It seems a silly conversation to be having in the midst of high unemployment and the continued, steady shedding of jobs, but nevertheless it's true: Many U.S. manufacturers are having difficulty finding the right people with the right skills to fill a variety of positions.
It's not so much a skills shortage as it is a skills gap -- and there's looming concern that the gap will grow as baby boomers begin to retire.
In February a local manufacturer told the Green Bay (Wis.) Press-Gazette he had "a bunch" of high-skilled jobs open but didn't have people to fill the slots. As the economic downturn unfolded last year, a Utah-based engineer-to-order firm told IndustryWeek of its problems finding a qualified candidate. ACE Clearwater Enterprises of Los Angeles last October stated that it has experienced shortages of skilled workers for years.
And a study released in 2009 by Deloitte, The Manufacturing Institute and Oracle revealed that nearly a third of companies were experiencing a modest to severe shortage. Gaps in such skills as problem-solving and communication also were noted in the study.
All that said, talk of a skills shortage is a long-standing conversation. For example, a 1997 study from the National Association of Manufacturers reported that 88% of manufacturers then were experiencing a shortage of skilled workers in at least one category. The same concern arose in a 2001 skills gap report. And in 2004 IndustryWeek wrote about the skills shortage at length.
The Solution is Elusive
The evidence suggests that appropriate training to meet current and forthcoming talent gaps remains elusive. Several factors help explain why.
"It's not a simple problem so I don't know that there is a simple solution," says Chuck Parke, a faculty member in the Center for Executive Education at the University of Tennessee at Knoxville.
Canon Virginia has hired and trained more than 300 new and current employees for new growth and expanded operations in Newport News.
Advances in technology explain the challenge in part, he suggests. As a result, "what was considered adequate 15 years ago would be nowhere near adequate today in certain machining applications," Parke says.
A second factor he notes is the outsourcing of low-skilled jobs to low-labor-cost countries. "The remaining jobs require a much higher skill level, and the average has gone up in terms of the amount of training needed per employee."
Parke also points to the high turnover rate of the workforce, due to layoffs, early buyouts of experienced workers and the mindset of many younger workers who don't come to a manufacturing company and stay.
As a result, he says, "Some of those training dollars that could be allocated at one point to take people to a higher skill level are now having to be allocated just to get people up to do the minimum requirements of the job."
And finally -- and possibly the largest factor, suggests Parke -- is that training frequently is among the first things cut when business is difficult. And manufacturing organizations have been under intense competitive pressure for the past 20 years, he notes.
Thomas A. Kochan, professor of management at the Massachusetts Institute of Technology's Sloan School of Management, says the basic problem is that U.S. manufacturing never has developed a close community of private industry and technical schools in any systematic way, although pockets of success exist.
"There is underinvolvement in training because we leave it to the individual manufacturers," he says.
Six years ago Kochan noted a danger expressed by many today: the risk that manufacturers would use the excuse of a lack of skilled workers as a reason to move elsewhere. While he notes low-cost labor is a significant lure for increased offshoring in recent years, Kochan says the availability of talent has played its part.
"Had we had a better-skilled workforce, I think we would have slowed the pace of decline," he says.
Training the Manufacturing Workforce
Kochan, who is co-director of the Institute for Work and Employment Research at MIT's Sloan School of Management, believes government should take a greater role "as a coordinating mechanism" to help develop a robust training process for manufacturing. He said the jobs bill under consideration by Congress provides an opportunity to build or rebuild a robust training program.
Absent a coordinated nationwide program, many educational institutions, associations, government agencies and even manufacturers themselves are racing to provide the training required to address the skills challenge -- and keep U.S. manufacturing competitive.
Last year, for example, the Manufacturing Institute announced the launch of a Manufacturing Skills Certification System ultimately aimed at the development of a workforce skilled in the areas most required by manufacturers. Four colleges in four states already have begun offering components of the certification system in manufacturing-related programs, and 19 other states are in various stages of installing the system in their programs, says Emily DeRocco, president of the Manufacturing Institute (an affiliate of the National Association of Manufacturers).
In implementing the system, these educational programs are by definition developing students with skills better matched to the needs of manufacturers, she says. Still in its early stages, the Manufacturing Skills Certification System currently focuses on entry-level skills, but DeRocco says certifications for higher-level and subject-matter-specific skills are slated to begin deploying this year.
Similarly, the Society of Manufacturing Engineers provides manufacturers with a lengthy list of training courses that address fundamental to advanced skills requirements.
Management consultant Mike Collins of MPC Management says manufacturers, too, must take responsibility for developing their own training. More explicitly, he says government dollars for training exist, but manufacturers are not getting their fair share "and it's their own fault" because they aren't taking the time and effort to find it.
"You've got to look for where the money is," Collins says, pointing to the Workforce Investment Act as one source. The dollars are disseminated through local workforce boards, whose meetings are rarely attended by manufacturers, he says. "They don't even know it exists."
Ultimately, local colleges and universities are providing a wealth of training to manufacturers. Indeed, nearly two-thirds of IndustryWeek's Best Plants winners and finalists over the past five years have partnered with local educational institutions to obtain training.
Canon's Skills Development Challenge
Training frequently is among the first things cut when business is difficult.
In May 2009, Canon opened a new 700,000-square-foot facility on the Canon Virginia campus in Newport News for the manufacture of laser printer cartridges. It is a highly automated facility filled with advanced robotics.
To support the new facility, Canon required engineers and technicians to operate, diagnose and troubleshoot problems with the equipment and to make repairs. At the same time Canon also expanded its Canon Americas Market Engineering & Technology Center, where the company is engaged in the repair and refurbishment of cameras, video cameras, copiers and similar equipment.
This business, too, required the hiring and training of a new workforce, although its skill set requirement was significantly different than that needed in the highly automated facility.
The ability to successfully ramp up large numbers of skilled workers was key to Canon's ability to land the new facility, says Scott Millar, senior director of human resources, who explained that the U.S. operation competed with Canon facilities in other countries for the project.
Training was an integral component of the incentive packages provided by the commonwealth of Virginia and local governments, with much of the training provided by Virginia's community college system.
"We knew, given the ramp of the timeline, that it would take several years to develop the curriculum and secure the resources on our own, and we didn't have the time,' says Millar.
However, because the necessary training already existed in the community colleges, Canon was able to quickly harness their resources.
Hiring Challenges Around Math Skills
For the highly automated facility, Canon needed precisely the type of highly skilled workforce frequently cited as lacking in the United States. The skills sought for new workers included knowledge in robotics, programmable logic control, circuitry and blueprint reading.
While the community college system developed a curriculum to meet Canon's needs (and trained new employees at Canon's Workforce Development Center located less than a mile from the Canon facility), Canon's Rhonda Bunn, manager of human resources and public relations, says the company did encounter some initial hiring challenges in finding enough people who could pass the math requirements needed to begin the curriculum.
"It's college-level algebra," explains Millar. Indeed, one of the first curriculum modifications was to lower the math level required in the first term simply to accept a greater number of students into the program. A less-advanced math class was offered before progressing to the more advanced class.
An interesting addition to the classroom training received by the employees for the advanced manufacturing facility (who attended classes three to four days a week) was their on-the-job training. Some new employees rotated through various Canon operations to gain a better understanding of the entire business operation, rather than just the piece for which they were in training. Such training "provides more of a customer focus. It gives [employees] more ownership in the process when they understand they're part of an entire chain of manufacturing. It also makes them a more flexible employee," Millar says.
Canon's Bunn also recommends that manufacturers who develop training partnerships (and she encourages taking advantage of community resources) be patient in creating such relationships. It takes time for partners to gain a full understanding of the business needs. "Work with partnerships to help them understand where you need to go and what your final outcome needs to be," she says.
Peerless Pump Trains for Business Improvement
Financial success is a strong function of how you train, believes Mike Cates, vice president of operations at Peerless Pump. Further, he states, "I'm firm in the belief that when people ask for training, or need it, you as a leader should be the one giving it to them or finding the expertise."
Indianapolis-based Peerless Pump has taken nearly 100 of its people through training at the University of Tennessee at Knoxville's Center for Executive Education, which offers a variety of training options for manufacturers, including customized training, lean and supply management offerings, leadership programs as well as an executive MBA. The university makes sure its content is relevant to what manufacturers need via extensive research and close connections to the manufacturing community.
As an example, Rhonda Barton, director of operations excellence, points to a leadership course titled Leadership Tools for Manufacturing Management. "We created that course because every single manufacturing facility we went into said, We have to have this course. We need this course desperately. We are promoting people faster, and they don't have the leadership skills they need to succeed.'"
Training that brings the most success to manufacturers is integrated into a company's strategic plan, "not a bolt-on," and has overt commitment from leadership, says the University of Tennessee's Parke. And there must be accountability.
For example, he says, "if you're going to send a group of people to UT to learn more about lean, there needs to be accountability when you get back that says you're going to work on these projects, and we're expecting these kinds of things to come out of it. If you're here for leadership training... what are you going to go back and do differently on Monday?"