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Skills Gap Threatens Health of Manufacturing Sector

Skills Gap Threatens Health of Manufacturing Sector

May 18, 2021
By 2030, 2.1 million jobs will go unfilled and could cost the U.S. economy $1 trillion.

While everyone is quite happy about manufacturing performing strong, some even calling it a comeback, the talent shortage is a very serious threat to the health of this sector.

A new study launched on May 4 by Deloitte and the Manufacturing Institute (MI), the social impact arm of the National Association of Manufacturers (NAM), warned that if the skills gap persists, 2.1 million manufacturing jobs could go unfilled in the U.S. by 2030. This could cost the U.S. economy as much as $1 trillion in 2030 alone.

IndustryWeek wanted to dig a little deeper into the study so posed a few questions to Paul Wellener, U.S. Industrial Products and Construction Leader at Deloitte. 

 IW: Given the conclusion in the study that finding talent is 36% harder than in 2018, what do you think has changed? It has been hard to find talent for many years now; what has changed over these past few years? 

 PW: A few notable changes have occurred since our last study, including the global pandemic from which the industry is still recovering. One of the nuances of today’s job market is the competition for entry-level positions. Over the past year, for example, as consumer behavior shifted due to the pandemic, e-commerce drove a spike in warehouse and distribution jobs.

Our data analysis found that through the end of 2020, warehouse and storage not only recovered all of the jobs initially displaced by the early months of the pandemic, but they went on to add another 100% of jobs. These types of jobs are in direct competition to entry-level manufacturing production roles.

Another nuance that has grown is the complexity of skills needed for many of the middle-skilled roles in production. For example, machinists and maintenance technicians need to not only have hands-on specialized skills for the role, they also need to increasingly have digital skills to work with the connected equipment in the production environment. And the pipeline for training and upskilling for these roles is not enough to fill demand now and in the coming years.

IW: Regarding new entrants having different job expectations, which has been a trend for a number of years, why do you think the sector still has not addressed this?

 PW: This is an area where the manufacturing industry is working toward a solution, and the pandemic may be the catalyst to change more quickly. In our executive interviews, we learned of some great examples of how companies are trying to solve for this particular challenge. For example, allowing shift-based employees to sign up for hours based on their individual needs has worked for one manufacturer at several plants. Other similar flexible scheduling efforts are being made as well, and this has helped reduce absenteeism and also could make the company more attractive to new hires.

IW: As the survey found that women were 1.8 times more likely than men to contemplate leaving the industry, citing the lack of work-life balance and the need for flexible schedules as top reasons to leave, what are companies doing to address this? 

 PW: Similar to the prior answer, there are efforts that companies are making to engage with and retain women who may have even greater challenges balancing work and life responsibilities now. For production roles, the ability to flex the schedule is so important. And, for non-production roles, the pandemic has opened up new ways to structure hybrid and remote work that could help with this ongoing challenge of balancing work and life responsibilities.

IW: The survey talks about providing pre-employment training and the fact that workers are expected to take on this cost. As this is difficult given many people cannot take off work and pay for training, what are some solutions that you have seen to address this?

 PW: There have been some promising solutions to this particular challenge, and many of them are coming through public-private partnerships. Several examples are highlighted in the study, including FAME, which is now managed by The Manufacturing Institute and includes a co-educational model where students learn at school and on the job, managed by a group of employers that form a FAME chapter. These talent ecosystems will be critical for the industry to build the pipeline for qualified, skilled talent in the coming years.

IW: Manufacturing also has to address the fact that they are perceived as being very quick to lay off people and even move locations. This translates to future workers believing that a career in manufacturing is not as stable as a career in other fields.  What have manufacturers be doing to address this?

PW: The industry has been working at its image, and manufacturers are taking steps at the local level. When we spoke with executives about attracting new entrants to production roles, they shared many examples of how manufacturers are taking active roles in the communities that surround their facilities, engaging with their workforce outside the walls of the factory. These efforts will help forge a stronger pipeline for not only the companies but the industry.

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