Bio: Jeannine Kunz is director of training and development for Tooling U-SME, where she leads a team dedicated to the ongoing education of the manufacturing workforce. SME, a nonprofit organization, has served practitioners, companies, educators, government and communities across the manufacturing spectrum for more than 80 years.
Manufacturing in the U.S. is making a comeback. This is good news for the country, companies and workers.
One reason for this expansion is that American companies – faced with rising labor and transportation costs abroad – are increasingly moving their operations back home. This means businesses are searching for ideal locations for expansion or relocation to give them a competitive edge.
While traditional measures of a community’s business-friendly environment are based around tax rates, regulations and transportation options, one of the most important—and often overlooked—criteria is access to a talented workforce.
A company’s access to skilled workers is critical for growing its business. Deloitte’s 2013 Global Manufacturing Competitiveness Index indicates talent-driven innovation based on the quality and availability of workers (skilled labor as well as researchers, scientists and engineers) is the number one driver of manufacturing competiveness.
Often employers invest in equipment, tooling and materials but neglect to make a similar investment in their employees. However, if workers don’t keep up with technological advances, the whole structure moves out of balance. A well-trained employee will more effectively utilize the capability of the new equipment leading to increased innovation and productivity.
The Manufacturing Talent Shortage
Let’s consider that manufacturing is an important driver for U.S. economic growth. With nearly 12 million Americans (or nine percent of the workforce) employed directly in manufacturing, the industry is a strong job creator and generates jobs in other industries.
Having a strong manufacturing center here is the U.S. is critical for our competitiveness as a country. As Mark Tomlinson, SME CEO wrote in a recent Huffington Post column, “Without a doubt, a healthy manufacturing industry of the future is one that keeps the research and development, design and production – and the highly paid manufacturing jobs that come with it – in America.”
After many years of watching jobs move overseas, the U.S. is fast becoming one of the lowest-cost countries for manufacturing in the developed world, according to the Boston Consulting Group, a strong incentive for companies to rediscover this country as a base of operations.
The manufacturing industry faces a large challenge, however. There is a severe shortage of skilled workers needed to fill today’s manufacturing jobs – and that will continue to grow unless addressed.
There are several reasons for this shortage:
• Limited pipeline – There has been a decline in people pursuing STEM education and younger generations are less drawn to a career in manufacturing.
• Retiring workforce – Baby boomers are hitting retirement age. Valuable experience and skills go with them.
• Changing pace of technology – At no other time has technical innovation moved so quickly. This is great news for growing companies, but can be a challenge for workers who can’t keep pace and are left behind.
• Reshoring – This movement to bring manufacturing back to the U.S. creates an even bigger demand for jobs.
This gap between the need for skilled workers and the availability of this talent is profound. According to a recent SME survey, nine out of ten manufacturers are challenged to find skilled workers.
This talent shortage underlines the importance of selecting sites for expansion or relocation that are serious about educating and training a workforce that can design, manufacture, program and repair high-tech machines.
Fortunately, there are governments, academic institutions and companies in many areas of the country recognizing that a trained workforce, with the right knowledge, skills and abilities, will greatly impact business for years to come.
Evaluating Sites for Workforce Readiness
To evaluate and select a site for expansion or development, here are three ways to ensure a new location is workforce ready.
1. Look at the supply chain from local academic institutions. Community colleges and vocational schools play a pivotal role in workforce development. In many communities throughout the U.S., these academic institutions have formed partnerships with local manufacturers to address the skilled talent gap.
In a new location, there are important questions to ask to determine if local schools are an avenue to finding a skilled workforce: Which schools offer training meeting the needs of local manufacturers? How willing are they to partner with you to create a pipeline of future employees that fit your company’s needs?
Just as a manufacturer would speak to any supplier about the quality and specifications of a part, a company needs to be in dialogue about the desired end product of education—knowledgeable and employable workers.
This model is working. SME is currently working within communities to connect high schools, community colleges and local manufacturers to create a pipeline of future workers.
One initiative, The Customized Training Program in North Carolina, provides training and support services for business and industry in the state through its network of nearly 60 community colleges. Funded by economic development dollars, this program offers companies high-quality learning solutions including classroom, lab and on-the-job training, and computer-based interactive programs and immersive 3-D simulation. This partnership is helping provide companies with the trained team members they need to meet today’s workplace demands.
This summer, North Carolina Governor Pat McCrory addressed the State Board of Community Colleges saying, “Community colleges are a crucial advantage to North Carolina’s economic development efforts.”
Another example is a Michigan-based program, which begins addressing manufacturers’ training needs at the local technical high school, coordinating with the community college. The program allows students to learn theory material online at their own pace. Paired with instructors delivering hands on training, students are learning in formats to address their individual learning style.
Starting early, and using the same training materials industry uses, accelerates the process and ensures graduates have the core skills needed to be shop-floor ready. Many local schools are finding online training, which is user-friendly for students and a time saver for instructors, is a powerful tool for accelerating training, a major bonus for manufacturers.
2. Review state incentive programs. From North Carolina to Indiana, states are doing more to attract companies to their areas by offering workforce development programs to help manufacturers find the skilled workers they need to continue growing their operations.
For instance, California’s Employment Training Panel (ETP), a business- and labor- supported state initiative, provides funds to offset the costs of some job skills training such as business skills, manufacturing skills, continuous improvement, etc. Since 1983, ETP has funded the training of more than 800,000 employees, serving more than 78,000 companies, expending over $1.25 billion.
As companies expand or relocate, it is important to understand which states offer incentive or grant programs for training and development along with the types of funding or services they offer. Often these programs are tied directly to cooperation with local community colleges and outcome based validation through assessments or industry certifications.
3. Take Ownership and Create a Training Program. A beneficial time to evaluate training and development programs is when companies are looking at expansion or relocation.
Alarmingly, while many manufacturers say they are challenged to find skilled workers, more than half have no plans in place to address this, according to a recent SME survey.
Fortunately, we are seeing more companies throughout the country take it upon themselves to train and develop the workforce they need. Each job requires unique skills and knowledge and it may be time to develop or enhance an overall training program to meet specific needs.
Companies happily innovate every day when it comes to technology and other advancements and this mindset must be directed to workforce development as well.
Growth in U.S. manufacturing means exciting things for companies, which now are considering expanding or relocating because of new opportunities. Access to a talented workforce should be high on the list of considerations. Success will come from tapping into the many existing state and local development resources (training and financial) as well as committing to internal workforce programs to
fully capitalize on this growth.
The bottom line is that no matter where they are located, manufacturers must become focused on training and development to maintain production levels, retain a competitive advantage and excel for years to come.
1. National Association of Manufacturers
