Skilled Labor Gap, Fact or Fiction?

When you think of the future of North America, do you think of Manufacturing? Probably not. The new U.S. economy has been built on knowledge and services, but not on manufacturing. Today manufacturing makes up anywhere between 10 to 13% of the U.S. labor force, and has dropped from a workforce of 17 million in 1982 to a little over 11 million today.




Source, Bureau of Labor Statistics, 2011

Off-shoring and outsourcing are seen as the primary culprits for the decline of U.S. manufacturing. As a long time Ohio resident, located in the area affectionately known as the “rust-belt”, I have personally seen the impact of outsourcing in U.S. manufacturing. But outsourcing is not the only reason for losses in manufacturing jobs. In 2003 Gartner research found that global manufacturing job losses were rising around the world due to simple technology improvements and lean manufacturing practices. These improvements not only reduced the need for manual labor, but also changed the work environment and remaining employee skill requirements. In today’s manufacturing organizations both the environment and workforce are focused on maximizing machine outputs and reducing labor costs.

In our current climate where unemployment hovers at 9%, and manufacturing continues to see improvements from technology are we really facing a skills gap? Recent data coming from today’s U.S. manufacturing organizations is pretty clear. Not only do we have a skills gap, but that gap is going to cost over 55% of the top U.S. manufactures each over $100 million dollars in the next five years. Additionally, 31% of manufactures said they currently have over 20 open positions that require skilled labor, and many comment that they would hire more than they need, just to ensure they have the skill for the future.

I had the opportunity to spend some time in mid-September at an innovation and trade show for U.S. based manufacturing organizations: IMX: A Commitment to the Advancing U.S. Manufacturing. I was invited to attend by one of the key sponsor organizations Society of Manufacturing Engineers, and a recent acquisition to their organization ToolingU. ToolingU provides on-line development programs to help manufacturers compete through knowledge and expertise. Many of these programs focus specifically on helping address the “skilled labor gap” audience.

In the midst of cryogenic machine tooling demonstrations from Mag , and innovative supply chain and talent presentations from Kennametal , I heard a constant focus on development and hiring challenges. There is no doubt from listening to the chatter on the floor and the facts from the various speakers that the U.S. does have a skilled labor gap today. Thoughts and frustrations from the participants could be summed up by a single comment I overheard on my first day at the event by a manufacturing leader, “I’m tired of trying to find them [skilled labor], it isn’t worth the time. I need to focus on building them internally.”

I came away from this event with more questions than answers:

  • What is “skilled labor”; how is it defined, what are the skills, background, and knowledge required to fit into this category?
  • What is creating this gap? Our educational process, our society, speed of change, or all of the above?
  • What is the U.S. plan for filling this gap? Government S.T.E.M. programs, collaborating industry leaders, aggressive talent management and development programs by individual companies, or increased foreign labor acquisition?
  • Is this a short term resurgence in the market or a long term market issue? Is this a global issue as well as U.S. issue?

In my discussions and interviews, the answers to these questions were not only unclear across multiple organizations; the lack of answers was also a key factor in the frustration of manufacturing owners and leaders alike.

Although there are no easy answers to these questions and challenges; I do think that the talent and learning communities have a real opportunity to do more than sit back and take a passive role in what could be the right time to help support the sparks of “new” life in an “old” industry. We can help drive a focus on areas that could dramatically impact not only the current skilled labor gap, but help change the view of manufacturing jobs in a very jaded U.S. labor market.

If this is an area you have a passion for and would like to hear more about this topic from the Brandon Hall Group, please feel free to comment. We’d love to hear about how your organization is addressing today’s skilled labor gap.

Stacey Harris

Brandon Hall Group Research

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