Innovation faces skill shortage – New Straits Times

EIGHT-FOLD GROWTH: Thousands of US jobs remain vacant for want of skilled labour, writes Wan Suhaimie Saidie

ASK anyone what is holding up the US economy amid the global economic turmoil since 2007, you might get different answers. But none would be more convincing than “technological innovation”. It is one of the main factors contributing to the recent improvement in US job creation and economic growth.

In a recent report by The New American, America’s foremost competitive advantage is its continuing superiority in the fields of artificial intelligence, robotics and digital manufacturing. Those advantages are pronounced in computers, electronics and appliances as well as plastics, rubber and machinery.

While most of us thought that such advances would mean a higher level of automation in the production line and fewer “shop floor” workers, the opposite is true.

The need for technicians and programmers to operate the robotic and high-tech equipment has grown eight-fold over the past few years and continues to keep the US as the world’s largest manufacturer of high-end finished goods.

Last year, factories in the United States added 237,000 jobs, the most since 1997, according to the Labour Statistics Department.

Meanwhile, the Manufacturers Alliance for Productivity and Innovation projected 173,000 factory jobs to be added this year, adding that unemployment in manufacturing has been below the national average for eight straight months, and the industry itself has been growing at three times the rate of the overall economy.

At the same time,  a study last October by Deloitte Consulting LLP found a skills crisis in the sector. In its survey of American manufacturers, respondents reported that five per cent of their jobs, or roughly 600,000 openings, remained unfilled due to lack of workers with the right skills.

The skills with the greatest impact on a firm’s productivity — machinists, distributors, technicians, craft workers — are the hardest to fill.

Even in the state of Massachusetts, the world capital of higher education, there are 119,600 job openings going unfilled because employers can’t find qualified applicants, according to the governor’s office in a recent article in the Boston Globe.

Ironically, the state has about 240,000 people who can’t find work.

The problem now was finding enough skilled workers to fill the higher-skilled manufacturing vacancies, said Jonas Prising, president for Manpower Group for the Americas, who was quoted by Business Without Borders.

“Those jobs that are coming back, albeit not in the same numbers, are well-paying and skilled jobs.”

In spite of the shortage of skilled workers, there has been a spate of US manufacturers returning from abroad, particularly from China.

Firms like General Electric, Caterpillar Inc, National Cash Register Corp, Master Lock and Farouk System, to name a few big names, are repatriating production, or parts of it, back to the US.

Apart from the increasing labour cost, better access to suppliers, easier logistics, a stable business and political environment are good reasons for US companies or for that matter any multinational company to shift their investment elsewhere.

Unless and until President Barack Obama’s proposed tax incentives for US manufacturers to bring back jobs is attractive enough and approved soon, manufacturers may be considering other destinations.

To tap the younger and skilled workforce, US tech firms have little choice but to look abroad again. The US is not the only country competing to attract potential high-tech manufacturers.

With a younger and increasingly more educated population, Southeast Asian countries have been one of the favourite destinations for world-class high-tech manufacturing companies.

There has been stiff competition among Southeast Asian nations over the years to attract foreign investments or FDIs.

Singapore stood out as a success story as it became one of the first in the region to graduate from labour to capital-intensive towards higher value-added industry in the shortest period of time.

Though starting at about the same time as Singapore, Malaysia is still lagging behind while countries like Thailand, Vietnam and Indonesia are catching up fast.

Having excellent infrastructure and tax breaks may not be good enough. To attract investments industrial policies, regulations and strategies need constant revisions and tweaks.

Singapore, for example, has been aggressively trying to attract biopharmaceutical firms by funding projects at top universities like MIT and Stanford with a reasonable amount of success. Getting to the source of innovation is a smart strategy and worth emulating.

– Wan Suhaimie Saidie is an economist who is taking a year’s break in Boston