Manufacturing a new industryHow manufacturing will continue to evolvefor future growth and productivity.
BuildingthenextmanufacturingageThe story of America’s growth as a leading forcein the global economy can only be told in tandemwith the development of the manufacturing sector.The American economy’s origins are steeped in the innovation,productivity and efficiency of our manufacturing industry —an industry that still employs over 10 million working Americanstoday and produces some of the world’s most importantproducts and goods. While history tells an iconic story of aglobal manufacturing empire, the present looks very different.
Manufacturing a new industryThe later part of the 20th century productivity is rising again, andsignified a paradigm shift from an the sector remains committed toeconomy weighted towards goods- innovation. Companies in newerproducing organizations and talent, branches of manufacturing, suchto rampant growth in the services as green manufacturing and solarsector and development of the energy, are especially optimistic“knowledge-based economy.” about their prospects, even thoughWith this new focus, the landscape economists remain cautious.of the American workforce changed As the manufacturing sector looksdrastically, yielding significant ahead towards recovery (and leadschallenges for the manufacturing the global economy in doing so),industry. companies must determine howDespite this shift in the labor market they can continuously practiceand the U.S. economic crisis of strategic cost improvementsthe past few years, manufacturing and efficiencies to meet shiftingcontinues to play a critical role in our consumer demands. In doing so,economy, and therefore our future. they will be well-positioned andThe president of the U.S.-based prepared as the influx of requestsManufacturing Institute, Emily Stover continue to shift upward. Taking fullDeRocco, has observed that manu- advantage of the economic recoveryfacturing has the highest rate of and sector rebound will requireproductivity growth compared to manufacturers to employ the rightother industries and produces more workforce strategy, which startsthan $1.5 trillion in goods every year. by finding the right mix of skilled talent and a strategic balance ofIn fact, the U.S. manufacturing temporary and permanent labor.sector is the eighth largest With this insight, organizations willeconomy in the world, though be better prepared to make wiseits impact on the U.S. economy investments in labor and will beis much larger considering the better positioned to be profitablenumber of sectors that rely heavily in the long term. Additionally,on a strong manufacturing base organizations will also make— including finance, accounting, every effort to not repeat recenttelecommunications and wholesale history, and instead, turn the pageand retail trade. In addition to its toward a future which drawssize, the sector is also amazingly on the innovation, productivityresilient. Despite being one of the and efficiency upon which it washardest hit industries over the past founded.couple of years, suffering significantlayoffs and business challenges,1 “The Facts About Modern Manufacturing.” 8th edition. The Manufacturing Institute. October 2009. www.nam.org/~/media/0F91A0FBEA1847D087E719EAAB4D4AD8.ashx2 “Manufacturing Outlook 2010: Cross Your Fingers: 2010 Will Be Better,” Industry Week. December 6, 2009. 3
Industry challenges go beyond economic instability Over the past several years, the manufacturing sector has faced a number of industry challenges that have contributed to — and continue to impact — its evolution and growth. Many of these challenges have also impacted hiring and talent decisions as the traditional roles and desired skill sets of manufacturing employees have evolved. Perhaps one of the more significant hurdles to faster recovery in the manufacturing sector is that, in tandem with the economic downtown, there have been vast changes in the industry at large. From metalworking and textiles to consumer packaged goods and technology, manufacturing is far different from the industry it was even a few years ago, resulting in very different industry expectations today than there have been historically.4
Manufacturing a new industryAs the popular saying notes, “the future is now,” Although the number of unemployed Americansand the manufacturing industry is keenly aware today means there is a huge pool from whichit must adapt to new trends and consumer to draw, manufacturers have not been able todemands to keep pace with global competition. find the skilled employees they need; a problem which has serious implications for the future.So, what exactly has changed? Another factor for consideration is that fromExamples of the changes in the manufacturing 2007 to 2009, although companies cut payrolls,sector include the “green revolution,” which has they still managed to produce more with fewermoved organizations to replace older products workers. Economists report that as a result,with more sustainable ones, work on alternative employees have been stretched, calling onenergy solutions, and the creation of new leaders to look carefully at labor costs, find newbuilding materials and designs. markets and develop new ways of operating if they are to remain competitive.Similarly, the rapid growth and increasingpopularity of eCommerce has resulted in the Additionally, manufacturers must now dealevolution of a number of manufacturers who with two vital issues on a day-to-day basis:now find themselves forced to play a dual role of the cost of safety and workforce eligibility.manufacturer-distributor — changing not only the As most manufacturing takes place in andynamics of the supply chain but also business industrial setting, it is particularly important thatstrategy and workforce models. This customer- a structured safety program is in place andfacing role of distribution brings with it different employers truly understand the costs that canbusiness challenges and requires many different result from not maintaining a safe workplace.skill sets in terms of successful talent. Successful They must also recognize the need to have amanufacturers today are learning how to deliver structured program to ensure compliance.both products and services — very different from In addition, workforce eligibility has becomethe historical role of the industry. a larger issue to contend with – ensuring thatWhile there have been pockets of growth within all employees are legally able to work in antraditional manufacturing roles, many of these organization is now a necessity for employers.positions have dramatically evolved and as a The discovery of ineligible workers is anresult, so have the skill sets required. Today, enormous liability for a business.manufacturing companies are in need of aspecialized level of versatile talent. Successfulcandidates must have broad-based expertiseand nimbleness with many manufacturersfalling short in finding this kind of talent,irrespective of the labor numbers.3 “Productivity Rebounds While Labor Costs Decline,” Manufacturing.net. November 4, 2010. www.manufacturing.net/News/2010/11/Labor-Relations-Productivity-Rebounds-While-Labor-Costs-Decline/?menuid=7244 Ibid. 5
Critical emerging trends in the manufacturing industry Responding to changing customer For example, carbon dioxide is the most harmful demands through new innovations. greenhouse gas we produce, but CO2 emissions From an industry-wide perspective, two key from U.S. factories have declined, even as customer service changes have emerged. First, industrial production has increased. The same buyers were asking for customized solutions is not true for other industry sectors. For example, rather than mass-produced products—a move “up to 30 percent of the energy used in a typical towards agility-based manufacturing. Second, industrial or commercial building today is wasted, customers want their products in hand sooner. but new, incremental improvements in green With increased competition in the marketplace, building design and other eco-principles are manufacturers face greater pressure to expedite fixing this fast.” Those candidates who possess delivery. Innovations such as flexible assembly the training and skill sets to handle these lines allow companies the option to produce complex issues and new green technologies multiple products on a single line or facility. will be well poised for opportunity as more This model has proven very effective throughout businesses make investments in clean energy. the recession and most likely will be the model on the road to recovery and beyond. Flexible workforce arrangements. Companies are also employing various Going green. workforce arrangements in the drive to remain According to the National Institute of Standards competitive. Outsourcing entire functions is still and Technology, if we are to achieve a time critical in some manufacturing operations. In “where manufacturing has a zero net impact fact, many predict that customer relationship on the environment…[manufacturing] will management and warranty programs will require key resources and methods that will continue to be outsourced. However, manufac- enable it to measure sustainability along several turers’ core competencies — and the attributes dimensions, allowing accurate assessment of that truly differentiate them — will remain in-house. status and progress.” Since green manufacturing is a relatively new sub-sector, there are questions An Industry Week article recently reported that, still to be answered. For example, is doing away “manufacturers must…have the flexibility to with landfills an admirable goal if instead we use meet changing markets by having the ability water and energy to clean disposable products? to quickly ramp up production at facilities in When a manufacturer (or architect or business growing markets or suffer the costs of shipping.” owner) talks about reducing his or her carbon As a result, contingent and blended workforces footprint, is a 75 percent reduction enough, or have become not only more popular, but does it have to be 90 percent to be considered also a business necessity and advantage in laudable? Defining standards, effective measure- this industry. The ideal ratio is 20-30 percent ments and best practices clearly remain a work temporary workers, and the remainder in progress. permanent staff. According to experts, this allows companies to react more quickly to economic Despite these uncertainties, green manufacturing shifts — to ramp up or scale back based on continues to be a priority and the need for skilled business needs — and to limit the negative talent able to do these jobs will only increase. 5 Jim Carroll. Ibid. 6 “Sustainable and Lifecycle Information-based Manufacturing Program,” National Institute of Standards and Technology. www.nist.gov/el/msid/dpg/slim.cfm 7 The Facts about Modern Manufacturing. National Association of Manufacturers. www.nam.org/~/media/0F91A0FBEA1847D087E719EAAB4D4AD8.ashx 8 Jim Carroll. Ibid. 9 Ibid.6 10 “Manufacturing Trends to Watch in 2007,” Ibid.
Manufacturing a new industryconsequences of an economic downturn. Today, staffing companies are able to place a moresophisticated level of contingent workforce by having a greater sensibility about what’s workingand where there is need within an organization.Staffing companies are, in fact, uniquely positioned to provide strategic management overa process — sensitive to the need for continuous cost improvements and armed with the abilityto identify improvements along the way for greater efficiencies and savings. They can partnerwith an organization to ensure that lean manufacturing is taking place and efficiencies are met.Additionally, some staffing providers are also offering a new solution: driving increased productivityby moving clients from an hourly cost model to a productivity-based model. In this model,companies are not billed by the hour, but instead, by unit.By holding the staffing provider accountable for meetingproduction levels versus headcount needs, measuring productivityis more transparent and easier to attain — increasing outputand also enabling significant cost savings. 7
Manufacturing a new industryBuilding the next manufacturing workforceThe manufacturing industry is clearly in a state community colleges are offering hands-onof flux, requiring a workforce of the future that courses in renewable energy. Another group,looks very different than it does today. Attributes the National Center for Manufacturing Education,of the ideal manufacturing worker of the future has professional development opportunities,will undoubtedly include: highly skilled, flexible, support services, and resources for educators.technical, adaptable and open to ongoing Additionally, staffing companies, which employprofessional and skill growth. a large portion of the manufacturing industry,Training is one of the most pressing issues have also answered the call for increasedin manufacturing today. Today’s workplace training and development. Today’s top recruitingrequires people “who can operate sophisticated firms offer their candidates a variety of learningcomputerized machinery, follow complex opportunities to ensure that their workers can offerblueprints and demonstrate higher math companies the most sophisticated skills neededproficiency than was previously required of in today’s evolving manufacturing job market.the typical assembly line worker.” Look at anyinnovative manufacturing industry segment,such as advanced medical devices or wind Training this next generationturbines, and the background and demo-graphics of this worker will look very different of workers ensures all willfrom a typical line manager at a traditional be better prepared for themanufacturing plant. manufacturing jobs of theIn response, the federal, local and state future. Similarly, today’s workergovernments, and manufacturing associationsare stepping up to provide programs that benefits from additional trainingeducate new workers for advanced STEM in new, niche areas such(science, technology, engineering, and as green technologies —mathematics) education. In Michigan, forexample, an educational program sponsored and those rewards tend to payby the Michigan Manufacturers Association off quickly. Those candidateshas the goal of teaching high school studentsabout the manufacturing field and provides who possess a higher pedigreethem with information about career oppor- of skill sets will be moretunities in the industry. attractive to potential employersColleges and industry associations are taking as the economy continuesresponsibility for training as well. PurdueUniversity, for example, has an online certificate to recover.program in Lean Six Sigma Green Belt formanufacturing workers. The ConnecticutCollege of Technology has a Regional Centerfor Next Generation Manufacturing that providesresources to teachers and students interestedin learning new technologies, and some11 “Factory Jobs Return but Employers Find Skills Shortage.” The New York Times. July 1, 2010. www.nytimes.com/2010/07/02/business/economy/02manufacturing.html12 Manufacturing & Engineering Technologies Education Clearinghouse. 9
The future of manufacturing10
Manufacturing a new industryManufacturing may be at acrossroads, but it has weatheredtough times before. As thepresident of The ManufacturingInstitute reminds us, “America’sglobal market share ofmanufacturing has held steadyat around 22 percent for 30years.” And if we are to rely onhistory, that success will continue.As companies look to rampup hiring in the months andyears ahead, the smartestmanufacturing organizationswill consider and act uponhow the changes that havetaken place across theindustry impact their talentpool and workforce planning.This sort of forward thinkingand preparation will keepthe manufacturing industry’splace as the cornerstone ofthe American job market —not only when discussed aspart of history, but long intothe future.