Courtesy of Jacksonville Business Journal
The manufacturing industry is in flux. Workforce data shows that the types of people working in manufacturing are changing, as are the skills they need.
The ADP Research Institute Q4 Workforce Vitality Report shows that despite the decline in manufacturing jobs (0.3 percent on an annual basis in the past quarter), the role of the factory worker will not disappear. It will, instead, change.
Similarly, automation is here, and it’s not slowing down. McKinsey’s 2017 A Future That Works report estimates that 49 percent of tasks people are paid to do in the global economy have the potential to become automated. The fundamental shifts taking place in manufacturing are affecting not just the way people work, but also the skills today’s workers need to have.
First, increased automation demands a more highly-skilled labor force. In fact, 30 percent of the workers moving into the manufacturing industry are coming from professional services. This segment is gaining fast on the 38 percent who have traditionally entered manufacturing from trade and transportation.
Those who can maintain and operate modern IT systems are especially in demand for manufacturing. And they’re paid more, too. Employees entering manufacturing from the fields of professional services, trade and transportation, and information technology see an average increase of 6.7 percent in wages, according to Workforce Vitality Report.
Second, and conversely, we are seeing “traditional” manufacturing workers exit the industry and experience a 2 percent decrease in wages in their new jobs. But this varies industry by industry. The 22 percent of workers who are leaving manufacturing to enter trade and transportation experience a 4.2 percent decrease in wages. On the bright side, the 24 percent of workers exiting manufacturing for professional services see a one percent wage increase.
A combination of efforts is needed
Employers in manufacturing face a difficult task in this shifting environment, too. Recruiting completely new talent is not an option, nor is retraining an entire workforce, but both are a major concern for employers. Twenty-eight percent of respondents in the ADP Strategic Drift report cite recruiting highly-skilled employees as their top concern, while 25 percent say it is retaining experienced employees. The answer is likely a combination of efforts to compete for newer talent while also focusing on retraining their existing workforce.
The tightening labor market is also at play here. With an anticipated worker shortage of 2 million by 2025, employers need to take a close look at their business model to understand their talent needs and develop a strategic approach to recruitment and workforce planning.
Here are three recommendations for employers who want to attract and retain top manufacturing talent:
- Tap into the STEM pipeline
A Deloitte report found that 80 percent of manufacturing companies said they’d be willing to pay new hires more than the market average, but better compensation isn’t a silver bullet. Manufacturing has a PR problem. The report found that manufacturing ranked last as a career choice among millennials, and that only one in three parents said they would encourage their child to pursue a career in the industry.
Employers should adopt recruiting practices that can shake the industry’s antiquated image. To compete for highly-skilled talent, companies need to create a pipeline of workers engaged in STEM fields.
Professional services and trade and transportation are currently the strongest sources for these workers when you look at the Workforce Vitality Report. Business should focus on recruitment from these industries and others while also looking to create a steady pipeline of young talent interested in the industry. Recruiting at colleges and establishing apprenticeship programs can help companies appeal to candidates who had not previously considered a manufacturing career.
- Retrain workers to partner with automation
Hand-in-hand with the talent shortage is the skills gap. The Deloitte report found that 70 percent of manufacturing employees are deficient in computer skills and 67 percent in technical skills. This reality is pushing lower-skilled workers out of manufacturing.
But this doesn’t have to be the case. With proper training, these workers can stay in the industry and thrive. The time is now for employers to invest in training, not just on the technical side, but also for educating employees to better understand how the industry is changing.
- Put your money, and benefits, where your mouth is
Recruiting new talent and retraining existing talent is just part of the equation. Companies then have to work to keep employees happy — the ones they attract from other industries as well as their current workers who can benefit from retraining. Especially now that millennials are the largest generation in the workforce, manufacturing companies should consider the workplace realities they come to expect — flexible hours, competitive pay, and opportunity for advancement — if they want to attract and retain this vital talent.
The future of manufacturing is not a zero-sum game. Although the industry is undergoing a transition, employers can leverage the opportunity to bring together and engage different types of workers with varying skill sets to achieve their business goals.