In the age of the “skills gap” in manufacturing, how do manufacturers find the right talent for their open positions?
Furthermore, what can be done to close that gap?
Supply chain risk management firm Avetta recently hosted a webinar, “The War for Contractor Talent,” with MetalMiner’s participation. The discussion zeroed in on the skills gap in the U.S., including the gap’s potential causes and impacts, plus what can be done to close it going forward.
MetalMiner Co-founder and Executive Editor Lisa Reisman was joined by Matt Runfola, founder of the Chicago Industrial Arts and Design Center, and Brett Armstrong, director of business development at Avetta.
To listen to the full discussion, visit Avetta’s webinar page.
The so-called skills gap is massive, as is the need for talent.
“There are 4.6 million manufacturing jobs to be filled by 2028,” said Reisman during the webinar, citing data from Deloitte, The Manufacturing Institute, Accenture and the Bureau of Labor Statistics. “Imagine, 2.4 million of them may go unfilled, which is a shocking number to me.
“The other piece that is interesting is the impact of not having the workers that are required within the manufacturing sector — that forecast and impact on the economy in general is quite substantial.”
According to the data prepared by Avetta, approximately $454 billion of economic activity could be at risk by 2028 if qualified manufacturing workers are not found.
To put that into perspective, that figure would account for a whopping 17% of the U.S.’s forecasted manufacturing GDP of $2.67 trillion.
Furthermore, 30% of executives at large U.S. companies predict a loss of business due to labor shortages, in turn leading to a decline in productivity growth and, eventually, a decline in the standard of living by 2030, according to data included in Avetta’s webinar presentation.
Building Interest in a Manufacturing Career
What exactly is happening in the manufacturing sector? Why are companies sometimes struggling to fill open positions?
According to Deloitte and IndustryWeek, 52% of 18-24 year-olds have a minimal interest in a manufacturing career, while 61% indicate they would rather pursue a “professional” career — this despite the fact that 91% of students and working professionals find work after completing apprenticeship programs.
On the other hand, from a hiring perspective, 42% of manufacturers have a “strong affinity toward outsourcing employees” in order to increase productivity and speed up the hiring process; however, this strategy comes with potential risks, including declines in product quality.
Given the skills gap and apparent lukewarm interest in manufacturing from those in the age 18-24 demographic, what kind of impact is that having on the sector?
That is a question Runfola thinks about quite a bit, as he runs the Chicago Industrial Arts and Design Center, which offers technical classes for students of all ages. At the center, students can learn a variety of skills, including welding, casting and woodworking, in addition to proficiency with a wide range of industrial equipment.
Runfola defined the skills gap as the difference between the skills that are required on the manufacturing floor versus what skills an employee comes to the floor already having.
As a result, the labor pool available for hire shrinks by virtue of the lack of these skills.
“There’s a smaller pool of qualified people to choose from and that means that a lot of companies must resort to hiring larger unskilled workforce,” Runfola said. “It also means companies must spend more time training employees on the job — and that’s time and money. If someone doesn’t come in with a specific skill set that you require, that means that you have to bring them up to speed and that means the job isn’t being carried out as effectively as it could be right from the start.”
Another consequence of this hiring model is higher turnover, Runfola posited, as those without the necessary skills likely won’t be as invested in the work as those who come to the manufacturing floor armed with the needed skills.
In Runfola’s view, in order to start to bring more young people into the sector, they need to be exposed to manufacturing processes at an early age.
“We need to get, whatever we call, industrial arts or vocational training, or career and technical education, back into the secondary school system,” he said. “These young adults need to know what their options are before they make a decision to go to school or enter the workforce.
“The good news with this is we’re being helped out quite a bit with the maker movement, the do-it-yourself movement, and even the STEM and robotics movement in school systems. So students are getting a taste of manufacturing or making things again, but we need to instill it more solidly in the school curriculum.”
Armstrong said in order to reduce the labor shortage, much is dependent on the culture of the organization looking to hire.
“There’s almost got to be a paradigm shift within organizations that they’re willing to invest in the third parties that they have coming onsite,” Armstrong said. “That’s something that we’re definitely seeing. When you consider the training that has got to take place and even the computer-based training that Avetta can offer, those are all great opportunities to pull new workers in and to ensure that they’ve got the appropriate skill sets and all of the training in place in order for them to be successful.”
What Happened to Trade Schools?
Speaking of education, trade schools are often the subject of much debate and discussion about whether we as a nation are adequately funding and advertising them (particularly as an option for young people).
Runfola called it a “demand and supply issue.”
Given the demographic statistics cited by Reisman, Runfola said there is “not enough demand to warrant a lot of certification schools.”
“I think that’s one of the issues,” Runfola said. “We have deemphasized so much the importance of, let’s just say, manufacturing or vocational-type careers, that most kids don’t think there’s value in it, and there’s a lot of kids that don’t even understand what that means to be in the manufacturing sector.”
The Importance of Contractor Management
In addition to simply finding the right workers, it is also crucial for companies to make sure their houses are in order with respect to contractor management.
Armstrong cited an example of a crew of workers who, while disassembling a construction crane, had prematurely removed pins that secured sections of the crane’s mast together, which contributing to the crane’s toppling under minor wind gusts.
“It put the enterprise organization who had hired those third-party workers to come onsite in significant risk,” Armstrong said. “One of the things we found at Avetta is that any time there is a safety-related event, first of all, we don’t ever want to see that. But when it does happen, it is typically not the third party that’s been invited to come onsite who makes their way to the news — instead, it’s that large enterprise organization. Their logo is the one that makes its way to the headlines and ultimately presents some type of risk to shareholder value.”
Procurement in Contractor Management
Armstrong said he has noticed a shift in how procurement interacts with stakeholders, noting an increasing emphasis on being a “value-added partner.”
“Typically, when Avetta’s brought in to work with an organization, it’s through one of two channels: either through safety or through procurement,” Armstrong said. “I would say that that shift has really started to take place in the last five years.”
That trend has accelerated in recent years, with procurement gaining a more visible presence at the table.
“The stakeholders that we now see sitting around the table would include procurement, purchasing, safety, operations, legal, risk … even the executive level as they start to consider the potential impacts of hiring the wrong party and what that could do to the organization itself,” Armstrong said.
Editor’s Note: For those interested in downloading the full webinar on-demand, visit Avetta’s webinar page.