and improve innovation and customer service, this result highlights the effort that should be considered by most manufacturers to combat the expected severity and impact of future skills gaps.
This may be an area of concern to manufacturers since retaining, hiring, and developing that skilled workforce will likely be difficult in the face of aging demographics. As more and more older and experienced employees retire, finding younger talent to replace them has become increasingly difficult, exacerbating the talent crunch. The anticipated retirement exodus could seriously hurt manufacturers in specific workforce segments over the next five years. The areas of skilled production (machinists, operators and technicians) and production support (industrial and manufacturing engineers and planners) would be hardest hit according to survey respondents.
Manufacturers are also feeling the pinch when it comes to highly specialized and innovative employees, such as scientists and design engineers. Their shortage could affect new manufacturing processes and production development.
Innovate To Get Innovative Workers
Finding a skilled workforce at the desired cost is critical to continued viability, growth and innovation. And as shown by responses, many companies expect innovation to have a heavy impact on employees, particularly as it relates to new processes and products. However, many are still applying the same old methods to address this rapidly changing workforce and talent gap. For example, only 20 percent of respondents to a recent talent management survey said they’re focusing on recruiting for their particular needs.1 It is going to take much more than that.
Many leading companies say it’s crucial to develop an innovative workforce plan, create a talent pipeline, and engage employees — both current and future — to remain competitive. Most top talent leaders say an effective plan should connect business and talent goals, provide ways to measure progress and performance, and leverage technology to help recruit and retain talent.2
Manufacturers have undertaken a range of strategies to address their skills and cost needs, including geographic shifts of workforce and operations. When asked whether they are currently considering a substantive shift in workforce location, 11 percent of respondents said they were. Their reasons vary widely. Responses were split evenly between access to qualified talent and a lower cost environment. While this may not be surprising, it is interesting that more innovative approaches such as proximity to educational and research facilities are given much less attention.
Paths To Closing The Gap
There’s no one magic solution that can address growing skills gap concerns among manufacturers. Larger forces, such as globalization and technology, will continually change the landscape, and employers should consider shifting accordingly. Some issues may need to be addressed through public policy involving many more stakeholders. However, there are some demonstrated methods manufacturers can take to mitigate the gap.
Using nationally-portable industry recognized credentials part of the National Association of Manufacturers (NAM)-endorsed Manufacturing Skills Certification System in HR practices can ensure new workers have the right skills and advance the skills of the current workforce to meet new demands.
Knowledge management plans and solutions can address the brain drain as older workers retire, taking with them valuable knowledge and experience. Capturing critical information through technology and passing it on to newer and younger workers can help reduce training time, can improve collaboration and communication, and even help companies get to market faster by leveraging previous programs.
Older workers can also gradually scale back their hours as they phase into retirement or even work as a part-time pensioner while helping younger colleagues gain the right knowledge and skills. Manufacturers and skilled trades have historically used apprenticeship programs to pass on specialized skills from an experienced craftsman to a new worker. And through mentoring programs, whether informal or established by a company, experienced workers can provide coaching and advice to less experienced colleagues. Employers have also leveraged their local community colleges or trade schools to supplement employee skills.
To download the complete version of the “Boiling Point? The Skills Gap In U.S. Manufacturing,” visit www.themanufacturinginstitute.org.
1) and 2) Deloitte. Talent Edge 2020: Blueprints for the New Normal. December 2010.