Manufacturing Skills Gap Reaching Critical Level

October 19, 2011

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The manufacturing skills gap continues to grow, with more employers citing difficulty finding skilled workers to fill key positions and remain competitive, according to new research.

Despite a high national unemployment rate and the availability of a wide range of training and certification programs, United States manufacturers are struggling to find skilled workers to fill key positions. This widening skills gap is approaching critical levels, threatening manufacturers' competitiveness and hurting their chances at success in the market.

U.S. manufacturing companies are facing a workforce shortage for as many as 600,000 positions, according to a new survey from Deloitte and the Manufacturing Institute. Based on a national poll of 1,123 manufacturing executives, the survey found that 5 percent of current manufacturing jobs are unfilled due to a lack of qualified candidates.

Sixty-seven percent of manufacturers report a moderate to severe shortage of available skilled workers, and 56 percent expect the shortage to increase in the next three to five years. The skills gap is having a severe impact on business performance, with 74 percent of respondents stating that a lack of skilled workers in production roles is impeding their ability to expand operations or improve productivity.

"These unfilled jobs are mainly in the skilled production category — positions such as machinists, operators, craft workers, distributors and technicians," Emily DeRocco, president of the Manufacturing Institute, said in an announcement of the results. "Unfortunately, these jobs require the most training and are traditionally among the hardest manufacturing jobs to find existing talent to fill."

Among the other employee segments, 42 percent of manufacturers said a skills shortage in production support roles (including industrial and manufacturing engineers) was having a negative impact on business performance, 23 percent cited gaps in unskilled production, 20 percent cited shortages in sales and marketing, 19 percent cited a shortage of scientists and design engineers, 13 percent cited a gap in management and administration roles and 8 percent cited a shortage in customer service positions.

Fifty-one percent of manufacturers reported that maintaining production consistent with customer demand was the operational practice most strongly affected by the skills gap, while 35 percent said it was maintaining quality levels, 32 percent said meeting productivity targets, 27 percent cited new product development and 24 percent cited implementing new technology.

The low regard that younger workers have for manufacturing jobs may be exacerbating the skills gap, as manufacturing ranked last among industries in which 18 to 24 year-olds would choose to start a career. Younger workers remain reluctant to take this career path despite the fact manufacturing-related professions consistently top earnings lists, making them some of the most lucrative jobs to pursue.

"Workers at the very low levels can earn as much as $30 an hour, with annual salaries for engineers ranging from $75,000 to $100,000. At Siemens, the average potential salary offered for its open positions is $89,000 a year," Reuters reports. "Although manufacturing accounts for about 12 percent of U.S. gross domestic product and about 10 percent of total non-farm employment, it has been the main pillar of support for the economy and one of the highest-paying sectors."

Another important factor in the widening skills gap involves the changing nature of manufacturing work itself, as it has increased in sophistication and complexity, particularly over the past five years.

"Many manufacturers have redesigned and streamlined production lines while increasingly automating processes. While some remaining job roles will require less technically skilled workers, ironically, these trends and innovations actually demand more skilled workers, such as maintenance engineers," the survey notes. "This changing nature of work is consistent across industries and companies of different size, and can make it difficult for workers to keep up with employment demands."

Deloitte and the Manufacturing Institute make several recommendations for plugging the workforce shortage, including: ramping up employer branding to make companies more appealing to candidates; relying more on performance tools, such as industry certification, and training programs to boost internal talent; and leveraging technology to help recruit and retain talent. Making geographic shifts to develop a labor pool closer to educational and research facilities can also be a useful step.

"The results of this survey may appear dire, but in reality each of these challenges is surmountable," Tom Morrison, principal at Deloitte Consulting LLP, notes. "The United States has among the largest, strongest manufacturing industries in the world and has demonstrated its ability to innovate and adapt time and time again."

Earlier

Bridging the Talent Gap

What's an Engineering Degree Worth?

Resources

Boiling Point: The Skills Gap in U.S. Manufacturing Deloitte / The Manufacturing Institute, October 2011

Wanted: 600,000 Skilled Workers for Manufacturing Industry... Deloitte, Oct. 17, 2011

So Many U.S. Manufacturing Jobs, So Few Skilled Workers by Lucia Mutikani Reuters, Oct. 12, 2011

Skills Shortage Threatens U.S. Manufacturers by Hal Weitzman The Financial Times, Oct. 17, 2011

U.S. Manufacturing Skills Shortage at Boiling Point? Manufacturing Executive, Oct. 14, 2011

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