In the next few years, thousands of Baby Boomers are going to retire, leaving factory jobs to Generation Y, who will be presented with dual challenges; increasing productivity and making the overall U.S. economy more competitive. However, the transition between the new generation of workers and the baby boomer generation workers will be difficult because the two generations are profoundly different in terms of attitude, skills and work styles.
According to the findings of "Developing & Engaging the Manufacturing Workforce," a white paper jointly published by the Grocery Manufacturer’s Association (GMA), Booz & Company, and The Alliance for Innovation & Operational Excellence (AIOE), consumer packaged goods manufacturers (CPGs) are experiencing difficulties in finding and retaining talented workers with the right combination of problem solving and core skills required in the 21st century manufacturing environment.
The Manufacturing Excellence Share Group (MESG), part of the GMA, developed the paper in conjunction with a Booz & Co. study and panel discussion in which more than a dozen manufacturing executives spoke about hiring, training, skill requirements and development, operational styles and new ways to uncover talent.
To provide a more comprehensive picture of the issues discussed in the study, we interviewed Patricia Riedl, Principal at Booz & Company, who, along with Matthew Lescohier and Thomas Mayor, provided the expertise and technical communicators during the MESG panel discussion and wrote the report. We also spoke with Maria Ferrante, Vice President, Education & Workforce Development at PMMI. PMMI has been at the forefront of workforce development and training issues in the packaging and processing industries for a number of years, launched AIOE with charter partner GMA in 2011.
Q: All too often, talking about employment in the manufacturing realm with other manufacturers becomes a “preaching to the choir” situation. Everyone feels they understand the problems that have led to qualified worker shortages, but are there factors that are often overlooked or misunderstood?
Riedl: In general, it is true that manufacturers understand many of the issues contributing to workforce shortages. Recent media reports and studies have clearly summarized the situation and underlying drivers — yet, the fact remains, only 50 percent of engineering students and 20 percent of math and science students regard manufacturing as an attractive career. Since this is the case, it would behoove manufacturing leaders to focus on what actions they can take to begin to turn the tide. While there is no “quick fix”, there is a lot manufacturers can do. For example, leaders should be asking themselves:
- Have I clearly defined the critical skills & capabilities my operations require to support my company’s strategy? If this strategy is unclear or likely to change, how will this change my talent requirements?
- Have I established a working environment that is attractive to the current talent pool (i.e. Generation Y)? Is there more I could do to ensure that once I recruit & hire someone that they stay for the long-term?
- Have I invested in the skills training required for my specific business? Are there local community colleges or training centers that I could partner with to expedite skill development, or provide it at a lower cost?
- Have I reached out to local & regional government / development bodies to communicate what my company needs to be successful? Can I partner with other local manufacturers to influence decisions that support a robust manufacturing base?
Q: There are a number of economic reports that offer a wide array of perspectives on the state of manufacturing employment. Which of the following do you believe are accurate, and why?
a.The manufacturing positions being created today are lower paying, entry level jobs that are not as appealing.
Riedl: To the contrary, most new manufacturing jobs today involve increasingly integrated, computer-controlled production cells and require significant ability to engage in system-level problem solving with team-mates on the floor. These are exciting, high-tech opportunities which require strong STEM skills, and in many cases a two-year associates degree or more.
b.The manufacturing positions currently available pay well but require more training and expertise than most applicants have, therefore making them difficult to fill.
Riedl: We see both skilled and unskilled opportunities in the market although most new (versus replacement) opportunities require advanced training. According to the Georgetown University Center on Education and the Workforce, in 1983, 22 percent of the U.S. manufacturing workforce had post-secondary education. By 2008, that number had increased to 34 percent. By 2018, it is expected that 38 percent of the U.S. manufacturing workforce will have a post-secondary education, a 12 percent increase over 2008 levels. The indications are that education requirements will continue to increase well into the future as manufacturing becomes more complex and requires a higher skill level.
Clients tell us that both skilled and unskilled positions are hard to fill for different reasons. High skill, high-tech roles are difficult to fill due to a lack of STEM-trained candidates with an interest in manufacturing. A recent Booz & Company survey showed that even recent science and engineering graduates have not been exposed to manufacturing — 31percent and 18 percent, respectively — making it very difficult for manufacturers to attract these workers. The good news is that a bit of exposure in high school or in technical degree programs can significantly impact employment choices.
Despite today’s high unemployment, lower skilled manufacturing roles — the traditional path to entry for generations of manufacturing workers — are also proving hard for our clients to fill. Here the story is a bit different — the complaints are a dearth of reliable candidates willing to commit to a structured, full-time job which in the short term offers only a small income premium relative to social welfare.
c.There are more manufacturing jobs available now than five years ago.
Riedl: Based on data from the U.S. Bureau of Labor Statistics, the number of workers employed in the manufacturing sector has fallen about 15 percent since 2007 (about 14 million workers in 2007 vs. about 12 million today). However, manufacturing jobs have been steadily increasing over the past 12 months.
d.The number of available manufacturing positions continues to decline each year.
Riedl: Based on data from the U.S. Bureau of Labor Statistics, the number of U.S. manufacturing job openings has steadily increased since mid-2009 (from about 100,000 openings in June 2009 to just fewer than 300,000 openings in July 2012). It is true that when you look further back, i.e. prior to the financial crisis (2007), U.S. manufacturing job openings today remain about 20 percent lower.
Since productivity gains in U.S. manufacturing have offset increases in demand and manufacturing output for several decades, we expect, and in fact would hope this will continue into the future as productivity increases are critical to improve the nation’s and the world’s standard of living. Over the past two decades, manufacturing productivity has averaged 1.6 percent growth (CAGR) vs. 1.0 percent productivity growth across the private sector as a whole.
The full study, a 17-page PDF, is available for free and can be downloaded immediately (sign-in required) from the AIOE website.
Patricia Riedl is a principal with Booz & Company based in Chicago. She works with consumer manufacturers and retailers, specializing in driving value through manufacturing and supply chain strategies. Matthew Lescohier is a senior associate with Booz & Company based in Chicago. He works with manufacturing and consumer health and nutrition companies to improve innovation and supply chain performance. Thomas Mayor is a senior executive advisor with Booz & Company based in Cleveland. With more than 20 years of consulting experience, he focuses across industries on supply and manufacturing strategy, operations turn-around, purchasing, and supply base management. Maria Ferrante is Vice President, Education & Workforce Development at PMMI. She facilitates collaboration between industry suppliers, end users and educators to improve the packaging and processing workforce. Under her leadership, PMMI U focuses on developing products and services to enhance the technical education of packaging and processing professionals.
Interview by Jeff Reinke, Editorial Director