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Boiling Point? The skills gap in US manufacturing

Boiling Point? The skills gap in US manufacturing



A report on talent in the manufacturing industry

A report on talent in the manufacturing industry
Sponsored by Deloitte and The Manufacturing Institute



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    Boiling Point? The skills gap in US manufacturing Boiling Point? The skills gap in US manufacturing Document Transcript

    • Boiling point? The skills gap in U.S. manufacturingA report on talent in the manufacturing industrySponsored by Deloitte and The Manufacturing Institute
    • ContentsDoes Manufacturing have the talent it needs to perform in the global marketplace?The performance imperativeSkills gap: Current snapshotFuture forwardMethodologyAuthors
    • Does manufacturing have the talent it needsto perform in the global marketplace?The past year has shown a renewed attention to the future of Overall, our survey findings are remarkably consistentthe manufacturing industry in the United States. In the media, with previous Skills Gap studies, with 67% of respondentsin online conversations, and in person, people are wondering reporting a moderate to severe shortage of available,whether the U.S. has what it takes to compete, and whether qualified workers and 56% anticipating the shortage towe can and should rededicate ourselves to strengthening grow worse in the next three to five years. In addition,the manufacturing sector in the face of increased global our survey indicates that 5% of current jobs at respondentcompetition and persistent economic challenges. manufacturers are unfilled due to a lack of qualified candidates. These results underscore the tenacity ofA strong manufacturing base has been fundamental a worsening talent shortage that threatens the futureto the economic success and effectiveness of the U.S., effectiveness of the U.S. manufacturing industry. When and we see little evidence of that changing. That’s one asked to look ahead three to five years, respondentsreason why, year after year, studies continue to show that indicate that access to a highly skilled, flexible workforceAmericans remain stalwart in their support of a strong is the most important factor in their effectiveness, rankedmanufacturing industry. Our own recent joint study on U.S. above factors such as new product innovation andpublic opinions of manufacturing1 found that throughout increased market share by a margin of 20 percentageone of the most turbulent periods in U.S. economic history, points. It’s not just that manufacturers are concernedpublic views on the importance of manufacturing – both in about talent today. This has been a serious issue for years,terms of its role in the U.S. economy and its function as a which begs the question of what must be done differentlyjob creation engine – have remained strong. Moreover, the in order to achieve the right results.manufacturing industry continues to be widely recognizedas an indicator of the health of the U.S. economy. It doesn’t help that today the skills gap is hitting where it hurts the most. Manufacturers are having theAs many U.S. manufacturers look to regain momentum, hardest time filling skilled production jobs that fuel theirthey will likely face some well-documented challenges. ability to innovate and grow, even in the face of highNot least among these is the issue of talent. This is unemployment. By that same token, their efforts tonot new – for years, manufacturers have reported a develop the skills of current employees are falling short.significant gap between the talent they need to keep Meanwhile, the manufacturing industry itself is evolving atgrowing their businesses and what they can actually find. such a rapid clip that companies are putting themselves atDeloitte Consulting LLP and the Manufacturing Institute risk of falling behind too far, too fast.have renewed the Skills Gap study, conducted in Julyand August, 2011, seeking to answer several important A closer look at the survey results turns up a few surprisingquestions about the nature of the skills and talent gaps in insights into the talent gap and how manufacturers aremanufacturing today: responding. Here are several highlights.• What impact is the skills gap having on company performance? The hardest jobs to fill are those that have the• Although the skills gap issue isn’t new, how is it evolving biggest impact on performance. in the face of continued economic and competitive Shortages in skilled production jobs – machinists, challenges? Which manufacturing jobs are being operators, craft workers, distributors, technicians, and affected the most? more – are taking their toll on manufacturers’ ability• What does the future of talent look like? What to expand operations, drive innovation, and improve 1 Deloitte and The upcoming trends are companies preparing for today? productivity. Seventy-four percent of respondents Manufacturing Institute. How fast are these changes happening? indicated that workforce shortages or skills deficiencies Unwavering Commitment: in skilled production roles are having a significant The Public’s View of theThis Skills Gap report is the first of a series of studies that impact on their ability to expand operations or improve Manufacturing Industrywill examine these issues and more. This report seeks productivity. Unfortunately, these jobs require the Today. September 2011.to address the questions posed above and provides most training, and are traditionally among the hardestan overview of the issues facing manufacturers today. manufacturing jobs to find existing talent to fill.Subsequent studies will focus on specific issues suchas training and education, talent management, andcommunity collaboration. Boiling point? The skills gap in U.S. manufacturing 1
    • While they recognize the importance of recruiting The skills gap is expected to take the biggest toll and developing talent, many manufacturers depend on skilled production jobs, and will likely widen as on outdated approaches for finding the right time passes. people, developing their employees’ skills, and When asked where the skills gap is likely to hurt the improving their performance. most as respondents look to the future, they identify At a time when finding the right talent for the job has skilled production jobs by a wide margin. Fully 80% of become so difficult, the spotlight shines even more respondents indicated that machinists, operators, craft brightly on recruitment and development efforts. After workers, distributors, and technician positions will be all, if manufacturers can’t bring in talent with the skills hardest hit by retirements in the upcoming years. At they need, they can take steps to expand the skills base the same time, companies expect the skilled production of their existing workforce. The bad news is that while group to be the hardest to find in the job market. most manufacturers have some tools in place to address these challenges, they are depending on outdated, What now? informal methods such as word-of-mouth recruiting. The respondents indicate the skills gap is an issue that When it comes to training, there is also considerable has reached the boiling point. The same old approaches room for improvement. aren’t enough to close the gap. Manufacturers should pursue more creative approaches to recruitment and talent High unemployment is not making it easier to management to make sure they have the skilled personnel fill positions, particularly in the areas of skilled they need to win in the future. For example, workforce production and production support. planning is important. But, on its own it’s not enough There’s no way around it: respondents report, on to deliver what manufacturers need. Fresh approaches median, that 5% of their jobs remain unfilled simply in areas such as employer branding can generate big because they can’t find people with the right skills. results when pursued in tandem with more traditional Translated to raw numbers, this means that as many as approaches. Similarly, many manufacturers are using many 600,000 jobs are going unfilled, a remarkable fact when of the same approaches to talent development that were the country is facing an unemployment rate that hovers being employed a decade ago. New performance tools above 9%. Respondents separately report that the and formal processes should be playing a larger role in any national education curriculum is not producing workers manufacturer’s talent management plan. with the basic skills they need – a trend not likely to improve in the near term. The manufacturing industry can’t solve all of its talent challenges on its own. Government agencies and The changing nature of manufacturing work is educational institutions have roles to play as well, creating making it harder for talent to keep up. a clear path for students to receive the right skills and Over the past five years, most manufacturers have training to prepare them for a career in manufacturing. redesigned and streamlined their production lines while That’s easier said than done in an industry environment implementing more process automation. In short, as that is evolving faster than at any point since its beginning. the industry has changed, the nature of work that it It will require new levels of collaboration between each of requires is changing as well. It’s happening fast, and these players. manufacturers will continue to expect more from their employees. Unfortunately, respondents report that While the results of this survey may appear dire, in reality the number one skills deficiency among their current each of these challenges is surmountable. The U.S. has employees is problem solving skills, making it difficult for among the largest, strongest manufacturing industries in current employees to adapt to changing needs. the world, and has demonstrated its ability to innovate and adapt time and time again. Now it’s time to show the world once again why there is no better place for manufacturing than the United States.2
    • The performance imperativeFor manufacturers, the skills gap issue isn’t just influencing Where it hurts the mosthow they run their businesses today. Just as important, it’s When it comes to how the skills gap affects the affecting their ability to grow and perform well into the future. competitive ability of manufacturers, respondents indicatedWhile manufacturers may recognize this link, our survey strong impacts across a variety of areas. When talent results show that many don’t have a detailed accounting and skills gaps affect production and quality levels orfor exactly where and how performance is affected on a development and innovation, it’s a concern regardless ofday-to-day basis. This makes it that much harder for them how you define it. Specifically, respondents don’t haveto address such challenges in a meaningful way. the skilled production personnel and supporting team members they need to maintain high production andTools of the trade quality levels, with 51% of respondents indicating this asConsider how surveyed manufacturers responded the most challenging issue resulting from the skills gapwhen asked which workforce factors they take into (see Figure 2). Not surprisingly, it is most acute amongaccount when planning corporate strategy. Workforce small- to mid-sized manufacturers, with 60% of companiesplanning and labor costs stand out as the dominant in the 500 to 1000 employee range singling it out as theirissues influencing strategic planning (see Figure 1). It’s most difficult issue. Digging deeper, respondents in certainan encouraging sign that workforce planning tops the industries highlighted slightly different issues. For example,list, but it may also mask a wide range of capabilities that in the life sciences and medical devices and technology,many companies include in the “workforce planning” media, and telecommunications categories, effectivecategory. For example, labor demand forecasts don’t sales and marketing had a much higher response rate as aoffer the ability to assess labor supply or perform scenario top-three issue.analyses that can help the company shift effectively tomeet changing business conditions. The workforce segments that are hardest to find are those that impact operations the most and require the mostThis finding also seems to belie other results in the training. From machinists and craft workers to industrialsurvey indicating that informal methods of performance engineers and planners, the talent crunch in these criticalmanagement and recruiting are among the most common areas is taking its toll on manufacturers’ ability to meetapproaches to how companies address their skills gaps. current operation objectives and achieve longer-termMeanwhile, potentially innovative approaches – employer strategic goals (see Figure 3).brand development, for instance – lurk near the bottom ofthe list of factors being considered.Figure 1: What workforce-related factors do you consider when setting your corporate strategy? Long-term workforce planning 81% Labor costs 68%Short-term availability of key talent 50% Sales force structure 30% Recruiting/branding 28% Low cost labor markets 21% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123. Source: Copyright 2011 Deloitte Development LLC and The Manufacturing Institute Boiling point? The skills gap in U.S. manufacturing 3
    • Figure 2: In which of the following operational areas has your company experienced the most difficulty due to workforce shortages or employee skill deficiencies? Maintaining production levels consistent with customer demand 51% Maintaining quality levels consistent 35% with customer requirements Achieving productivity targets 32% New product development 27% and innovation Implementing new technology 24% Implementing quality 20% improvement processes Effective sales and marketing 17% Achieving/maintaining target levels of customer service and satisfaction 16% Effective supply chain planning 13% and management 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123. Figure 3: For which employee segments have workforce shortages or skill deficiencies had a significant negative impact on your companys ability to expand operations or improve productivity? Skilled production (machinists, operators, craft workers, distributors, technicians) 74% Production support (industrial engineers, 42% manufacturing engineers, planners, etc.) Unskilled production 23% Sales and marketing 20% Scientists and design engineers 19% Management and administration 13% (HR, IT, finance, executives) Customer service (including call centers) 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123.Source: Copyright 2011Deloitte Development LLC andThe Manufacturing Institute4
    • Developing talent Figure 4: From which of the following methods or techniques does your company identify and react to those skills gaps which most impact your companyFinding people with the required skills is only part ofthe equation. Respondents are also looking to develop Informal feedback from 81% supervisors or managerstheir current talent in order to close the skills gap Formal performance appraisals 57%and outperform the competition. While most of the Career development planning 31%respondents we surveyed indicated that they haveperformance management tools in place, they are still Feedback from training programs 30%relying heavily on informal methods. This isn’t a new trend Formal competency modeling 17%– our 2005 Skills Gap study reported virtually identical 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%results. These results vary by company size and industry,of course. Respondents from life sciences and aerospace Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123.and defense companies report a higher reliance on formalperformance appraisals, while respondent-companieswith more than 5,000 employees from other industriesdepend more heavily on career development planning. Figure 5: Which methods do you currently use to mitigate existing skill gaps?Interestingly, the use of competency modeling, whilehigher among larger companies, is still relatively low when Internal employee training and development programs 83%compared with other approaches (see Figure 4). Use of overtime 67%To make a significant impact, approaches such as Use of contingent labor (staffing agencies, etc.) 49%competency modeling should be considered bymanufacturers to gain momentum in their internal talent External training and 48% certification programsdevelopment efforts. Career development programs andcompetency models, for instance, can be an invaluable Outsourcing of certain functions 42% Focused recruiting on newtool in aligning employees’ expectations with those of workforce segments, i.e. Gender 20%their employers when it comes to the knowledge, skills, and/or Diversity initiativesand abilities required. But today, only 31% of respondent- 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%companies report having formal career development, and Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123.only 17% of the respondents report using competencymodel tools.Clearly, many manufacturers are investing in trainingprograms. But the evidence suggests that these programs Readily available toolsare falling short of their goals. Two-thirds of the respondents Many manufacturers are skeptical about the ability of training to close the skillssaid they’re relying on overtime, while nearly half used gap. It’s true that training alone isn’t enough, but it does have an important rolethird-party labor to close the skill gaps (see Figure 5). to play. One problem is that without competency models or targets in place, it’sThese methods are costly, inefficient, and can add up to hard for manufacturers to measure the impact of training efforts. Also, smallera big drag on overall performance. The responses to this manufacturers may not be able to support development of competency models.question are remarkably consistent across industry groups, Fortunately, there are readily available tools created specifically for this purpose, suchindicating a need across the board to embrace more as the NAM-endorsed Manufacturing Skills Certification System, which can helpanalytical and innovative means of dealing with skills gaps. manufacturers provide their workers with the required range of skills to compete. No matter which approach is used, the bottom line is that manufacturers need to more effectively understand what skills they really need, and then use targeted training approaches to make sure their workforce is prepared to deliver. Source: Copyright 2011 Deloitte Development LLC and The Manufacturing Institute Boiling point? The skills gap in U.S. manufacturing 5
    • Skills gap: Current snapshot After making difficult workforce-related decisions during Exacerbating the issue is the stubbornly poor perception the global recession, our results show that manufacturers of manufacturing jobs among younger workers. Our are thinking about hiring again – even in a long, painfully recent public opinion survey on manufacturing found that slow recovery. That puts the skills gap in the spotlight once among 18-24 year-olds, manufacturing ranks dead last again. But what are manufacturers facing as they look to among industries in which they would choose to start their reinforce their labor pool? As noted previously and shown careers.2 Combined with the results above, this leaves the in Figure 6, 67% of respondents indicate a moderate to manufacturing industry with some steep challenges related severe shortage in qualified workers overall. A deeper look to business operations. Over 70% of respondents indicate at the data indicates that the issues are more severe for an increase or no change over the past five years in how the certain critical workforce segments. current skills shortage negatively impacts critical functions like new product development, implementation of new Important roles are not getting any easier to fill technologies, or attaining productivity targets (see Figure 7). Respondents have noted that their most significant needs today are in the skilled production sector, which will also face the largest skills shortages in the near future. Focusing on the next generation Eighty-three percent of companies indicate a moderate to San Antonio manufacturers recently partnered serious shortage of skilled production workers and 69% of with the Alamo Community Colleges to introduce companies expect this shortage to worsen over the next high-school juniors and seniors to manufacturing three to five years (see Figure 6). careers and higher education by completing an industry-driven curriculum to develop work ready Manufacturers face challenges in other technical job skills in manufacturing. The dual-credit program classifications such as engineering technologists and incorporates classroom instruction with hands-on scientists, with moderate to severe shortages at 60% learning in a state-of-the-art facility and allows and 50% of surveyed companies, respectively. Again, the participating students to graduate high school situation for these employment categories is expected with up to 35 credits, a National Career Readiness to worsen in the near term. This will present a serious Certificate (NCRC), and the Production Technician problem in a few years as more and more workers retire Certification from the Manufacturing Skills Standards – and their employers know that. As shown in the next Council (MSSC). Local manufacturers provided section, 75% of respondents indicated that pending significant input into program design and curriculum retirements and an aging workforce will have the most and local industry groups offer job internships valued significant impact among skilled production workers, with as high as $2,800. The San Antonio manufacturers 40% saying it will be significant for production support. also recruit Academy graduates for job opportunities in their facilities in manufacturing production operations and facilities maintenance.2 Deloitte and The Manufacturing Institute. Unwavering Commitment: The Public’s View of the Manufacturing Industry Today. September 2011.6
    • Figure 6: Please select the option that best describes the availability of qualified workers for the following workforce segmentsat your company today, and indicate if you anticipate the shortage to increase, decrease, or not change over the next 3-5 years:Today Overall 7% 26% 55% 12% Unskilled production 42% 30% 22% 6% Skilled production (machinists, operators, craft workers, distributors, technicians) 5% 12% 38% 45%Engineering technologists (industrial engineers, 14% 26% 40% 20% manufacturing engineers, planners, etc.) Scientists and product design engineers 27% 23% 33% 17% HR/IT/Finance (Executive, Management and Administrative Staff) 40% 38% 20% 2% Sales and marketing 35% 37% 24% 5% Customer service 42% 37% 18% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% No shortage Low shortage Moderate shortage Serious shortageNext 3-5 years Overall 26% 7% 56% 11% Unskilled production 60% 6% 24% 10% Skilled production (machinists, operators, craft workers, distributors, technicians) 18% 5% 69% 7%Engineering technologists (industrial engineers, 36% 6% 45% 14% manufacturing engineers, planners, etc.) Scientists and product design engineers 36% 5% 35% 24% HR/IT/Finance (Executive, Management and Administrative Staff) 65% 7% 14% 14% Sales and marketing 58% 8% 19% 15% Customer service 62% 8% 13% 17% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% No change Decreased shortage Increased shortage Don’t knowFigure 7: If a skills shortage has been identified in your company, please indicate how this shortage trend has impacted each ofthe following areas during the past five years: New product development and innovation 22% 6% 35% 37% Implementing new technologies 16% 7% 33% 43% Implementing quality improvement processes, e.g. sustainability processes 16% 9% 39% 37% Achieving productivity targets 11% 9% 34% 46% Maintaining production levels consistent with customer demand 12% 9% 32% 47% Achieving and maintaining desired levels of customer satisfaction 16% 8% 42% 34% International expansion: ability to import, export, or expand globally 30% 7% 37% 26% Source: Copyright 2011 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Deloitte Development LLC and The Manufacturing Institute No skills Skills shortage Skills shortage Skills shortage shortage has decreased has not changed has increased Boiling point? The skills gap in U.S. manufacturing 7
    • Changing nature of work Figure 8: To what extent has the nature of work changed during the past five years?The skills gap problem comes into sharper focus when Redesigned/streamlinedconsidering the changing nature of manufacturing work production lines 83%during the past five years. Many manufacturers have rede- Increased use of automation 51%signed and streamlined production lines while increasinglyautomating processes. While some remaining job roles will Increased concerns about labor costs 48%require less technically skilled workers, ironically, these trendsand innovations actually demand more skilled workers, such Increase in skilled positions 43%as maintenance engineers. This changing nature of work Increase in flexible work time 24%is consistent across industries and companies of differentsize, and can make it difficult for workers to keep up with Use of team-based work and compensation models 20%employment demands (see Figure 8). Use of flex work models 9%Critical thinking: Beyond technical training 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Many industries, not just manufacturing, are feeling the Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123.talent crunch. It’s been widely reported that high schoolstudents have demonstrated a lack of proficiency in mathand science. But when we asked respondents what theyconsidered to be the most serious skill deficiencies in theircurrent employees, inadequate problem-solving skills Figure 9: What are the most serious skill deficiencies in your current employees?topped the list. It was followed by a lack of basic technicaltraining and inadequate basic employability skills (see Inadequate problem-solving skills 52%Figure 9). Notably, inadequate math, reading, and writing Lack of basic technical training (degree, industry certification or vocational training) 43%skills weren’t seen as being as serious as other concerns. Inadequate basic employability skills (attendance timeliness, work ethic, etc.) 40%While the national curriculum may be discretely addressing Inadequate technology/computer skills 36%certain skills, there continues to be a lack of broader problemsolving abilities. Many manufacturers and other employers are Inadequate math skills 30%learning that skills such as critical thinking not only allow an Inadequate reading/writing/ communication skills 29%individual to digest, analyze, and communicate information,but are needed across a broad range of disciplines. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123.The unemployment paradoxIn an attempt to translate the factors described previouslyinto real numbers, we asked respondents how many actualjobs went unfilled due to a lack of qualified applicants. We found the median value of unfilled jobs is 5% among thesurvey’s nearly 1,100 respondents. Think of it this way: asmany as 600,000 well-paying jobs are going unfilled whilethe national unemployment rate hovers around 9%. Asdiscussed above, these results will likely get worse. But likein our 2005 and 2009 surveys, we continue to see thatmany manufacturing companies are still using the sametactics to address the same problem. Manufacturers canhelp by improving training and recruiting, but they can’t doit on their own. To some degree, it may require a national Source: Copyright 2011movement, which could include public policy changes, to Deloitte Development LLC andhelp address the skills gap concerns. The Manufacturing Institute8
    • Future forwardThe manufacturing industry is undergoing a rapid Figure 10: Given the change in the economy and business environment, which of the following will be most important to your companys future business success during the next 3-5 years?evolution, spurred on by technology advances,globalization, and shifting demographics. What do High skilled, flexible workforce 68%manufacturers expect to happen when it comes to talent New product innovation 48%in the future, and how are they preparing to come out ontop? Are manufacturers taking the right steps to prepare Increased market share 38%for even greater skills gaps in the future? Low cost producer status 29%The changing workforceThe changing nature of work, and the ensuing need for Increased customer service orientation 24%improved workforce skills, has become a focal point for Increasing sales outside the U.S. 22%companies as they plan for their future results. When asked which factors would help improve their businesses the Supply chain integration with 21% suppliers or customersmost over the next five years, a highly skilled and flexibleworkforce topped the list for manufacturers, ranking ahead 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%of product innovation, increasing market share, low-cost Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123.producer status, and even supply chain integration withsuppliers, among other factors (see Figure 10). In an erawhen many companies have spent significant time andresources to streamline operations and improve innovationand customer service, this result highlights the effort thatshould be considered by most manufacturers to combatthe expected severity and impact of future skills gaps.This may be an area of concern to manufacturers since Figure 11: Retirement challenges: In which workforce segments will the aging workforceretaining, hiring, and developing that skilled workforce and anticipated retirements have the greatest impact?will likely be difficult in the face of aging demographics. Skilled production (machinists, operators, craft workers, distributors, technicians) 75%As more and more older and experienced employees Production support (industrial engineers,retire, finding younger talent to replace them has become manufacturing engineers, planners, etc.) 40%increasingly difficult, exacerbating the talent crunch. Management and administration (HR, IT, finance, executives) 40%The anticipated retirement exodus could seriously hurtmanufacturers in specific workforce segments over the Scientists and design engineers 22%next five years. The areas of skilled production (machinists,operators, and technicians) and production support Sales and marketing 21%(industrial and manufacturing engineers, and planners)would be hardest hit according to survey respondents Unskilled production 15%(see Figure 11). Manufacturers are also feeling the pinch Customer service (including call centers) 7%when it comes to highly specialized and innovativeemployees, such as scientists and design engineers. Their 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%shortage could affect new manufacturing processes and Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123.production development (see Figure 12 on the page 10). Source: Copyright 2011 Deloitte Development LLC and The Manufacturing Institute Boiling point? The skills gap in U.S. manufacturing 9
    • Innovate to get innovative workers Figure 12: Hiring Challenges: In which workforce segments do you anticipate the greatest hiring challenges during the next 3-5 years?Finding a skilled workforce at the desired cost is critical Skilled production (machinists, operators,to continued viability, growth, and innovation. And as craft workers, distributors, technicians) 80%shown by responses, many companies expect innova- Production support (industrial engineers, manufacturing engineers, planners, etc.) 48%tion to have a heavy impact on employees, particularlyas it relates to new process and products (see Figure 13). Scientists and design engineers 29%However, many are still applying the same old methods Sales and marketing 21%to address this rapidly changing workforce and talentgap. For example, only 20% of respondents to a recent Management and administration (HR, IT, finance, executives) 20%talent management survey said they’re focusing on Unskilled production 17%recruiting for their particular needs.4 It’s going to takemuch more than that. Customer service (including call centers) 7%Many leading companies say it’s crucial to develop an 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%innovative workforce plan, create a talent pipeline, and Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123.engage employees – both current and future – to remaincompetitive. Most top talent leaders say an effective plan Figure 13: How does innovation impact your workforce?should connect business and talent goals, provide ways tomeasure progress and performance, and leverage tech- New manufacturing processes 80%nology to help recruit and retain talent.5 New product development 64% Access to new markets 46% Need to respond to sustainability concerns 31% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%4&5 Deloitte. Talent Edge 2020: Blueprints for the New Note: This is a multiple selection question, percentages may not add to 100%. Base used is 1123. Normal. December 2010. Source: Copyright 2011 Deloitte Development LLC and The Manufacturing Institute10
    • Geographic strategies Figure 14: What is the most important consideration when selecting a geography?Manufacturers have undertaken a range of strategies to Access to qualified talent 27.8%address their skills and cost needs, including geographic Lower cost environment 26.2%shifts of workforce and operations. When asked whether Regulations more conducive tothey are currently considering a substantive shift in business performance 19.0%workforce location, 11% of respondents said they were. Access to customers 17.5%Their reasons vary widely. As shown in Figure 14, Proximity to educational/ research institutions 2.4%responses were split evenly between access to qualified Access to materials 1.6%talent and a lower cost environment. While this may not be surprising, it is interesting that more innovative approaches 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%such as proximity to educational and research facilities are Note: This is only applicable to respondents that stated they were considering moving which was 11% of total.given much less attention. Paths to closing the gap There’s no one magic solution that can address growing skills gap concerns among manufacturers. Larger forces, such as globalization and technology, will continually change the landscape, and employers should consider shifting accordingly. Some issues may need to be addressed through public policy involving many more stakeholders. However, there are some demonstrated methods manufacturers can take to mitigate the gap. Knowledge management plans and solutions can address the brain drain as older workers retire, taking with them valuable knowledge and experience. Capturing critical information through technology and passing it on to newer and younger workers can help reduce training time, can improve collaboration and communication, and even help companies get to market faster by leveraging previous programs. Older workers can also gradually scale back their hours as they phase into retirement or even work as a part-time pensioner while helping younger colleagues gain the right knowledge and skills. Manufacturers and skilled trades have historically used apprenticeship programs to pass on specialized skills from an experienced craftsman to a new worker. And through mentoring programs, whether informal or established by a company, experienced workers can provide coaching and advice to less experienced colleagues. Employers have also leveraged their local community colleges or trade schools to supplement employee skills. Source: Copyright 2011 Deloitte Development LLC and The Manufacturing Institute Boiling point? The skills gap in U.S. manufacturing 11
    • Methodology This survey was commissioned by Deloitte and The Manufacturing Institute, and was conducted online by Deloitte during July and August of 2011. The survey polled a nationally representative sample of 1,123 executives across fifty states and has a margin of error for the entire sample of +/- three percentage points. Figure 15: Participating company primary industry classification 4% 7% 1% 7% 6% 7% 4% 14% 4% 50% Aerospace & Defense Life sciences and medical devices Automotive Process Consumer products Retail Energy and resources Technology, media and Industrial products telecommunications Transportation Figure 16: Participating company size, based on annual revenue 7% 4% 1% 7% 29% 45% Less than $1 million Between $500 million Between $1 and $10 million and $1 billion Between $10 and $100 million Between $1 and $5 billionSource: Copyright 2011Deloitte Development LLC and Between $100 and $500 million Over $5 billionThe Manufacturing Institute12
    • AuthorsTom Morrison Emily Stover DeRoccoNational Service Line Leader PresidentTotal Rewards The Manufacturing InstituteDeloitte Consulting LLP EDeRocco@nam.orgthomorrison@deloitte.com Jennifer McNellyBob Maciejewski Senior Vice PresidentSenior Manager The Manufacturing InstituteDeloitte Consulting LLP JMcNelly@nam.orgromaciejewski@deloitte.com Gardner CarrickCraig Giffi Senior Director of Strategic InitiativesVice Chairman and U.S. Consumer & The Manufacturing InstituteIndustrial Products Leader GCarrick@nam.orgDeloitte LLPcgiffi@deloitte.com
    • About The Manufacturing InstituteThe Manufacturing Institute is a non-partisan 501(c) (3) affiliate of the National Association of Manufacturers focused on delivering leading-edgeinformation and services to the nation’s manufacturers through its Center for the American Workforce and its National Center for Manufacturing Research. Visit www.themanufacturinginstitute.org.About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms,each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure ofDeloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure ofDeloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.Copyright © 2011 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited