Changing Nature of Work and the Workforce
Many industries, not just manufacturing, are feeling the talent crunch. It’s been widely reported that high school students have demonstrated a lack of proficiency in math and science. But when we asked executives what they considered to be the most serious skill deficiencies, technical and computer skills topped the list. It was followed by a lack of problem solving skills, basic technical training, and math skills. And overall, less than half of the manufacturing executives surveyed indicate their employees have sufficient basic employability skills (attendance, timeliness, etc.) and the ability to work well in a team environment. The skills gap problem comes into sharper focus when considering the increasingly technical nature of manufacturing work. Many manufacturers have redesigned and streamlined production lines while increasingly automating processes. While some remaining job roles will require less technically skilled workers, ironically, these trends and innovations actually demand more skilled workers.
The changing nature of work, the ensuing need for improved workforce skills, and the imminent retirement of baby boomers (born between 1946 and 1964) has become a focal point for companies as they consider the resulting business impact. Retaining, hiring, and developing a skilled workforce will be increasingly difficult in the face of aging demographics. As more and more older and experienced employees retire, finding younger talent to replace them will become increasingly difficult, not to mention the loss of all their embedded knowledge, thereby exacerbating the talent crunch.
The anticipated retirement exodus could seriously hurt manufacturers. The areas of skilled production (machinists, operators, and technicians) will be the hardest hit according to manufacturing executives. Considering skilled production occupations account for over 50 percent of the total manufacturing workforce, worker shortages in this category will present a significant challenge to companies. Manufacturers are also feeling the pinch when it comes to highly specialized and innovative employees, such as scientists and design engineers. Their shortage could affect new manufacturing processes and new product development.
Recruitment Challenges
The negative image of the industry, coupled with scarcity of STEM talent in high schools, makes recruiting the right candidates challenging for manufacturing companies. The wage paradox adds to the conundrum, as well. Although manufacturers indicate they have the propensity to pay more than market rates, they are still often unable to find the right talent.
The Business Impact
The effects of the talent shortage are expected to be felt in functions throughout manufacturing companies. When asked which business areas will be affected most due to the talent shortage, more than three-fourths of manufacturing executives believe the greatest impact of the skills shortage will be in maintaining or increasing production levels (in line with customer demand) and implementing new technologies while achieving productivity targets. As manufacturers struggle to support their strategic, business, and production plans with insufficient human capital, they tend to stretch their existing resources. In fact, current data suggests the average annual working hours in manufacturing is 17 percent more than in all private industries.
In addition, the use of frequent or forced overtime in order to maintain base production levels is not only economically unviable in the long term, but also suppresses productivity. In an era where many companies have spent significant time and resources to streamline operations, improve the ability to meet customer demand, and implement the latest technologies, this result highlights the effort that should be considered by most manufacturers to combat the expected severity and impact of future skills gap.
