Constantly growing in response to increased population and demand, the manufacturing sector must rely on a skilled, talented work force to continue to bring innovation to the industry. Addressing this growing demand, Deloitte LLP, in conjunction with the Manufacturing Institute, has produced a report outlining the present and future needs of manufacturers. High on the list of concerns is an ever growing skills gap between the workforce talent needed and the talent available to hire.
According to the Skills Gap Study, there simply are not enough talented people in the manufacturing workforce to fill positions, with an average of six out of ten skilled production positions remaining unfilled. These vacancies, in tandem with a widening skills gap, are only projected to increase in the coming years. It is estimated that over two million production jobs will be unfilled in the coming decade, showing the unprecedented implications of such an expansive gap. In order to mitigate the growing trends, the manufacturing industry must apply a multi-faceted approach to garner new talent.
As baby boomers leave the workforce, a significant number of jobs will be filled by younger generations. However nearly 70% of current workers are described as “not sufficient” in key technology skills. For this reason, it is imperative that the future talent pool is better prepared. Focusing not only on traditional education and training, but on more STEM opportunities for students, is key to bridging the growing skills gap.
Despite increased education and training efforts, the report shows that a fundamental challenge exists in the basic recruitment and retention of manufacturing employees. Finding employees who are willing to stay in positions for extended periods of time has become increasingly difficult. As a result of this increased mobility, in concurrence with a lack of domestic STEM growth, many jobs are being sent overseas, where increased demand and diminished costs prove attractive to businesses. This departure of the employment pool, however, is juxtaposed with strong American support for increasing manufacturing jobs in the U.S. In fact, over 80% of Americans believe that the manufacturing industry should receive more investment to promote growth.
Even though there is strong general support for manufacturing, many Americans are still reluctant to take manufacturing jobs, citing limited career prospects and unstable job security. If the manufacturing industry is to successfully reverse such hesitancy and increase growth, an appeal to millennial values is imperative. Understanding that the new era of workforce applicants require mobility and industry autonomy is key to successfully advertising manufacturing jobs. This change cannot occur, however, unless the skills gap is immediately addressed. This will substantially increase the number of students and workers who can adequately fill new, more technology-based roles.
At the annual meeting of the World Economic Forum in Davos, Switzerland, Editor-in-Chief Ana Rold sat down with one of the architects behind the report, Duane Dickson, to discuss the future of manufacturing and jobs.
DC: In the Skills Gap Study conducted by the Manufacturing Institute and Deloitte, 70% of the executives surveyed indicated that current employees are not sufficient in technology and computer skills, and 82% believe workforce shortages or skills deficiencies in production roles have a significant impact on the companies’ abilities to meet customer demand. What do the main findings above actually say about the skills and talent gap?
A couple of things. First, past labor migration caused some skills areas to erode. For a period of time I worked for two companies that chased cheaper labor that existed elsewhere. For the last 10 years that hasn’t been the problem, but there’s still some after effects from that. But I think the bigger problem is the pace of change and technology. If we think it’s disruptive now, fast forward 5 or 10 years and it’s going to be even more disruptive. It’s because things are becoming more decentralized and scalable. Think about 3D printing and advanced manufacturing techniques—it allows you to put in a whole lot less capital, be closer to the customer, and create more customized products. I think you’re going to see things move more towards zero inventory, close to the custom manufacturing. And what that requires is all enabled by the digital world. It requires really good capabilities in not only technology, but also computer science and mathematics in the digital space.
DC: How do you define the skills gap? Is there a talent deficit in some countries and a talent surplus in others?
I think there is a talent deficit in almost every country, but it’s different. There is a lot of good training in schools in some of the developing countries, and there are people who are ready to go. But to really have the skills and capabilities that producers are going to want, [employees] have to have a number of years of experience under their belt. They have to solve some problems. That’s hard to do when you’re just coming up through the ranks, and there aren’t really big technology programs to work on, or manufacturing bottlenecking to work on. If you don’t have those experiences under your belt, the skills and capabilities won’t develop.
DC: Does this issue vary from country to country?
Let’s take R&D in the chemical industry—it’s something I know pretty well. In the United States, no one wants to work in the companies. One of the reasons we have a skills gap is because no one really thinks about it from the start. And I can tell you it’s a big problem, and it’s on the minds of the CEOs of every industry. But in the U.S., over time the more mature industries cut costs. As a result, they cut R&D spending. And in the process of making those cuts, they create a spiral of less and less growth. Growth is really what it takes to bring new skills on board. When companies are growing, they have a little bit of surplus capital to invest in the future. When companies are hustling, they’re really just trying to make the numbers every quarter. So that’s the U.S. situation. I would just call it an aging demographic.
DC: Can you speak on such an example abroad?
Look at multinational investing in China. [New plants or entire businesses] that include an R&D center are going to run in to significant issues if companies don’t expatriate a certain number of people. Once you expatriate people there has to be a training program—an on-the-job training program. That’s been difficult because the multinationals will train somebody, and once they get trained they go to a state-owned enterprise. So I’d say it’s two things: It’s migration and it’s youth.
DC: Tell me a little bit about the youth component. How do we engage millennials—people who are mobile, who have supercomputers in their hands?
Well that’s a great word, “engage.” In manufacturing we talk all the time about how important it is to engage not just the millennials, but to engage a number of different populations. So that really changes the communications burden. It’s not advertising anymore, it’s really connecting. It’s having stories to tell that are not all good, but authentic and give people a chance to self-select and ride with you. So I think the first thing is engage. After engage, there’s a need to allow them to go in a direction where they can be most effective, and that doesn’t mean that they’re willing to sit still and be told what to do all the time. This is a mobile generation. As soon as they’re tired of something they are going to move on.
So the idea is how do you keep it interesting for them, but also how much time does it take to develop skills? I have a CFO client who always tells a story about a young, post-millennial who had come out of business school and had been with the company as an engineer before. He potentially wanted to be a successor to the CFO. At one point, they wanted him to move to some place in Kansas to be plant controller for two years because they needed that rotation. That’s when he stopped and said, “that’s not an experience I want to have, I’m married, that’s not an experience my wife wants to have, so I’m going to have to do something else.” So engaging the workforce that works with you isn’t just a matter of one-way communication. It’s a matter of listening to what they’re really trying to do. It’s about trying to meet what they’re trying to do with something that’s valuable for the company to do.
DC: What do you think can be done from a policy perspective to bridge this gap between talent-surplus countries and talent-deficit countries? We’re looking to a mobile generation that can’t really move due to immigration policies. We’ve figured out a way to go across the world quickly but not to move workers quickly.
I think every client I have struggles with that, and we struggle with it at Deloitte. The whole idea of mobility is a very good idea, but it’s very hard because if somebody goes and works in China, that’s a slot that an up-and-coming Chinese resource can’t fill, and the education that’s going on at that point really migrates back to another country. But I also have a lot of clients who are having trouble from a different perspective: they haven’t figured out how to manage themselves in places like China without continuing to just send ex-patriots. It’s a difficult issue.
So, what can be done to balance it out? I’m not sure anything can be done in the short term. But you don’t give up. You keep hiring the local national resources, especially if they’re well educated. You continue to develop them, and give them global experience as well. But we really have to reach back into education.
DC: I know Deloitte University exists to fill a gap in the education system. People come out of schools and they’re not properly trained for current jobs, let alone for the jobs of the future. What skills, besides STEM skills, do you think are needed for the future employee?
Well I’m not sure exactly what you’ll call this in the future, maybe in the past it would have been “Sales Skills.” But I would say engagement skills are very big. You can tell people that it’s important to engage, but it’s hard to put a definition around that and tell employees what it takes to be good at it. You can waste a lot of time trying to teach it, and miss the mark. But the one thing about sales skills is if you think about hiring the best and the brightest—which everyone wants to do—they have to be in positions where they can fail, and not fail catastrophically. Because you learn as much from things that don’t succeed as from those that do. And that, in my own observations, is one of the harder things for the millennials to get their arms around. You know, the sense that things aren’t always going perfectly and everybody doesn’t win all the time.
DC: What do you think manufacturers can do to recruit, foster, and engage the best talent? How should they act?
Way back in the 80s, I worked for 3M, and there was this CEO there named Jake Jacobson. They were talking about how the industry was really hot in the re-engineering area at that point in time. He said, “I know we have to do it, and I know it’s important, but I don’t believe in it.” I think the only way you’re going to get over this gap, whether it’s a new generation of leadership or the current generation, is you can’t just have attitude, you can’t just practice behaviors. You have to believe it. I think as soon as the leadership starts to believe in those types of engagement practices and new development paths, there could potentially be new ways of measuring success. Until that happens it’s not going to be very easy.
DC: Millennials are a generation that’s very adaptable, mobile, and very entrepreneurial. The old concepts of business—you come, you work for 20 years and pursue a career, and you’re loyal to your company—have begun to fade. How does big business rearrange its philosophy to plan for a generation of people who are there to start things and move on?
Well how did this all begin? Some of this began because it’s been a more abundant 50 years than the years our parents lived in. But I don’t think you should throw in the towel in creating a home for people for their entire career. It doesn’t mean you don’t face reality and realize there’s going to be a lower percentage of people. But the only way you’re going to foster that environment is to create mobility and exciting roles in your own company. Also, you’ll create longevity in the way you compensate and reward performance. When companies started to change pensions and things like that, they signaled that people need to take what they’ve earned with them, whether it’s retirement packages or anything else. There’s a recognition that people want to do that, and turnover is still very rough. But more advanced companies are focusing on tapping into the entrepreneurial spirit and creating opportunities for people who want to start something with their investment and potentially return.
DC: Especially with manufacturing and STEM jobs, you’re looking at people who are innately innovative, who want to patent things. Do you think the company of the future will want to foster that innovation even if it means they can’t retain all of that later on?
I don’t think they’ll have a choice. But I think that companies that are successful and adaptable are doing that pretty well. In my career I’ve started five companies. But I have hope for this generation. They are willing to take risks; they just want to be less constrained by the bureaucracy of a company.
DC: Broadly, what are the two or three biggest takeaways you would offer as these dynamics between employee and employer continue to shift?
The first one is that what we’re experiencing now is just a small slice of the disruption we’re going to see as advanced manufacturing unfolds and the need for computer science and technology grows. But it changes the whole landscape of assets and places to work. The idea that you put a 3D printer in warehouse that used to just ship product and now it makes products too, changes inventory, transportation, and the way manufacturing plants operate. So the first one is to get ready for the coming disruption. The other is at this point the industry at large is only reacting to generational change. It’s a question of systems, and policies, and things out there that need to adapt to build cultures that can succeed. It’s too early to tell what that will look like, but if you’re not working on it right now, it will be a very difficult deal.
DC: In terms of competency, technical and developmental, what are you looking for in talent? How does this vary across regions?
Multi-disciplinary talent is the most important thing. It isn’t useful anymore for a chemical company to only have chemical engineers and chemists. They have to have cross training in physics and biology, just as a starter. In the STEM world, it’s not just one skill. There’s always going to be Nobel prizes for the best in a field, but there’s a lot less of that going on. To be practical about solving problems in the world, you need multi-disciplinary capabilities. You might include engagement or sales in there too. Marketing has seen a back and forth in companies, either supporting it or cutting it. Reinforcing a brand in the market is going to become everybody’s job. The ability to understand multiple facets of a company is essential.
DC: So everyone in the arts should know sciences, and vice-versa.
Exactly, I don’t think it hurts to take some economic classes if you’re a political science major.
DC: Why did the Manufacturing Institute and Deloitte team up for this project?
I worked in the industry for a long time—we’ve all been waiting a long time to see someone publish something confirming that the skills gaps are there. I also sense that it’s a hot topic and people are looking for answers.
DC: To everyone that says, “we can’t just have mathematicians or technologists,” what do you say?
I’d say they’re right. But you have to treat the ones you have like all the rest. You have to figure out what motivates them. You can’t have 20,000 people and 20,000 ways to judge and motivate them. But you can be aware of essential skills, and create environments to collaborate with others. It’s the idea of getting to a stage where skills are looked after, and where people have standards of performance. We’re not telling you how to do it, but where we want to be.
a global affairs media network
Help Wanted: Addressing the Skills Gap in U.S. Manufacturing
March 12, 2015
Constantly growing in response to increased population and demand, the manufacturing sector must rely on a skilled, talented work force to continue to bring innovation to the industry. Addressing this growing demand, Deloitte LLP, in conjunction with the Manufacturing Institute, has produced a report outlining the present and future needs of manufacturers. High on the list of concerns is an ever growing skills gap between the workforce talent needed and the talent available to hire.
According to the Skills Gap Study, there simply are not enough talented people in the manufacturing workforce to fill positions, with an average of six out of ten skilled production positions remaining unfilled. These vacancies, in tandem with a widening skills gap, are only projected to increase in the coming years. It is estimated that over two million production jobs will be unfilled in the coming decade, showing the unprecedented implications of such an expansive gap. In order to mitigate the growing trends, the manufacturing industry must apply a multi-faceted approach to garner new talent.
As baby boomers leave the workforce, a significant number of jobs will be filled by younger generations. However nearly 70% of current workers are described as “not sufficient” in key technology skills. For this reason, it is imperative that the future talent pool is better prepared. Focusing not only on traditional education and training, but on more STEM opportunities for students, is key to bridging the growing skills gap.
Despite increased education and training efforts, the report shows that a fundamental challenge exists in the basic recruitment and retention of manufacturing employees. Finding employees who are willing to stay in positions for extended periods of time has become increasingly difficult. As a result of this increased mobility, in concurrence with a lack of domestic STEM growth, many jobs are being sent overseas, where increased demand and diminished costs prove attractive to businesses. This departure of the employment pool, however, is juxtaposed with strong American support for increasing manufacturing jobs in the U.S. In fact, over 80% of Americans believe that the manufacturing industry should receive more investment to promote growth.
Even though there is strong general support for manufacturing, many Americans are still reluctant to take manufacturing jobs, citing limited career prospects and unstable job security. If the manufacturing industry is to successfully reverse such hesitancy and increase growth, an appeal to millennial values is imperative. Understanding that the new era of workforce applicants require mobility and industry autonomy is key to successfully advertising manufacturing jobs. This change cannot occur, however, unless the skills gap is immediately addressed. This will substantially increase the number of students and workers who can adequately fill new, more technology-based roles.
At the annual meeting of the World Economic Forum in Davos, Switzerland, Editor-in-Chief Ana Rold sat down with one of the architects behind the report, Duane Dickson, to discuss the future of manufacturing and jobs.
DC: In the Skills Gap Study conducted by the Manufacturing Institute and Deloitte, 70% of the executives surveyed indicated that current employees are not sufficient in technology and computer skills, and 82% believe workforce shortages or skills deficiencies in production roles have a significant impact on the companies’ abilities to meet customer demand. What do the main findings above actually say about the skills and talent gap?
A couple of things. First, past labor migration caused some skills areas to erode. For a period of time I worked for two companies that chased cheaper labor that existed elsewhere. For the last 10 years that hasn’t been the problem, but there’s still some after effects from that. But I think the bigger problem is the pace of change and technology. If we think it’s disruptive now, fast forward 5 or 10 years and it’s going to be even more disruptive. It’s because things are becoming more decentralized and scalable. Think about 3D printing and advanced manufacturing techniques—it allows you to put in a whole lot less capital, be closer to the customer, and create more customized products. I think you’re going to see things move more towards zero inventory, close to the custom manufacturing. And what that requires is all enabled by the digital world. It requires really good capabilities in not only technology, but also computer science and mathematics in the digital space.
DC: How do you define the skills gap? Is there a talent deficit in some countries and a talent surplus in others?
I think there is a talent deficit in almost every country, but it’s different. There is a lot of good training in schools in some of the developing countries, and there are people who are ready to go. But to really have the skills and capabilities that producers are going to want, [employees] have to have a number of years of experience under their belt. They have to solve some problems. That’s hard to do when you’re just coming up through the ranks, and there aren’t really big technology programs to work on, or manufacturing bottlenecking to work on. If you don’t have those experiences under your belt, the skills and capabilities won’t develop.
DC: Does this issue vary from country to country?
Let’s take R&D in the chemical industry—it’s something I know pretty well. In the United States, no one wants to work in the companies. One of the reasons we have a skills gap is because no one really thinks about it from the start. And I can tell you it’s a big problem, and it’s on the minds of the CEOs of every industry. But in the U.S., over time the more mature industries cut costs. As a result, they cut R&D spending. And in the process of making those cuts, they create a spiral of less and less growth. Growth is really what it takes to bring new skills on board. When companies are growing, they have a little bit of surplus capital to invest in the future. When companies are hustling, they’re really just trying to make the numbers every quarter. So that’s the U.S. situation. I would just call it an aging demographic.
DC: Can you speak on such an example abroad?
Look at multinational investing in China. [New plants or entire businesses] that include an R&D center are going to run in to significant issues if companies don’t expatriate a certain number of people. Once you expatriate people there has to be a training program—an on-the-job training program. That’s been difficult because the multinationals will train somebody, and once they get trained they go to a state-owned enterprise. So I’d say it’s two things: It’s migration and it’s youth.
DC: Tell me a little bit about the youth component. How do we engage millennials—people who are mobile, who have supercomputers in their hands?
Well that’s a great word, “engage.” In manufacturing we talk all the time about how important it is to engage not just the millennials, but to engage a number of different populations. So that really changes the communications burden. It’s not advertising anymore, it’s really connecting. It’s having stories to tell that are not all good, but authentic and give people a chance to self-select and ride with you. So I think the first thing is engage. After engage, there’s a need to allow them to go in a direction where they can be most effective, and that doesn’t mean that they’re willing to sit still and be told what to do all the time. This is a mobile generation. As soon as they’re tired of something they are going to move on.
So the idea is how do you keep it interesting for them, but also how much time does it take to develop skills? I have a CFO client who always tells a story about a young, post-millennial who had come out of business school and had been with the company as an engineer before. He potentially wanted to be a successor to the CFO. At one point, they wanted him to move to some place in Kansas to be plant controller for two years because they needed that rotation. That’s when he stopped and said, “that’s not an experience I want to have, I’m married, that’s not an experience my wife wants to have, so I’m going to have to do something else.” So engaging the workforce that works with you isn’t just a matter of one-way communication. It’s a matter of listening to what they’re really trying to do. It’s about trying to meet what they’re trying to do with something that’s valuable for the company to do.
DC: What do you think can be done from a policy perspective to bridge this gap between talent-surplus countries and talent-deficit countries? We’re looking to a mobile generation that can’t really move due to immigration policies. We’ve figured out a way to go across the world quickly but not to move workers quickly.
I think every client I have struggles with that, and we struggle with it at Deloitte. The whole idea of mobility is a very good idea, but it’s very hard because if somebody goes and works in China, that’s a slot that an up-and-coming Chinese resource can’t fill, and the education that’s going on at that point really migrates back to another country. But I also have a lot of clients who are having trouble from a different perspective: they haven’t figured out how to manage themselves in places like China without continuing to just send ex-patriots. It’s a difficult issue.
So, what can be done to balance it out? I’m not sure anything can be done in the short term. But you don’t give up. You keep hiring the local national resources, especially if they’re well educated. You continue to develop them, and give them global experience as well. But we really have to reach back into education.
DC: I know Deloitte University exists to fill a gap in the education system. People come out of schools and they’re not properly trained for current jobs, let alone for the jobs of the future. What skills, besides STEM skills, do you think are needed for the future employee?
Well I’m not sure exactly what you’ll call this in the future, maybe in the past it would have been “Sales Skills.” But I would say engagement skills are very big. You can tell people that it’s important to engage, but it’s hard to put a definition around that and tell employees what it takes to be good at it. You can waste a lot of time trying to teach it, and miss the mark. But the one thing about sales skills is if you think about hiring the best and the brightest—which everyone wants to do—they have to be in positions where they can fail, and not fail catastrophically. Because you learn as much from things that don’t succeed as from those that do. And that, in my own observations, is one of the harder things for the millennials to get their arms around. You know, the sense that things aren’t always going perfectly and everybody doesn’t win all the time.
DC: What do you think manufacturers can do to recruit, foster, and engage the best talent? How should they act?
Way back in the 80s, I worked for 3M, and there was this CEO there named Jake Jacobson. They were talking about how the industry was really hot in the re-engineering area at that point in time. He said, “I know we have to do it, and I know it’s important, but I don’t believe in it.” I think the only way you’re going to get over this gap, whether it’s a new generation of leadership or the current generation, is you can’t just have attitude, you can’t just practice behaviors. You have to believe it. I think as soon as the leadership starts to believe in those types of engagement practices and new development paths, there could potentially be new ways of measuring success. Until that happens it’s not going to be very easy.
DC: Millennials are a generation that’s very adaptable, mobile, and very entrepreneurial. The old concepts of business—you come, you work for 20 years and pursue a career, and you’re loyal to your company—have begun to fade. How does big business rearrange its philosophy to plan for a generation of people who are there to start things and move on?
Well how did this all begin? Some of this began because it’s been a more abundant 50 years than the years our parents lived in. But I don’t think you should throw in the towel in creating a home for people for their entire career. It doesn’t mean you don’t face reality and realize there’s going to be a lower percentage of people. But the only way you’re going to foster that environment is to create mobility and exciting roles in your own company. Also, you’ll create longevity in the way you compensate and reward performance. When companies started to change pensions and things like that, they signaled that people need to take what they’ve earned with them, whether it’s retirement packages or anything else. There’s a recognition that people want to do that, and turnover is still very rough. But more advanced companies are focusing on tapping into the entrepreneurial spirit and creating opportunities for people who want to start something with their investment and potentially return.
DC: Especially with manufacturing and STEM jobs, you’re looking at people who are innately innovative, who want to patent things. Do you think the company of the future will want to foster that innovation even if it means they can’t retain all of that later on?
I don’t think they’ll have a choice. But I think that companies that are successful and adaptable are doing that pretty well. In my career I’ve started five companies. But I have hope for this generation. They are willing to take risks; they just want to be less constrained by the bureaucracy of a company.
DC: Broadly, what are the two or three biggest takeaways you would offer as these dynamics between employee and employer continue to shift?
The first one is that what we’re experiencing now is just a small slice of the disruption we’re going to see as advanced manufacturing unfolds and the need for computer science and technology grows. But it changes the whole landscape of assets and places to work. The idea that you put a 3D printer in warehouse that used to just ship product and now it makes products too, changes inventory, transportation, and the way manufacturing plants operate. So the first one is to get ready for the coming disruption. The other is at this point the industry at large is only reacting to generational change. It’s a question of systems, and policies, and things out there that need to adapt to build cultures that can succeed. It’s too early to tell what that will look like, but if you’re not working on it right now, it will be a very difficult deal.
DC: In terms of competency, technical and developmental, what are you looking for in talent? How does this vary across regions?
Multi-disciplinary talent is the most important thing. It isn’t useful anymore for a chemical company to only have chemical engineers and chemists. They have to have cross training in physics and biology, just as a starter. In the STEM world, it’s not just one skill. There’s always going to be Nobel prizes for the best in a field, but there’s a lot less of that going on. To be practical about solving problems in the world, you need multi-disciplinary capabilities. You might include engagement or sales in there too. Marketing has seen a back and forth in companies, either supporting it or cutting it. Reinforcing a brand in the market is going to become everybody’s job. The ability to understand multiple facets of a company is essential.
DC: So everyone in the arts should know sciences, and vice-versa.
Exactly, I don’t think it hurts to take some economic classes if you’re a political science major.
DC: Why did the Manufacturing Institute and Deloitte team up for this project?
I worked in the industry for a long time—we’ve all been waiting a long time to see someone publish something confirming that the skills gaps are there. I also sense that it’s a hot topic and people are looking for answers.
DC: To everyone that says, “we can’t just have mathematicians or technologists,” what do you say?
I’d say they’re right. But you have to treat the ones you have like all the rest. You have to figure out what motivates them. You can’t have 20,000 people and 20,000 ways to judge and motivate them. But you can be aware of essential skills, and create environments to collaborate with others. It’s the idea of getting to a stage where skills are looked after, and where people have standards of performance. We’re not telling you how to do it, but where we want to be.
