Some Manufacturers Are Minding the (Skilled Labor) Gap
A new year is upon us, bringing great optimism and opportunity for the manufacturing industry. The ticking clock, however, reminds us we are closer to the end of the decade when a perfect storm of a limited employee pipeline, a retiring workforce, reshoring and the changing pace of technology is expected to place even greater labor demands on manufacturers, challenged by an already slim supply of skilled workers.
While there are positive signs that manufacturers are starting to take action, there is much still to do to ensure the industry and our nation remain competitive. After all, keeping the manufacturing engine going and growing is an important driver for the US economy and for the country to remain competitive. With nearly 12 million Americans (or 9% of the workforce) employed directly in manufacturing according to the National Association of Manufacturers, the industry is a strong job creator and generates jobs in other industries.
For continued growth, manufacturers must have access to skilled labor, an area where the industry is severely challenged. According to a recent SME survey, 9 out of 10 manufacturers are having difficulty finding skilled workers and they say this is directly hurting their bottom line. The same survey showed that not having access to a talented workforce is impacting production, quality, innovation and growth.
With businesses success on the line, focusing on training and development should be the clear choice. However, while employers invest in equipment, tooling and materials, they often neglect to make a similar investment in their employees. If workers don’t keep up with technological advances, the whole structure moves out of balance. A well-trained employee will more effectively utilize the capability of new equipment, leading to increased innovation and productivity.
Three Workforce Development Trends
There are positive signs that manufacturers are beginning to understand the importance of addressing this skilled labor gap now before it’s too late. Tapping into these three workforce development trends can help organizations commit to making 2014 the year of change when it comes to training and development.
1. Manufacturers are taking ownership of training and development programs
The good news is that, according to our SME survey, nearly half of manufacturers say they have a plan in place to address their need to find skilled workers. That is progress. However, that means that the other half (54%) still don’t have a plan.
Finding and developing a strong pipeline is not an overnight fix and, fortunately, some prescient manufacturers such as SGS Tool Company in Munroe Falls, OH, are great models for addressing this.
The 62-year-old manufacturer of round, solid carbide cutting tools started looking at the growing skills gap issue a number of years ago and made a commitment to continuous improvement and developing its associates.
SGS began working with area schools, from junior high through college level, to establish a pipeline of future associates. It also adopted an internal training program, which included online training from Tooling U-SME.
Today, SGS’s strategy is paying off with metrics related to retention and engagement well above industry average, all helping address the skilled labor shortage. The company has just 5% turnover when many manufacturers are seeing turnover rates of 23–30%. In fact, the average SGS associate has worked at the company for 15 years.
With examples all around of companies struggling with workforce development issues, even if a manufacturer is not feeling the pain currently, taking ownership of training and development programs today will reduce risk by staying ahead of the pending worker shortage, leading to continued competitiveness.
2. Strengthening of partnerships with local academic institutions
High schools, community colleges and vocational schools are playing a pivotal role in workforce development. In many communities throughout the US, these academic institutions have formed partnerships with local manufacturers to address the skilled talent gap.
Take Ivy Tech Community College in South Bend, IN. Part of the nation’s largest community college system, Ivy Tech is setting the standard for establishing a steady pipeline of qualified machinists ready to hit the shop floor.
Ivy Tech’s Machine Tool Institute simulates a real-world machine shop, where students of all ages and backgrounds punch in and out, learning both the hard and soft skills needed to succeed in the manufacturing world. In just two years, the program has issued nearly 300 NIMS certifications, aligned with Tooling U-SME online classes, and regularly places students in jobs in the local area with grads starting between $14 and $20 an hour.
Another example is Hawthorne High School in California, recognized by the SME Education Foundation as a PRIME (Partners Response in Manufacturing Education) school. As part of the program, Hawthorne receives grants and scholarships for future education, and has been connected by SME with local manufacturers. This partnership is producing an important pipeline of skilled workers for neighborhood companies, including Northrop Grumman, Boeing, Raytheon, Honeywell and SpaceX.
It is important to note that while economic development dollars are available to help fund these programs, there is no need to remake the wheel. By modeling programs on existing initiatives and tapping into SME’s experience, manufacturers can establish strong programs of their own, connecting with local academic institutions to create a pipeline of future workers.
3. Sophistication of training process
Over the years, the process of training has become much more sophisticated. Years ago, companies might check a box to indicate training had been completed. Today there are a lot more rules, regulations and documentation. For instance, think about the more stringent guidelines for ISO certification.
Also, today it’s necessary to validate that knowledge has been transferred—not just that a class has been completed. Manufacturers want to know that an employee is able to apply the knowledge provided in the class. Another change is that organizations are looking at employees individually and building customized training programs specifically to fit their strengths and weaknesses. Training is no longer one size fits all.
All of this is increasing the sophistication of the whole system and adding pressure on manufacturers to keep up.
To address this, SME brought together a team of manufacturing experts coupled with academics, to build Tooling U-SME’s Competency Framework, which helps manufacturers ensure employees are meeting the job requirements at the performance levels needed to meet business objectives.
The Competency Framework builds out nine functional models, with over 60 job specific competency models. Using this tool, employers will be able to take the subjectivity out of employee evaluations and be able to build well-defined progression models for advancing entry-level workers through more senior-level workers.
Companies will also be able to benchmark their competencies across other manufacturing organizations, as there is now a standard body of knowledge and skills to take to the shop floor and apply to specific tasks that need to be accomplished.
The sophistication of the process of creating a strong training program, training people and mapping training has come a long way. With pressures that manufacturers face meeting production and customer demands along with finding a talented workforce, it is more critical than ever to ensure a training program ties directly to business goals, ensuring a solid return on investment and sustained competitive advantage for years to come. ME
Jeannine Kunz is the managing director of workforce and education at SME, where she leads a team dedicated to the ongoing education of the manufacturing workforce. SME, a nonprofit organization, has served practitioners, companies, educators, government and communities across the manufacturing spectrum for more than 80 years.
This article was first published in the January 2014 edition of Manufacturing Engineering magazine.