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As many U.S. manufacturers look to regain momentum, they will likely face some well-documented challenges. Not least among these is the issue of talent. This is not new – for years, manufacturers have reported a significant gap between the talent they need to keep growing their businesses and what they can actually find. Deloitte Consulting LLP and the Manufacturing Institute have renewed the Skills Gap study, conducted in July and August, 2011, seeking to answer several important questions about the nature of the skills and talent gaps in manufacturing today:
- What impact is the skills gap having on company performance?
- Although the skills gap issue isn’t new, how is it evolving in the face of continued economic and competitive challenges? Which manufacturing jobs are being affected the most?
- What does the future of talent look like? What upcoming trends are companies preparing for today? How fast are these changes happening?
Overall, our survey findings are remarkably consistent with previous Skills Gap studies, with 67% of respondents reporting a moderate to severe shortage of available, qualified workers and 56% anticipating the shortage to grow worse in the next three to five years. In addition, our survey indicates that 5% of current jobs at respondent manufacturers are unfilled due to a lack of qualified candidates. These results underscore the tenacity of a worsening talent shortage that threatens the future effectiveness of the U.S. manufacturing industry.
When asked to look ahead three to five years, respondents indicate that access to a highly skilled, flexible workforce is the most important factor in their effectiveness, ranked above factors such as new product innovation and increased market share by a margin of 20 percentage points. It’s not just that manufacturers are concerned about talent today. This has been a serious issue for years, which begs the question of what must be done differently in order to achieve the right results.
It doesn’t help that today the skills gap is hitting where it hurts the most. Manufacturers are having the hardest time filling skilled production jobs that fuel their ability to innovate and grow, even in the face of high unemployment. By that same token, their efforts to develop the skills of current employees are falling short. Meanwhile, the manufacturing industry itself is evolving at such a rapid clip that companies are putting themselves at risk of falling behind too far, too fast.
A closer look at the survey results turns up a few surprising insights into the talent gap and how manufacturers are responding. Here are several highlights.
The hardest jobs to fill are those that have the biggest impact on performance.
Shortages in skilled production jobs – machinists, operators, craft workers, distributors, technicians, and more – are taking their toll on manufacturers’ ability to expand operations, drive innovation, and improve productivity. Seventy-four percent of respondents indicated that workforce shortages or skills deficiencies in skilled production roles are having a significant impact on their ability to expand operations or improve productivity. Unfortunately, these jobs require the most training, and are traditionally among the hardest manufacturing jobs to find existing talent to fill.
While they recognize the importance of recruiting and developing talent, many manufacturers depend on outdated approaches for finding the right people, developing their employees’ skills, and improving their performance.
At a time when finding the right talent for the job has become so difficult, the spotlight shines even more brightly on recruitment and development efforts. After all, if manufacturers can’t bring in talent with the skills they need, they can take steps to expand the skills base of their existing workforce. The bad news is that while most manufacturers have some tools in place to address these challenges, they are depending on outdated, informal methods such as word-of-mouth recruiting. When it comes to training, there is also considerable room for improvement.
High unemployment is not making it easier to fill positions, particularly in the areas of skilled production and production support.
There’s no way around it: respondents report, on median, that 5% of their jobs remain unfilled simply because they can’t find people with the right skills. Translated to raw numbers, this means that as many as 600,000 jobs are going unfilled, a remarkable fact when the country is facing an unemployment rate that hovers above 9%. Respondents separately report that the national education curriculum is not producing workers with the basic skills they need – a trend not likely to improve in the near term.
The changing nature of manufacturing work is making it harder for talent to keep up.
Over the past five years, most manufacturers have redesigned and streamlined their production lines while implementing more process automation. In short, as the industry has changed, the nature of work that it requires is changing as well. It’s happening fast, and manufacturers will continue to expect more from their employees. Unfortunately, respondents report that the number one skills deficiency among their current employees is problem solving skills, making it difficult for current employees to adapt to changing needs.
The skills gap is expected to take the biggest toll on skilled production jobs, and will likely widen as time passes.
When asked where the skills gap is likely to hurt the most as respondents look to the future, they identify skilled production jobs by a wide margin. Fully 80% of respondents indicated that machinists, operators, craft workers, distributors, and technician positions will be hardest hit by retirements in the upcoming years. At the same time, companies expect the skilled production group to be the hardest to find in the job market.