Report: Manufacturers Can't Innovate Without Talent

April 27, 2012
Skilled worker shortage hampers manufacturers' product-development activities amid increasing pressure to be more innovative.

A dearth of skilled manufacturing workers and increasing pressure to innovate quickly are two key factors threatening future growth for manufacturers worldwide, according to a report by the World Economic Forum and Deloitte Touche Tohmatsu Ltd.

About 10 million manufacturing jobs worldwide are vacant because of a growing skills gap, the report stated.

"In the race to future prosperity, nothing will matter more than talent," said Craig Giffi, Deloitte vice chairman and co-author of the "The Future of Manufacturing: Opportunities to Drive Economic Growth" report released April 25.

Manufacturers in developed countries are having difficulty finding highly skilled workers, such as engineers, while companies in emerging economies are struggling to fill skilled production jobs, Giffi said.

The report cited a 2011 Manpower survey that showed 34% of global employers reported difficulty filling jobs because of a talent shortage. Employers in Japan, India, Brazil and the United States were the most likely companies to report problems identifying skilled workers.

Manufacturers that can overcome the skilled-worker challenge will rise above their global competitors, Giffi said.

Companies are collaborating with educators to reduce the impact of the talent shortage, according to the report.

This includes skills certification efforts by organizations such as the National Association of Manufacturers' Manufacturing Skills Certificate System and a program in India led by an IT outsourcing company to train aerospace and mechanical design engineers.

Innovation Rules

Manufacturers will also need to innovate at an accelerated pace to stay ahead of competitors.

Research and development spending is a critical component of innovation growth. But other socioeconomic factors, including education, infrastructure and policy, will impact future innovation.

Policies that encourage R&D investment by focusing on such areas as patent processing, tax code and intellectual property protection will encourage more innovative developments, the report said.

The most successful countries will fund R&D initiatives that align with the nation's strategic priorities. China, for instance, is making significant investments in sectors that are critical to the nation's development, including biotech, energy efficiency and next-generation information technology.

Developing and attracting highly skilled researchers and engineers will also impact manufacturers' ability to innovate.

Companies considered more innovative grew their net income about two times faster than their "non-innovative counterparts" between 2006 and 2010, said John Moavenzadeh, senior director for Mobility Industries at the World Economic Forum.

"Meanwhile, countries that are more successful at fostering innovation performed better when it comes to both gross domestic product and GDP per capita," he said.

See also:

Shortage of Skilled Workers Taking its Toll on U.S. Manufacturers

2012 IW Salary Survey: Readers Sound Off

Executives Fear Leadership Shortage

About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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