US manufacturing skills gap could cost the economy US$1trn
Paul Wellener, Vice Chairman and U.S. Industrial Products and Construction Leader, Deloitte LLP. The effects of COVID-19
Since then, the sector has been successful in hiring back 820,000 of these jobs by the end of 2020. However, there are still 570,000 jobs that are yet to be filled to breakeven the employment levels prior to the outbreak.
Despite there being nearly 500,000 job openings in the sector, those surveyed by Deloitte and the Manufacturing Institute report that they are struggling to fill even the higher paying entry level production positions, let alone identifying and retaining skilled workers for more specialised roles.
Key findings from the report:
- US manufacturer feel that it is now 36% harder to find the right talent compared to 2018, even though unemployment has almost doubled since
- Key consequences as a result of not filling jobs included: inability to increase revenue growth (82%) and inability to maintain production levels to satisfy demand (81%)
- 77% of US manufacturers believe that they will continue to have difficulties when it comes to attracting and retaining workers not only in 2021 but beyond as well
- The top reasons for positions going unfilled include: new entrants having different expectations for jobs and careers (38%), lack of attraction or interest in the industry (36%), and the retirement of baby boomers (34%)
- US manufacturers also found that the challenges for attracting entry level and skilled workers are exacerbated due to misconceptions about manufacturing work, particularly among the younger generations
So why is it important to address these challenges, and how can the gap be closed?
Projected to leave 2.1mn jobs unfilled by 2030 if it is not addressed, the manufacturing skills gap could cost the US economy as much as US$1trn.
In Deloitte and the Manufacturing Institute’s latest report titled: ‘’ the two explore both the new and continuing contributors to the skills gap in the US and details key steps manufacturers can take in order to attract and retain skilled and diverse workers.
The importance of workforce diversity
In the 2020 ‘’, reports that when it comes to women in manufacturing, women represent only 33% of industry jobs, and only 26% of leadership positions. To add to this, Deloitte and the manufacturing Institute discovered that one in four women are considering leaving the industry.
Key findings from the report:
- Women represent on 25% of production jobs with only 30% being manufacturing professionals, despite representing almost half of the overall US workforce
- Women are 1.8 times more likely to leave the industry compared to men, reporting the lack of work-life balance and flexible schedules as top reasons for leaving
- 50% of manufacturers have a formal program to recruit women
- 42% of manufacturers identify their efforts to recruit women as substantial
- While a majority of manufacturers include diversity, equity and inclusion (DEI) training in their talent management programs, only 25% find the programs impactful when it comes to actually retraining employees
“Given the foundational role the manufacturing sector plays in our nation’s economy, it is deeply concerning that at a time when jobs are in such high demand nationwide, the number of vacant entry-level manufacturing positions continues to grow. Attracting and retaining diverse talent presents both a challenge and solution to bridging the talent gap. To attract a new generation of workers, the industry should work together to change the perception of work in manufacturing and expand and diversify its talent pipeline,” said Paul Wellener, vice chairman and U.S. industrial products and construction leader, Deloitte LLP.
Deloitte and the Manufacturing Institutes recommendations for closing the skills, employment and retention gaps
With the industry at a crucial tipping point, to avoid the negative effects predicted for the industry by 2030 if left unaddressed manufacturers should consider the following efforts to bridge the gaps:
- Engage more with local communities to recruit talent
- Seek to hire former military personnel for the mid to high skilled positions
- Broaden the talent pipeline to increase diversity
- Assess company culture to identify improvement areas that require DEI programs
- Tie leadership performance with DEI
- Establish recruitment efforts at the high school level to build greater awareness
- Consider making shift-based jobs more flexible
- Leverage advanced technology to improve digital skills
“Manufacturers are proud to lead efforts to build stronger, more diverse and inclusive workplaces because we are committed to being the solution. These findings confirm the urgency of our mission and that we need not only to continue our work but to accelerate it. As we expand our programs at The Manufacturing Institute, and work with the National Association of Manufacturers on initiatives like our Creators Wanted campaign and tour, we’re making sure that Americans of all backgrounds in all states can find a home in manufacturing and get equipped with the skills to seize these opportunities. With so many open jobs in manufacturing, we are uniquely positioned to welcome emerging and displaced workers into rewarding and meaningful careers,” said Carolyn Lee, Executive Director, The Manufacturing Institute.
Gartner: Leaders Lack Skilled Smart Manufacturing Workers
With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.
While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.
“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.
“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”
Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.
“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.
Technology and People
While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.
“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.
Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.