Is There or Isn’t There a Skills Gap?

September 18, 2013

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American manufacturers often cite the “skills gap” as a major obstacle to company growth and industry resurgence. But some researchers argue that the situation is not as bad as often depicted, and even claim the gap is a myth. So what’s the truth? 

In 2011, researchers at the Manufacturing Institute (MI) and professional-services firm Deloitte surveyed 1,123 U.S. manufacturing executives and found that 67 percent were experiencing “a moderate to severe shortage of available, qualified workers.” Fifty-six percent expected the shortage to worsen during the following three to five years. Researchers found that “5 percent of current jobs at respondent manufacturers are unfilled due to a lack of qualified candidates.”

How could manufacturers be experiencing such a shortage while unemployment is relatively high? The shortages, Deloitte found, show up in “skilled production jobs” requiring specialized capabilities, such as machinists, operators, craft workers, distributors and technicians. “Seventy-four percent of respondents indicated that workforce shortages or skills deficiencies in skilled production roles are having a significant impact on their ability to expand operations or improve productivity.”

In an interview with IMT, Douglas Woods, president of AMT - The Association For Manufacturing Technology (AMT) cited U.S. Bureau of Labor Statistics (BLS) data showing that the number of manufacturing openings at any given time has been averaging 250,000 this year. “There is a huge shortage of talented people in manufacturing,” he said.

However, Marc V. Levine of the Center for Economic Development at the University of Wisconsin-Milwaukee asserts that “the skills gap is a myth.” In a research report he wrote on the issue, he states that, “High unemployment is mainly the result of a deficiency in aggregate demand and slow economic growth, not because workers lack the right education or skills.”

Researchers from Boston Consulting Group (BCG) assert that the skills gap is real, but contend that, at least in the short term, “the U.S. skills gap will be far less of a problem than many people believe” and that “it is unlikely to prevent a resurgence in U.S. manufacturing in the next few years.” BCG’s report estimates the current gap at 80,000 to 100,000 “highly skilled manufacturing workers … less than 1 percent of the nation’s total manufacturing workforce and less than 8 percent of its highly skilled workforce of approximately 1.4 million.”

Moreover, the significant shortages are limited to only five of the country’s 50 largest manufacturing centers, according to the report. There is a longer-term risk of a shortage in skilled workers, the BCG maintains, but this can be averted if government and the private sector take action now to ensure the educational system prepares students for “the increasingly sophisticated and demanding skills needed in manufacturing.”

Woods agrees with some of the BCG report, such as the notion that “the U.S. education system is failing to train enough new skilled workers to replace those who retire.” He also agrees with BCG’s assertion that “the word ‘crisis’ is a bit dramatic” but that the problem will intensify with those retirements.

However, he disputes their claim that the gap is limited to a few manufacturing centers.<!––nextpage––>

“There is a deficiency in properly trained workers all over, not just in those locations BCG mentioned," Woods said. "It is negatively impacting the growth potential of our manufacturing economy. Every AMT member I have talked to in the last four years has identified this as one of their top three issues.

“BCG mentions they talked to 100 companies to get their perspective. I talk to that many every few months, from all over the U.S., and I can tell you for a fact that almost every one of them has open positions that they would love to fill if they could find someone with the correct skill set.”

The kinds of hard-to-fill jobs, he said, include applications engineer, CNC operator, designer, CAD operator, service tech, materials engineer, quality tech, sales engineer and many more.

Gardner Carrick, MI vice president of strategic initiatives and one of the authors of the Deloitte/MI study, reiterated Woods’s points in an interview with IMT. “Every employer we talk to tells us that they have difficulty finding people to fill their production positions,” he said.

Carrick questioned BCG’s estimate of the shortage at 80,000 to 100,000. “I was unable to get any of the research behind that number, as BCG is not releasing their full report. We feel it’s definitely a greater number based on our conversations with manufacturers,” he said. Even BLS’s 250,000 figure is too low, as many manufacturing jobs are being recruited by staffing agencies, he added. Those agencies are having trouble filling the skilled positions, but their worker shortages get counted as service jobs rather than manufacturing jobs. “We think that number should be more like 480,000,” he said.

As far as Levine’s work is concerned, Carrick said it made a useful “counterpoint” to the his study. “It was provocative, but at the same time I thought it was well written,” he said. “In my conversations with Dr. Levine, I thought he was straight up. I had no issues with his approach.”

Woods was less charitable. “With regard to Professor Levine, the best I can say is he is highly misdirected and he clearly does not understand what is happening all around him in manufacturing employment,” he said.

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