Straight talk on the future prospects for reviving manufacturing - Part 1

Monday, May 9, 2016

This report is presented in a three part series in Target Online in May. It is an in-depth discussion of the skills gap problem we are facing and will be published in three parts:

·         Part 1 The Challenge – What obstacles are companies facing with closing the skills gap?

·         Part 2 The Options – What actions can be taken to close the skills gap?

·         Part 3 What we have to do differently – What are new and creative ways to close the skills gap?


Next Week we’ll address Part 2 and Part 3 the following week.


Part 1 What obstacles are companies facing with closing the skills gap?

The Challenge

Exactly Who's going to run this Stuff?

The workforce of tomorrow must be trained, not for the jobs in the market today, but for the jobs that will emerge as critical to the operation of the digital factory in the future.

The Coming Environment

Let’s call it “a Factory with a Future” instead of some conceptual notion of the elusive ‘factory of the future’. While the future most certainly is encroaching on us at breathtaking speed and certainty, the economic indicators do not show manufacturing to be enjoying the resurgence that many have hoped for. Employment increased every one of the past five years but the GDP output measure for gross domestic product has increased only at the same rate as hours of work.  This slow growth, with stagnant wages and a stubborn resistance to improving output per hour, confirms that a slowdown in productivity is with us and real. Productivity has always historically been the pathway to prosperity and prosperity also has not improved. So, what could be wrong?

This slowdown is occurring despite constant advances in software, equipment and management practices to try to make corporate America more efficient. Actual economic output has only improved just 0.4 percent from 2011 to 2015. These results are not just a statistical blip, they confirm the slowdown. The lower productivity rate could be a result of the slowdown in capital spending since the 2008 recession. Or it could be that people returning to the labor force now may be less effective at boosting economic output for each hour they put in. This is less effective than workers were in past times.

One fact is certain: America quite simply does not have enough of the modern manufacturing skills, either on hand or developing in the education pipeline to realize the productivity promise and capitalize and leverage the dazzling technology that is already with us today. The underlying reason an American worker makes much more today than a century ago is that each hour of labor produces much more in goods and services. Something needs to change.

The manufacturing skills gap problem

A 2015 Manufacturing Institute/Deloitte Skills Gap study cited that 3.6 million jobs would be created in manufacturing by 2025, but only 2.4 million skilled workers would be available to fill them. That meant that some 2.2 million jobs would be left unfilled. This condition is being caused by baby boomer retirements, estimated to be around 9,000 per week in 2016 and growing, along with the lack of interest in students graduating or dropping out of High Schools, this supply side shortage is exacerbated with the dismal number (11.2 percent) of college students majoring in science , technology, engineering, and mathematics fields. That adds up to some staggering numbers of human shortfall being groomed to resurrect, sustain, or grow the business of 'making things' in America. This "skills gap" crisis also has serious consequences for America's economy.

Even if there were a dramatic change of attitude towards favoring a manufacturing career by parents and youngsters, our students still in school would face tremendous obstacles and prospects of  'too long' a wait to succeed in rescuing a near term manufacturing decline. That is because our development systems are also in failure mode.

Why the skills gap is getting worse

America's high schools currently only graduate 70 percent of its students and those graduating mainly focus their curriculum of study towards preparing for college entry. STEM (science, technology, engineering, and mathematics) is under-emphasized in many schools in favor of college testing.  While almost all high school graduates can handle a smartphone, fewer than 10 percent of them know how to use a tape measure, T-square or protractor. Vocational tech schools are too few. Too many of them have closed due to low enrollment and viewed negatively by parents and the community, and sometimes vastly under-equipped and out-of-date. The technical and community colleges are underused, with only about 30 percent of the students actually completing their chosen program (students cannot afford not to both work and learn). College degrees of Engineering majors are in single-digit percentages vastly short of industry's near term needs. Internship/apprenticeship programs have been cut in half since 2010 due to cost cutting. And it is estimated that 9,000 experienced employees retire every week taking their 'tribal knowledge' with them.  In the media the "skills gap" crisis receives plenty of publicity, however fewer than 4 percent of manufacturing companies actually work with their local schools on skills training. Well-meaning companies donate machines and equipment that they have decided to no longer use anymore, which makes much needed student hands-on training become out-of-date or irrelevant.

The challenging future of manufacturing

In the future, Siemens says machines will not only need to make the part, they will need the ability to see it, measure it, compare it to the design, make changes on the fly in an entirely electronic mode with no more trial-and-error and, finally, log all the production and workflow data, uploading it to a bus for non-stop statistical analysis of the factory workflows. That requires a keen awareness of the new technologies that will be vital. And that is what students need to be good at. As additive manufacturing, in all its seven (current) forms, continues to change the look of American manufacturing at the speed of light, modern companies must be in line with that development as well as with many others such as the hybrid machine, which fuses conventional chip-cutting with perhaps laser sintering or other additive methods, to produce a finished part.

Speed, or more precisely velocity, has been the one constant goal of OEMs since the day when Henry Ford introduced the conveyor line for assembly of his cars. Adept innovation of people, processes, and product will be critical not only in the machining and assembly, but also in the design, modification implementation and logistical handling of component parts, as they arrive on that assembly line.  

Read Part 2 next week The Options – What Actions Can Be Taken to Close the Skills Gap?

Kenneth J. McGuire is the president of Management Excellence Action Coalition,