U.S. manufacturers are facing an even greater skills gap crisis than previously imagined: some 2 million unfilled manufacturing jobs by 2025, only 10 years from now, according to a new report from the Manufacturing Institute and Deloitte.
For those of us who appreciate the importance of manufacturing to our nation's economy and grasp the grim implications of such a far-reaching skills shortage, this is disturbing news. The study was based on interviews with 450 manufacturing executives and is an elaboration of an earlier Institute/Deloitte study showing 600,000 unfilled manufacturing jobs in 2011. Two big drivers of this trend are the accelerating retirement rates of current manufacturing workers and an anticipated expansion of manufacturing in the U.S. projected over the next several years. The report concluded that 2.7 million new workers will be needed to replace retiring workers, and another 700,000 to meet the needs of "natural business growth."
Based upon estimates of surveyed executives, about 60 percent of the manufacturing jobs unfilled today are attributable to a shortage of applicants with the requisite skills. Thus the authors anticipate that 2 million of the projected 3.4 million manufacturing jobs that come online by 2025 will be unfilled because of the skills gap.
The survey respondents insist that they pay 20-percent more on average than other industries, and 80 percent said they would be willing to hike compensation even more if credible candidates applied for work. Most of the respondents insist that they are beating the bushes for qualified candidates and offering inducements, but they are finding it a hard sell. In the meantime, manufacturing workers are plugging the gap through overtime, putting in 17-percent more hours on average than workers in other fields.
The report identifies other reasons for the skills shortage beyond retirement and rapid industry growth. Manufacturing still has an outdated, negative image among many young people. Also, the rapid advance of technology is raising the bar for working in modern manufacturing, and the public schools generally are doing a dismal job of teaching the STEM subjects (science, technology, engineering and math). Some experts also fault industry for not providing sufficient training to applicants interested in manufacturing careers through on-the-job instruction and apprenticeship programs. Between 2003 and 2013, manufacturers reduced by 40 percent investments in various forms of internal skills development programs that combine on-the-job learning with mentorships, apprenticeships and classroom education.
The report concludes that manufacturers that intend to be competitive and profitable in the years ahead will have to get off their hands and take aggressive action. They cannot afford to wait for the public schools to do it for them. They must foster internal training programs and become directly involved with local high schools, trade schools and community colleges to create a reliable stream of qualified candidates. The Manufacturing Institute is working to do this through its Dream It, Do It program and in a new partnership with EverFi. The Institute and EverFi will welcome your inquiries, suggestions and participation.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years, and later as President of the Manufacturing Institute. Jerry is available for speaking engagements.