How will the Skilled Worforce Shortage Affect Your Business?

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A good friend and mentor of mine, Jeff Klingberg, President and CEO of The Mountain Stream Group, in Chicago, has been sharing some really important insight into what’s going on in the world of manufacturing today. Jeff’s engineering background, and our discussions regarding knowledge management and capturing corporate knowledge led him to forward me Plant Engineering 2014 Workforce Development Study: 6 key findings, by Amanda McLeman from theJuly 22, 2014 Plant Engineering.

The report revealed 66% of manufacturing facilities are experiencing a skilled workforce shortage, and an average of 7% of jobs within plants are unfulfilled because of it. On February 6, 2015, the U.S. Bureau of Labor Statistics (BLS) reported the current unemployment rate is 5.7%, down from 10.2% in 2009.

You may or may not know the BLS unemployment numbers are skewed because they don’t account for the long-term unemployed who have given up searching for work, but that’s another subject altogether. With so many people out of work, how can it be that 66% of manufacturing facilities are experiencing a skilled workforce shortage?

This problem shouldn’t really be that much of a surprise to all of us.

Why? Because most of the younger generation today believes that they need a college education to get a good job. Our education system has also put more emphasis on preparing students to attend college. They have de-emphasized and, for the most part, eliminated those programs that help young people develop skill sets around mechanical drawing, automotive and industrial engineering.

Today’s younger generation prefers to work in service-industry jobs where they can use their computer skills. The idea of working in a manufacturing plant and getting their “hands dirty”, like their parents and grandparents did, somehow seems to be beneath them.

The problem with this logic is that when they do graduate from college, they are competing for jobs in a marketplace that is already overcrowded with applicants, while those jobs in the skilled labor market go unfilled. To make matters worse, according to the Plant Engineering article the younger workforce lacks project management (62%), engineering (53%), and team building skills (48%).

It’s clear that manufacturing’s image is tarnished and isn’t portrayed as a positive career choice for millennials today. Manufacturing itself is partly to blame, because the apprenticeship programs of the 50’s and 60’s were dropped in the 70’s and 80’s, as many manufacturing jobs were outsourced to overseas locations. Those practices have come back to haunt those companies who are trying to regrow their employee base. Many of those organizations are finding that it is cheaper to bring those jobs and skill sets back home, but they are having difficulty filling those positions.

In the recent McKinsey Next Shoring: A New Paradigm for Global Manufacturing webinar based on their study of the same name, Katy George, an 18-year veteran of McKinsey, focused on global macroeconomic changes, advanced manufacturing technologies, and how they will reshape manufacturing strategies and opportunities.

McKinsey’s study sees U.S. manufacturing growing at a higher rate than that of India and China. So, the future for U.S. manufacturing looks bright, but it will be different because of the use of automation and robotics, which U.S. manufacturers are behind in implementing. Nevertheless, there will be openings for those people who have the skill sets needed to fulfill them.

Another factor in manufacturing workforce shortages is the current aging baby boomer workforce who are quickly reaching retirement age. As they retire, they take the years of knowledge and the skill sets they have acquired with them.

So, what’s the answer to this problem?

  1. Community outreach programs, where those manufacturing organizations become more of a positive influence within their community and promote their organizations as a good place to work, with job security and benefits. They need to influence people at an earlier age that the types of opportunities for young people are attainable at a lower cost and higher reward than what they might attain from attending college.
  2. Manufacturers will need to develop apprenticeship programs to develop the skill sets they need in-house.
  3. Those organizations will need to tap into the mission critical knowledge areas within their organization, from the people and positions that have that knowledge. Then, they need to create a strategic, ongoing plan to identify, capture, catalog and make accessible that knowledge, so it isn’t lost when they have employee turnover and so that knowledge can be used to quickly onboard new hires and job replacement employees.

This is a real and critical problem for the manufacturing community in the U.S., and those organizations can no longer ignore the negative consequences created by this workforce shortage problem. The faster those manufacturing facilities recognize this and create a plan to solve it, the stronger we will be as a nation. At least that’s the way I see it, what say you?

About the author:

Chuck Carey is an accomplished sales, marketing and business executive with more than 40 years of experience in the information technology industry. Chuck’s vast knowledge of the problems facing all types of organizations around identifying and capturing corporate knowledge makes him ideally suited to work with and consult in that area. If you would like to see if Chuck can help you and your organization please contact him through this website.

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