Bridging the Skills Gap in the Manufacturing Industry
Meghan Brown posted on May 15, 2018 |

In business-speak, a skills gap is the difference between the skills required to perform a specified job, and the actual skills that employees possess.  When a company or industry says they are suffering from a skills gap, this means that they are experiencing difficulties finding workers to hire who have the skills the job requires.

What Is the Manufacturing Skills Gap and How Does it Affect the Industry?

There is currently a skills gap affecting the manufacturing industry.  This gap has been growing for some time, but has reached new heights in the years since the 2008 recession. The result has been manufacturers that are facing difficulties filling open positions due to a lack of qualified and skilled applicants.

Projections from Deloitte and the Manufacturing Institute, among other industry analysts, predict that over the next decade, more than 2 million manufacturing jobs will go unfilled across the U.S. 

It sounds like an impossible number, but it’s not simply plucked from thin air.  The U.S. manufacturing industry is expected to see the addition of 3.4 million jobs over the next ten years in order to accommodate growing manufacturing demand.  However, as many of 60 percent of these jobs are expected to remain unfilled due to a shortage of appropriately skilled talent.  With only 1.4 million of these new jobs being able to find workers, the industry will be left with that staggering shortfall of 2 million.

Source: Deloitte and Manufacturing Institute, “The Skills Gap in U.S. Manufacturing 2015 and Beyond.”
Source: Deloitte and Manufacturing Institute, “The Skills Gap in U.S. Manufacturing 2015 and Beyond.”

“Manufacturing has been—and still is—one of the greatest contributors to the nation’s economy,” states Wilkistar Otieno, associate professor of industrial and manufacturing engineering at the University of Wisconsin-Milwaukee.  Manufacturing forms the backbone of the economy, because every 100 jobs in a manufacturing facility creates 250 jobs across other sectors of the economy.  “The National Association of Manufacturing estimates that for every $1 that is invested in manufacturing, about $2 is injected into the economy,” Otieno added.

What factors are creating and exacerbating the manufacturing skills gap, and how can the industry can bridge the gap?

Why Can’t I Hire the Skilled Talent I Need?

One question that has become a refrain across the manufacturing industry illustrates the difficulties manufacturers are experiencing as they attempt to fill jobs with skilled workers: Why can’t companies find the skilled workers they need?

Growing production demand has caused manufacturers to create new positions and new titles, only to see these jobs sit unfilled for extended periods of time because none of the applicants they receive hold enough of the core skills of the job.   According to the Deloitte and MFI report, computer skills, problem solving skills, technical training and mathematics skills topped the list of skills companies wanted, but which job applicants lack.

Source: Deloitte and Manufacturing Institute, “The Skills Gap in U.S. Manufacturing 2015 and Beyond.”
Source: Deloitte and Manufacturing Institute, “The Skills Gap in U.S. Manufacturing 2015 and Beyond.”

The specific roles expected to feel the talent shortage most acutely are in skilled production, such as machinists, operators and technicians, which together amounts to more than 50 percent of the manufacturing workforce.  Design engineers are another job role critical to manufacturing where a lack of workers will have a detrimental effect on the industry, specifically in the development of new products and manufacturing processes.

“Many engineers simply do not have the skills for advanced manufacturing processes, such as additive manufacturing and 3d printing,” said Frank Liou, director of the manufacturing engineering program at Missouri University of Science and Technology.  “For example, most engineers still don’t know how to properly design a part for 3D printing, and while many students know how to build a CAD drawing, they don’t know how to apply CAD/CAM and use CAD data to drive the manufacturing process.”

Where is this misalignment between skills needed and skills possessed coming from?  There are several primary contributing factors to this manufacturing skills gap.

The Aging and Retiring Workforce is On the Way Out

A significant portion of the current manufacturing workforce is nearing retirement age—and 2.7 million jobs are expected to become available.  This isn’t news; the retirement of the Baby Boomer generation (those born between 1946 and 1964) has for many years been anticipated to have a strong impact on the economy, as well as on social services such as health care.

It sounds like a good thing: older workers retire to make room for the new generation to enter the workforce and start doing their part for the economy by producing, earning a wage, and consuming. But for the manufacturing industry, it isn’t quite so clear cut.

The Boomers in manufacturing are often long-term engineering and manufacturing experts who hold a breadth and depth of technical skills and knowledge that can’t be matched by education alone. This is an issue for manufacturing companies because as these older workers leave the workforce, they take this knowledge with them.  The new, younger workers coming in often have trendy new technical skills in artificial intelligence, augmented and virtual reality programming or building Internet of Things (IoT) networks, but they simply don’t have a comparable amount of industry experience.

And it isn’t technical capabilities alone that the manufacturing industry loses.  As Steve Melnyk and Alan Dunn from APICS point out, when Boomer experts retire, manufacturers lose valuable company and industry experience, tested and proven problem-solving abilities, deep knowledge of competitive advantages, and relationships between team members, customers and critical suppliers.

It’s not the same as moving to a new department or position within the company, where an expert could still be consulted on tricky issues or asked to be a mentor—these people are leaving the workforce entirely and taking their knowledge with them.

Strong Economic Growth is Outpacing Workers’ Skills

Again, this sounds like—and is, in the big picture—a good thing.  Strong economic growth makes for a strong country and benefits every industry and the workforce as a whole.  But manufacturing is suffering from this growth in a specific way: more jobs are being created than there are workers to fill them.

The level of skill involved is what makes this an issue for manufacturing in a way other industries escape.  The new jobs being created are the cutting edge, highly technical and STEM-oriented jobs of Industry 4.0, and there simply aren’t enough workers with the right skills to fill all these positions.

According to the Deloitte and Manufacturing Institute (MFI) report, the U.S. economy experienced a low to moderate growth rate through 2014-2015, where manufacturing production grew by 3 to 4 percent.  However, while this momentum is building, and many U.S. manufacturers are optimistic about the future industry growth, the talent shortage will become one of the most significant challenges the industry will need to overcome.

In short, manufacturing jobs are being created faster than companies can find, hire and train workers, which leaves many companies in limbo with projects and goals they want to pursue, but which have to be put on hold while they try to build up the right team with the right skills.

Misconceptions of Manufacturing Turn New Workers Away

We all know it’s not true, but the unfortunate fact is that many people have negative misconceptions about the manufacturing industry.  When asked, most Americans say that they believe manufacturing to be one of the country’s most important industries.  However, many of the same people wouldn’t recommend a career in manufacturing to themselves, their peers or their children.

An incorrect perception of manufacturing persists: that a job in manufacturing is low-tech, dangerous, dirty and low-paying work.  This means that when the younger generation of workers starts deciding their career and education path, they choose to go elsewhere, and take their future skills with them.

The reality is that modern manufacturing and the future Industry 4.0 is an entirely different thing from the image of a turn-of-the-20th-century assembly line factory.  Manufacturing today is at the forefront of technology and modern innovation with the use of robotics, computers, data analytics, IoT, product design and 3D printing.

“The recent developments in smart manufacturing, industrial internet of things, connected enterprise strategies and Industry 4.0, if well relayed, would naturally appeal to the new generation,” Otieno states.  The high-tech skills young people say they are interested in are the same ones moving manufacturing forward:

  • Personalized manufacturing has necessitated a move away from high volume low variety manufacturing as brought about by the 2nd industrial revolution, and toward high variety low volume, because of ever-changing customer demand.
  • Remote sensing, control and monitoring is being enabled by advances in augmented reality.
  • Data analytics and artificial intelligence is optimizing manufacturing processes and ensuring agility and pre-emptive manufacturing business decision making processes.
  • Automation and robotics make manufacturing plants high-tech and more efficient.

What these have in common is the need for employees with strong technical skills in STEM, analytical thinking and problem solving—the skills the next generation of the workforce says they want to cultivate and use.

A Lack of Strong STEM Skills in Both New and Old Workers

This contributor to the manufacturing skills gap isn’t limited to any single group, but rather is endemic throughout the industry as manufacturing has changed from traditional methods relying primarily on manual human labour into the high-tech modern industry we have today.

Many industries are feeling the talent gap, but manufacturing suffers from one of the widest.  There is a lack of STEM skills, particularly in computer skills, technical training and mathematics in employees at all levels and across the board.  Problem solving is also a notable deficiency, and is a core skill that would be developed through a strong STEM education.

With the increasingly technical nature of manufacturing work, it’s becoming more urgent that these deficiencies be addressed.

But why do so few workers have the necessary STEM skills?  This scarcity is resulted from multiple factors.  Many of the older workforce moved straight from high school to a manufacturing job in the 70’s and 80’s, and while they have since acquired a breadth of practical knowledge, they weren’t exposed to—or didn’t pursue—higher education in STEM subjects.  Meanwhile, a lack of STEM education in high school over the past 20 years has resulted in young workers who are unprepared for the demanding technical requirements of the new and future manufacturing jobs.

Those who do have strong STEM skills are often unaware of the evolution of the manufacturing industry, and of the career paths in manufacturing for which their skills would be ideal.

“Most students are aware of the traditional engineering professions, such as aeronautical, biomedical, civil, electrical, materials and mechanical, among others,” said Otiano.  “But most students are not aware of career paths that are available through controls, mechatronics, and industrial and manufacturing (sometimes referred to as industrial and systems) engineering.”  These latter three commonly-unknown degrees are specifically designed to equip students with the ability to design and analyze automated manufacturing processes.

Narrowing the Manufacturing Skills Gap

Knowing where the manufacturing skills gap comes from, and how it will affect the industry, is only have the battle.  It remains for the industry and all its stakeholders—from companies and industry associations, to individual workers and students—to collectively work toward a solution.

For some tips on narrowing the manufacturing skills gap, check out our ebook How to Hire and Retain Skilled Workers in a Skills Gap Economy.



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