Closing the Manufacturing Skills Gap

As the manufacturing started to become more integrated with advanced technologies and automation, many onlookers predicted that there would be less of a need for skilled workers. In reality, this prediction could not have been further from the truth, as the digital transformation has actually amplified the need for skilled human workers. Just in the last decade, vacancies in manufacturing jobs have increased threefold, and the numbers continue to rise. What’s the reason for the increasing number of job vacancies? The Skills Gap.

Open jobs in manufacturing, in hundreds of thousands
Source: Bureau of Labor Statistics

What’s the Skills Gap and where did it come from?

The Skills Gap describes a discrepancy between in-demand skills and the number of workers that have them. In manufacturing, these skills are not only limited to technological skills, but also machining, assembly and process oriented skills. According to a study conducted by Deloitte and the Manufacturing Institute, the Skills Gap may leave an estimated 2.4 million positions unfilled over the next eight years, with a potential economic impact of $2.5 trillion.

The Skill Gap can be broadly attributed to two sources. The first actually has nothing to do with advanced technologies. Baby Boomers make up approximately 22-27% of the manufacturing workforce. By 2030, every Baby Boomer will have turned the standard retirement age of 65. As more and more workers of this generation reach retirement age, manufacturing companies are facing an exodus of their skilled workforce. A significant portion of manufacturing knowledge is tacit knowledge that companies don't often document in any central resource. Thus, as experienced manufacturing workers continue to retire at a rapid rate, they take their years of knowledge with them and young workers are often left lost without clear direction.

The second source of the Skills Gap is of course the large-scale adoption of advanced technologies and automation. Because of the recency as well as the rapid-changing nature of these technologies, many manufacturing firms are quickly realizing they don’t have the sufficient human capital to support them.

How can manufacturing companies close the Skill Gap?

The solution to the Skill Gap issue is actually quite simple and it comes down to three essential actions: up-skill, re-skill, and cross-skill. Up-skilling is the process of teaching workers new skills, re-skilling is the process of reinforcing already-learned skill with ongoing training, and cross-skilling is the process of training workers in skills outside the immediate scope of their job so that they can step into another role if need be.

If the solution is so simple, then why aren’t all manufacturing companies doing it? The answer is that despite the solution’s simplicity, many manufacturing companies don’t have the necessary infrastructure in place to facilitate it. A recent report from The Brookings Institution and The National Center for the Middle Market found that 45% of middle market manufacturing firms do not have a system for ongoing training.

The silver lining of the Skills Gap is that is easy to solve on a company-wide level if leadership make a serious commitment to skill development. By adopting a comprehensive system that defines in-demand skills, facilitates all three types of “skilling,” and holds your people accountable for attaining competency in their roles, manufacturing companies can remain competitive and effectively overcome the Skills Gap.