Solving the Manufacturing Skills Gap

Michael Hendrix, Research Manager
National Chamber Foundation


Is there a skills shortage in manufacturing? In a word, yes. IndustryWeek recently highlighted a survey by MFG.com of small American manufacturers which found that hiring skilled workers is "one of their greatest challenges."

Another recent report by Deloitte and the National Association of Manufacturers said that nearly 600,000 manufacturing jobs were left unfilled because of a lack of qualified applicants. Indeed, some 67% of the manufacturers surveyed noted a dire shortage in skilled labor.

You see that demand for skilled labor being played out in the workforce. Since 2006, over half of the manufacturing labor force consisted of people with at least some college education, according to the Economics & Statistics Administration, and the recession has only reinforced this trend in the intervening years.

The sector is also graying at a rapid pace, which is both a cause and a consequence of fewer younger workers willing to work in manufacturing. Some of the most skilled jobs remain in the hands of those ages 55 and older, while younger workers choose other occupations. When these workers retire then, firms may be faced with large legacy costs and a shortage of younger workers able to fill the missing spots. Some 56% of respondents to the earlier Deloitte survey worried what would happen to the skills of their workforce once these baby boomer workers retired.

The long and the short of it is that many workers chose to train for employment in other sectors. Manufacturing has been losing jobs for decades, once at a drip in the years up to 1980 and then in a rush in the 2000s. A sense of opportunity in the sector slipped away while the American economy made a shift toward the service sector. You can see that change reflected not just in where jobs are found, but how people see themselves.

Gallup found in 1963 that half of all Americans identified themselves as being members of the "working class." Just 27% saw themselves in the same light by 2008. Higher education only seems to reinforce this trend toward service sector employment and a middle class that no longer identifies with the shop floor.

There's no shortage of ideas about how to alter this dynamic. Darlene Miller, a small business owner on the President's Council for Jobs and Competitiveness, has been working closely with The Manufacturing Institute to forge ties between companies and community colleges.

With this sort of cooperation, the hope is that colleges can better understand the skills they need to impart to their students in order to make employable, while firms can hire students who are equipped from the beginning. This is not too dissimilar from Germany's approach, which centers around practical, vocational training after high school. Once trained, organizations like The Manufacturing Institute have developed the capacity to test and certify needed skills.

And let's not forget the apprenticeships of old. Rolls-Royce, for example, just unveiled its Apprentice Academy to train some 400 young new hires each year. These are all investments being poured into the foundation of manufacturing's future.

Perhaps the greatest hope for closing the skills gap is found in the changes within manufacturing itself. As The Economist notes, "The definition of a manufacturing job is becoming increasingly blurred." Making things in America today is often less about the shop floor. Skilled jobs in manufacturing now mean accountants and supply chain managers just as much technicians.

With greater frequency, we're seeing jobs and skillsets merge between manufacturing and services as workforce needs and technology changes. That opens up a much bigger reservoir of skilled workers who had never knowingly placed themselves in the running for manufacturing jobs.

To the surprise of too many, American manufacturing is in demand. So are its skilled workers.
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If you're interested in the topic of manufacturing, be sure to come to our Business Horizon Series on May 17th. NCF will be teaming up with NAM and MAPI to discuss the manufacturing as a "new cornerstone of competitiveness."
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