Digital transformation and the workforce: a discussion with Deloitte

At the 2024 Digital Transformation Forum in BostonDesign World sat down with Deloitte’s Asi Klein, managing director of industrial products and construction, and Matthew Fox, senior manager, to discuss trends in workforce development. Here’s a video of the discussion and a Q&A article below.

What are the major workforce trends you’re seeing in manufacturing?

Asi Klein: Great question. Funny enough, every few years, Deloitte and the Manufacturing Institute release a manufacturing talent study, and the latest edition just came out last month. I highly encourage everybody to check it out. One of the interesting statistics there has been that since the pandemic, manufacturing has actually grown significantly. Today, there are 13 million jobs in the U.S. in the manufacturing sector. That’s more than we had pre-pandemic. However, when you start to project out these trends in the future, we expect that by 2033 there’ll be about 3.8 million jobs that are needed, but only 1.9 million — half — will be filled.

A part of that is because there’s a gap in applications, right? People are not necessarily attracted to manufacturing jobs. And a part of that is actually a skills gap, which has been growing for the last 10, 12, years plus, right? We’ve been seeing this as a regular trend, that there’s more and more of these skills that are needed.

Now, the interesting thing in the last few years, the sort of post-pandemic world and boom in AI, leads us to see that much of the skills that are required are those higher-order skills and technical roles. That is actually where the biggest gap is going to be. And one of the things that Matt and I focus on a lot with our clients is how to help them think through: How do I close that skills gap?

What jobs are you seeing impacted and how?

Matthew Fox: We tend to see the most amount of change in the engineering and manufacturing jobs. But then, in addition to those, anyone who’s heavy in data use, data scientists, and folks that are on the floor, so machine operators and technicians. Those are the ones that seem to have the most change coming at them and then, with that, the most opportunity for a focus on talent and skills.

Just to bring it to life. I’ll pick on the manufacturing engineer, which I’m picking on out of a place of love and respect. When I worked as a design engineer early in my career, the manufacturing engineers were the unsung heroes. They were always coming in to put out the fires that wouldn’t have even started if they had a seat at the table at the beginning of a design review.

We see that with a lot of our clients, for example, manufacturing engineers that are buried in paperwork trying to decipher and figure out all the changes that are being pushed at them from upstream in the design process. By nature of thinking about how you can transform the work, and also with that transform the skills, suddenly you can free up the capacity of those manufacturing engineers to not be doing administrative work and playing catch up but to actually be thinking about the future. So, participating in collaborative reviews cross-functionally and even doing things like partnering with quality engineers to start to figure out how you can create alarms and warnings through IoT and technologies like that. So then you can sort of start to monitor the work as it’s being done on the floor, and start to think about, again, preemptively, how you can transform processes and introduce new technologies to prevent quality lapses downstream.

How can organizations figure out these evolving jobs and talent needs?

Klein: You know, Matt actually gave a really great example, and the phrase of transforming the work is where I would actually recommend companies to start. We’re all concerned, we’ve all seen articles about these AI technologies going to take away jobs. The answer is no. What it is going to do is really force companies to start thinking about: What is the value that a person, a human, creates that you can’t get from a machine? And that means that, increasingly, it’s about transforming the work and thinking about what tasks are those value-added tasks that you can’t replicate today.

Very often, that comes down to things like customer service, leadership, the ability to translate data, and how you take that data and tell a story with it. These are things that are impacting jobs today that traditionally you wouldn’t think about, like engineering, right? You’re seeing more and more requirements of business leadership and customer engagement with engineers, because that is the differentiator.

Very often, what we do in the market is actually help our clients think through: How is the job changing? What are those value-added tasks? Once you figure out those tasks, the question, then, is: What are the skills that are needed? And some skills are going to be sort of steady state. You can figure out how to upskill people today in-house. Some of them might be brand new, some of them might be in decline. Again, we’re seeing more and more of technology skills that are being incorporated in traditionally non-technology jobs. And we’re seeing a huge boom in what we call the soft skills, right? The people skills, the management, leadership. Once you have that combination in place, it is now easier to start defining the work. It is easier to start thinking about: How do I recruit for these roles? It is easier to start thinking about: How do I upskill where we have gaps?

Once organizations figure out their talent needs, what should they do next?

Fox: There’s a multitude of things that they can do. I’ll use two examples of clients that Asi and I have partnered with in recent years, where we’ve taken them through this body of upfront work, of recognizing the skills that are actually needed for them — not just in the industry that they sit, but for what they’re trying to do from a strategic standpoint.

We’ll usually start the conversation of where are they going from a product development standpoint in the next five years, 10 years, 15 years. And from that, using a library of skills for engineering and manufacturing roles that we have, we’ll create a prioritized set of skills, whether they’re the human skills, the specialized skills, or the technical and technology skills that matter most, given where they’re trying to go.

From there, there are many things you could do. One is doing a skills assessment, where now that you prioritize these skills, figure out what you actually have in-house today and figure out where there are gaps that need to be solved. We’ve seen clients do interesting things with that, whether it’s developing targeted learning strategies or even doing things as provocative as thinking about where does this work actually need to occur. We’ve seen organizations, when they’re thinking about expanding their geographical footprint, use skills as one of the important decision criteria, in addition to least-costs and political considerations of entering new markets. So, bringing skills to the table and having those conversations over where it makes sense for our business to actually be located. That’s one example.

Another thing that we’ve seen increasingly to upskill a workforce, an existing workforce, is getting creative in how we are approaching the learning and engagement of employees. We’ve all been through the PowerPoint old-school instructor-led training formats. Now we’re seeing organizations that are saying: How do we deliver learning in the flow of work itself so it’s not disruptive? So we, as adult learners, are getting both the learning and the support we need as we’re going through a new technology, a new set of processes. Like I said, there are many different avenues you can go, but it’s nice to see that skills and upskill and has become increasingly top of mind, not just for CHROs but all the all the business leaders.

Any closing thoughts or key takeaways about the workforce of the future?

Klein: Yeah, I can jump in with a few. You know, Matt just alluded to the role of the CHRO. Increasingly, we’re seeing that it’s actually business leaders that need to focus on this. HR certainly has a seat at the table, but you need your heads of engineering, your COOs, your CIOs really focused on: How do we build the right talent base?

We’re seeing more of a trend of those business leaders coming to that conclusion earlier than they used to. In previous years, you’ve seen more and more conversations about optimized processes and putting in new technology. The workforce was a lagging kind of need. It’s good to see that this is now catching up. And I think there’s still a greater focus needed from business leaders to say: What is the true differentiator for us? And it is going to be figuring out this gap in skills to allow for continued growth as you’ve kind of run out of opportunities to optimize your business, right? You can only lean out so far.

Fox: I agree with everything that was said, and the other thing I would coach organizations is to make time for this conversation. Oftentimes, I think we find ourselves as leaders in reactive mode when it comes to trying to solve some of these issues. And that’s unfortunate because a lot of this you can get ahead of, but you just really need to upfront have those conversations, make time to think about not just your product, not just your services, not just going to market, but how you actually get to market. And that’s more often than not, going to be the talent and the people that you’ve got at your fingertips.