A Critical Look at the Skills Gap in Manufacturing

Over the last five years, the phrase “skills gap” has entered the popular vocabulary.

In the time since, the “skills gap” has become a hot button issue, spurring a wave of analyses, solutions, and critiques. Nowhere is this more true than in manufacturing, where changing work and an intensifying labor crisis are driving organizations to search for novel solutions.

Given that the National Association of Manufacturers and the Bureau of Labor Statistics reported a record number of unfilled jobs this fall (September 2019), now is the perfect time to examine one of the most pressing issues facing the industry.

The “skills gap” describes a misalignment between the skills extant in the workforce and the skills demanded by the labor market.

The concept surfaced in the years following the 2007 financial crisis. During this period, the number of positions open in the U.S. economy returned to pre-recession levels while unemployment remained high. The skills gap offered one explanation for this phenomenon.

Today, the term is synonymous with a STEM or digital skills gap. This is in part a product of the exploding demand for skills in software development, IoT and cloud technologies, and machine learning and AI.

While it is true that high-tech skills are and will likely remain in demand, they’re not the only skills that fall under the umbrella of “skills gap,” especially in manufacturing. The concept also encompasses manual, operational, and other skills not requiring digital expertise. In manufacturing, these skills can include machining, assembly, and process-oriented knowledge, as well as soft skills that are difficult to capture on a resume.

In the last year, new research has caused many to question whether or not there’s a skills gap myth.

A recent paper, for example, found that employers increase the qualifications required for each open position in times of high unemployment. The authors suggest that this increase in employer requirements could give the impression of a gap where none exists–employers were just being pickier about who they hired because they could.

This is an important observation and one that can help break the cycle of worker credentialing and re-credentialing at a job seeker’s expense. It can inform efforts that result in more equitable outcomes for job seekers.

But this observation doesn’t tell the whole story. While some have cited this research to suggest that the “skills gap is a lie,” the reality is complex and requires consideration of the nuances of each industry.

When analyzing the skills gap, it’s important to pay attention to how industry-specific conditions can lead to a mismatch between supply and demand for skills.

In manufacturing, a consortium of industry advocacy groups and management consulting firms have tracked manufacturers’ difficulty finding skilled labor for over a decade. They’ve observed and sought solutions to the skills gap for longer than the term has existed.

In the last two years, large scale studies have confirmed that manufacturing faces an acute skills gap. In the last decade, the Bureau of Labor Statistics found that vacancies in manufacturing firms have increased threefold. As a result, analysts predict that 2.4 million jobs will go unfilled over the next decade, contributing to nearly $454 billion in unrealized GDP.

One of the key findings of this research is that the skills gap in manufacturing isn’t limited to high-tech positions or job titles with digital buzzwords in them. Many manufacturers struggle to find workers with adequate experience in fabrication, machining, and assembly.

In manufacturing there are two forces leading to a concrete, measurable workforce skills gap.

First, experienced manufacturing workers are retiring at a higher rate than new workers are entering.

Called the Silver Tsunami, a generation of career manufacturers are taking their hard earned knowledge with them. As labor and management researcher Thomas Kochan has suggested, a significant portion of manufacturing knowledge is tacit knowledge. In other words, it isn’t documented or codified in any external resource. It lives in the body and mind of its owner.

Thus, manufacturing is particularly prone to losing significant operational and technical know-how if workers can’t pass their skills on.

Second, manufacturing is increasingly a digital industry.

As IIoT, Cloud, and Big Data become a reality on the shop floor, manufacturers need new skill sets to match. Increasingly, job postings in manufacturing call for software development, machine learning, and SQL analysis experience. A 2019 BCG study that 70% of the fastest growing skills in manufacturing and adjacent industries are digital. In those industries, job postings containing “IoT,” “cloud,” and “machine learning” are increasing 20% year over year.

Closing the skills gap is going to take significant effort (check out our detailed look at solutions here), and it’s not something that any organization or institution can do alone.

Here are some potential ways manufacturers, educational institutions, and government can collaborate to help close the skills gap (we’ve written a more detailed look at proposed solutions here).

1. Reskilling as a regular part of employment – Both employers and workers suffer when open positions go unfilled. Employers can help employees develop the skills they need to stay competitive in a changing landscape.
2. Involve Workers Early – Technological change is incremental. The earlier employers involve workers in decisions about which technologies are implemented and how, the better chance projects will be successful for employers and workers.
3. Digital Knowledge Share – If workers are interested in developing new skills to advance their careers, digital knowledge-sharing initiatives can provide them with the content and resources needed to advance.
4. Cross-institutional Collaboration – Manufacturers can work with education providers and government organizations to assess needs and create targeted training programs at the local, state, and national levels.

Tulip helps manufacturers train and retrain their workforce to keep everyone competitive. If you’re interested in how Tulip can enhance your training, get in touch for a free demo.