Industry Market Trends
Plugging the Manufacturing Skills Gap
August 21, 2012
Many companies across the manufacturing sector are struggling to find the right employees for unfilled positions. While business activity in U.S. manufacturing remains strong, this shortage of workers with the appropriate technical skills and experience is hindering growth and may soon reach a critical level. How can manufacturers bridge the talent gap? Although business activity in the manufacturing industry has rebounded strongly since the recession and many companies are poised for growth, a significant percentage of available positions remains unfilled. Companies are struggling to find employees with the right skills and experience, and this workforce shortage is approaching critical levels. "Based on my interaction with our customers, which tend to be OEMs and tier 1 suppliers, it is obvious that the critical skills needed for manufacturers' workforces are strained right now," Bill Horwarth, president of MAG Global Services, told IMT. "Many companies are struggling to bring their existing workforce up to the standards needed and to fill empty positions." According to the latest annual talent shortage survey from ManpowerGroup, 34 percent of employers worldwide are experiencing difficulty in filling mission-critical positions at their company. The problem is more pronounced in the United States than most other countries, with 49 percent of U.S. employers reporting difficulty in meeting staffing needs. Broken down by job role, the largest gaps are in professions requiring a high degree of technical proficiency. Manpower notes that engineering positions are the hardest to fill in the U.S., followed by technicians, sales representatives, skilled trades workers and production operators. The inability to fill these roles has a negative effect on a company's customers and investors, with 41 percent of employers reporting a medium or high impact on stakeholders. "Employers should not presume that stakeholders will continue to look past shortcomings in service and performance resulting from lean structures," Jeffrey Joerres, ManpowerGroup chairman and CEO, said in an announcement of the results. "Leaving positions unfilled may be a short-term fix, but it's a short-sighted and unsustainable approach to addressing talent shortages... Employers must find solutions to help them address shortages and close specific skills gaps, such as investing in training and partnering with educators." While a lack of applicants is one of the top causes of staff shortages, lack of technical skills is equally important, with both issues cited by 36 percent of businesses as the main reason for unfilled positions. Thirty-one percent of companies also cite lack of appropriate experience as a major barrier to hiring candidates. Among the most in-demand skills are industry-specific qualifications and certifications among professionals (19 percent) and skilled trades workers (10 percent). Skill in operating mechanical or industrial equipment is the next most-cited concern at 4 percent, while computer and IT skills are also cited by 4 percent of respondents. Considering the high level of technical sophistication and complexity involved in today's industrial processes, manufacturers have been hit particularly hard by the lack of skilled workers. A recent report from Deloitte found that 67 percent of manufacturers are facing a moderate to severe shortage of available, qualified workers, and 56 percent anticipate the gap to grow worse over the next three to five years. "Most manufacturing firms have been able to cover that gap by increasing work hours for current staff, as well as looking for resources outside the company, such as contract workers and temporary workers," Horwarth added. "I haven't seen companies pull back from growth yet, but there's certainly the potential for a slowdown in expansion if the current shortage isn't resolved soon." Seventy-four percent of manufacturers report that the largest staffing shortages are in skilled production (including machinists, operators, craft workers, distributors and technicians), followed by production support (including industrial engineers, manufacturing engineers and planners), which was cited by 42 percent of respondents. In all, an estimated 5 percent of manufacturing positions are currently unfilled, representing 600,000 open jobs. "Manufacturers obviously want to fill these roles by tapping the currently available workforce," Emily DeRocco, president of the Manufacturing Institute, told Deloitte. "However, they report that the No. 1 skills deficiency among their current employees is in the area of problem solving, making it difficult for current employees to adapt to changing needs. Adding to the problem, respondents report that the education system is not producing workers with the basic skills they need." As the shortage becomes a mounting problem, manufacturers and policymakers are looking for ways to address the issue. Economy in Crisis identifies three key steps for reversing the trend:
- Strengthen Educational Partnerships - Many schools, including technical colleges, are well positioned to teach the necessary skills needed in today's manufacturing industries. While some manufacturers are already partnering with school networks to deliver relevant skills, these relationships should be improved and made more widespread.
- Invest in Training - Training programs have proven effective for enhancing skills among existing workers. Investing in in-house training can help manufacturers develop employees with skills that match job openings by training them with the right aptitude.
- Engage with Tomorrow's Workforce - To address long-term needs, manufacturing needs to get younger people interested in the field by exposing them to it in a fun and engaging way, like Tampa Bay's STEM Goes to Work program or the LEGO Mindstorms project from National Instruments.