The U.S. manufacturing industry has experienced tremendous net growth over the past couple of decades. While that’s great news for the industry, manufacturers now face a brutal workforce shortage that threatens to impede continued growth.
In fact, according to research conducted by Deloitte and The Manufacturing Institute, over the next ten years, manufacturers will likely need to add 4.6 million manufacturing jobs — 2.4 million of which may go unfilled. It’s already happening. Today, more than 500,000 manufacturing jobs remain vacant in the United States.
Why such a dire talent shortage in US manufacturing?
First off, there is the overall hiring crisis in America. According to the U.S. Bureau of Labor Statistics, there are currently more job openings in the U.S. economy than there are people looking for work. However, manufacturers are feeling the pinch more than most because the sector is suffering the consequence of an aging workforce. According to a Society of Human Resource Management report, nearly 27% of manufacturing workers are set to retire over the next ten years, taking their specialized skills and institutional knowledge with them.
And despite the fact that manufacturing is increasingly high-tech oriented—with robotics, specialized software, artificial intelligence, and computer-connected equipment quickly becoming the new norm—young people don’t view industrial manufacturing as a desirable career path. Even parents take a less-than-optimal view of the industry as a career choice for their kids. As reported by the National Association of Manufacturers and the Manufacturing Institute, “only 3 in 10 parents would consider guiding their child toward a career in the field.”
As SVP and GM of Manufacturing, Automotive, and Energy at Salesforce, I regularly meet with manufacturers throughout the U.S. They’re all trying to figure out how to attract and retain workers.
It won’t happen overnight, or even in one year, but I believe manufacturers will begin to get an edge in the talent war in 2019 by adopting some of the strategies listed below. Here’s what I predict we’ll see more of in the coming year.
Offering incentives to retirement-aged workers
To address worker shortages, more manufacturers are encouraging potential retirees to stay on, enticing them with flexible schedules, job sharing, short work weeks, and work-from-home opportunities.
Some companies go a step further. As part of its “Today for Tomorrow” project, BMW began retrofitting sections of its factories in Germany, installing flooring that is easier on the joints, and purchasing ergonomic chairs that telescope (an alternative to standing all day). They even provided orthopedic shoes to older workers. The company also brought physiotherapists into the factories to advise workers on stretching, ergonomics, and nutrition.
In addition, BMW paired old and young workers alike on the assembly line. According to the BBC, BMW initially invested 40,000 Euro (approx. $45K) in the program and experienced a 7% increase in worker productivity. Since then, BMW has implemented the program in factories around the world.
An Increase in partnerships with vocational schools
Manufacturers will continue to invest more in partnering with vocational training programs and high schools, offering more internship and apprentice opportunities.
Take global power leader Cummins, Inc. for example. With headquarters in Indiana, the company launched its Technical Education for Communities program (TEC), a global initiative that seeks to address the technical skills gap around the globe.
Cummins works with education and industry leaders, including Peterbilt Trucks and FedEx Freight, to deliver a standardized education program that includes teacher training, a market-relevant curriculum, and the tools and systems on which students gain practical hands-on experience. To date, Cummins has implemented TEC in 23 countries, most recently in the United States.
While Cummins piloted its own program, many U.S. manufacturers are looking to the German apprenticeship model, in which students spend about 50–70% of their class time gaining hands-on experience working at companies.
With help from the German American Chamber of Commerce (GACC), ten states have established German-style apprenticeship programs, including Georgia, Michigan, South Carolina, Alabama, and Tennessee.
German manufacturing companies including Volkswagen, Bosch, and Stihl have partnered with GACC to bring apprenticeship programs to the US. While participating companies focus on the technical side of the apprenticeship, the GACC oversees the quality of the programs.
It’s important to remember: These vocational training programs are not exclusively for teens and young adults looking to enter the industry. In many cases, employers can use these programs as a critical path for retraining and “upskilling” long-time employees.
Employing tactics of successful high-tech companies
It’s easy to live in a bubble when you work for a San Francisco-based software company, but some of the perks offered by high-tech companies include a solid financial package, flexible schedule, the option to work from home, generous vacation and sick time, and the opportunity to work from various office locations around the world.
Recruits are enticed with stock purchase opportunities, free food, commuter checks, and reimbursement for gym memberships, yoga classes - even massages! At larger software companies, employees often enjoy beautiful eco-friendly campuses, onsite restaurants, coffee bars, and game rooms.
These perks help companies stand out from the competition in attracting and retaining high-quality talent. And while some manufacturers may offer such perks, few advertise that they do, which brings me to my next prediction...
An Improvement in perception, investment in branding
When trying to recruit new hires, some would argue that a perception gap, not a skills gap, may be manufacturing’s biggest problem. According to research from Deloitte, the National Association of Manufacturers, and the Manufacturing Institute, less than five in 10 Americans surveyed “believe manufacturing jobs are interesting, rewarding, clean, safe, stable, and secure.”
Consider the automotive industry: What comes to mind when you think of the Big Three automotive brands (Ford, General Motors, and Fiat Chrysler)? Now, what do you think of when someone mentions Tesla? All four are manufacturers of cars and all four are competing for design, engineering, and shop-floor talent, but Tesla elicits a vastly different emotional response than do the other three brands, not just for the car buyer, but also for prospective employees.
Tesla is perceived as an innovative, revolutionary, and eco-friendly company that manufacturers sleek technically advanced automobiles. Based on brand and consumer perception alone, I’d wager Tesla can recruit more effectively than any other U.S. car manufacturer.
Recent ad campaigns from Caterpillar Inc. and Koch Industries are solid examples of manufacturers investing in their brands in order to change perception. While Caterpillar’s “Let's Do The Work” campaign helps bring a human face to the company, Koch’s ad campaigns “Challenge Accepted” seeks to explain what the huge conglomerate does while differentiating the company from its founders’ political views.
Manufacturing is already wildly innovative in its optimization of production processes. In the coming year, I predict we'll start to see that same innovation creep into the people processes side of the house, driven by the need to attract new talent in a rapidly growing sector. And while there will continue to be much talk about robots replacing humans on the production floor, in reality, the automation advancements that are sweeping across the industry are opening up whole new worlds of high-tech job opportunities for skilled workers. Humans are in higher demand than ever, especially in manufacturing.