As more middle-market manufacturers adopt advanced techniques, they find better profitability and business growth. The major challenge with incorporating these specialized manufacturing techniques, ranging from automation to information technology, is a lack of workers with adequate skills, a detriment to business growth, according to new research by the National Center for the Middle Market (NCMM) and the National Association Manufacturers (NAM), which highlights strategies to reverse the worker gap.
The comprehensive report indicates advanced manufacturing is to grow at a substantial rate among the middle-market manufacturing base — companies with annual revenues that fall between $10 million and $1 billion. Of these businesses, 47 percent claim that they use “at least one” advanced manufacturing technique — with most, 68 percent, using automation, followed by computer technologies (CAM, CAE, CAD) at 62 percent. More than half of middle manufacturers leverage high-tech process technologies (59 percent) and information technologies (57 percent). Of the 53 percent that do not currently use the advanced techniques, most say they will adopt them in the near future, within the next three to five years.
Reasons for leveraging advanced manufacturing techniques vary, but businesses report being most motivated by improvements in production output, improvement in turnaround time, and higher profitability. Indeed, the NCMM/NAM research notes that advanced techniques have had a positive financial impact on businesses, with middle manufacturers reporting a 20 percent increase in profitability over the past five years.
The Advanced Technique Skills Deficiency Is Severe
One of the main barriers to adopting more advanced techniques is cost, but over a quarter of the mid-manufacturers surveyed admit that advanced manufacturing requires a different labor pool. Across all mid-manufacturers, the consensus is that production line workers are the most likely to lack the advanced skills that are necessary to get high-tech jobs done. Moreover, 74 percent of businesses using advanced techniques cite that the skills most lacking are in STEM (science, technology, engineering, and mathematics), but primarily in science and mathematics.
The data that reflects the deficit is striking, with 93 percent of advanced technology users reporting a lack of workers with advanced skills.
What Can Reverse the Skills Gap?
Manufacturers report that they are already taking steps in addressing the skills gap, with almost all reporting that they have shifted their recruitment strategies and more than half (57 percent) claiming that they regularly retrain new workers to prepare them for new technologies. Meanwhile, 31 percent said that they actively recruit workers with STEM skills.
The report breaks down several strategies that can help the 42 percent that still require new hires with tech skills, and those looking to add skilled people to their workforce, with strategies highlighted here. Some are presented below:
- Practice Flexibility
This strategy applies to being flexible in both the advanced technology investments and the way such technologies and techniques are used. The report warns that it’s crucial to apply advanced techniques to increase the output of what a customer wants (i.e., customized products) instead of focusing them just to increase output.
- Prioritize Training over Tech Investments
Since there is a beneficial outcome from training, which translates to better performance, the NCMM research notes that it is crucial to spend time and financial resources in training. “Research in numerous studies has indicated that companies should spend more on training, perhaps twice as much, than on buying the actual technology. Results show that users allocate 8.8 weeks on training and 7.4 percent of sales on training/development — substantially more than non-users,” the report authors note.
- Don’t Expect an Immediate Change
Those who are not using advanced manufacturing techniques plan to do so in the near future (three to five years), but the effects of adding these techniques will take time — up to several years — the report authors claim, emphasizing, “Patience is a virtue.”
What do you think can reverse the skills gap when it comes to advanced manufacturing techniques? Share your advice with us below.