Times have changed. Manufacturing is no longer an antiquated, dirty line of work, like it was some three decades ago, when it lacked novelty and modernization, and when its jobs were sent overseas in bunches.
Now, it’s quite the opposite – a clean, reemerging industry crowded with innovation and technological advancements, with those once off-shored jobs now being re-shored.
In essence, American manufacturing, in many ways, is back, albeit with a new high-tech look. The sector accounted for about $1.9 trillion, or about 12 percent, of the U.S. gross domestic product (GDP) in 2012.
And according to a recent ThomasNet.com® report, these newfound innovations, consequently, have since spurred an abundance of growth opportunities for manufacturers countrywide.
That’s the good news.
But what’s indisputably bad news is that the same analysis also underlines what has been time and again called manufacturing’s ailing Achilles heel: There are not enough qualified young workers – those categorized as Generation Y between the ages of 18 and 32 – to replace the sector’s quickly graying workforce, many of whom have retired or plan to in the very near future.
This “disconnect,” as the report refers to it, between manufacturers experiencing substantial growth and their lack of urgency in attracting fresh, youthful talent not only threatens to slow the nation’s new wave of industry momentum, it also jeopardizes its future vitality, says ThomasNet® President Eileen Markowitz.
“As a foundation of our economy, the manufacturing sector remains vibrant, but cracks are coming to the surface,” Markowitz says in a news release. “Changes in the workforce demographics and old attitudes about manufacturing as a career threaten the industry’s expansion. It’s time for those who love American manufacturing to double their efforts to engage the next generation.”
In order to understand why spooling in new industrial talent is vital, one must first comprehend how manufacturing is booming from coast to coast.
According to the aforementioned analysis, about 55 percent of its more than 1,200 respondents – many of whom are owners, executives, and general managers from small and mid-size companies from varying industry sectors – reported that they expanded in 2012. Even better, 63 percent expect to grow by the end of this year.
Furthermore, the annual report, called Industry Market Barometer® (IMB), adds that business is trending up for manufacturers for the fourth consecutive year – an admirable achievement considering how quickly the sector was trending downward during the close of the last century and the start of this one.
As a result, manufacturers, according to the survey, are directing their resources into numerous strategies to boost sales, including competing more aggressively in core markets, improving customer retention and service, and acquiring or growing business in new industries or new parts of the U.S.
And innovation is driving this growth. About 67 percent of respondents said they plan to introduce new or innovative products and services by the close of this year. That’s almost double the number reported in the same survey last year, with more is likely to come next year.
“These manufacturers really have a focus and commitment and they’re not letting what’s happening on the outside control their fate,” Susan Orr, senior director, partner program management at ThomasNet, tells Industry Today.
Examples of such innovation, which, according to the study, will improve companies’ operations and increase their growth, include:
- Boosting productivity with more advanced CAD (computer-aided design) software, CNC (computer numerical control) equipment, and cloud computing;
- Making customer products through additive manufacturing;
- Relying on “visual boards” for top-line views of their plants;
- Using smartphones and tablets to monitor inventory for stocking and pricing.
“This increase signals a growing confidence in the market and a willingness to make capital investments,” the report says, adding “new products and services represent innovation, which almost half of the respondents say is responsible for their competitiveness.”
And in another sign of the times, more than half – 62 percent, to be exact – say their websites are their most effective business-building tactic.
“Our company is doing exceptionally well, and with our website as our primary marketing tool, we have doubled our online sales,” says Karen Norheim, Vice President of Marketing and Information Technology with American Crane and Equipment Corp., located in the greater Philadelphia area.
There is also an increased desire for manufacturers to make investments in their operations to support growth. Target areas, according to the study, include the need to accommodate higher production and closely monitor output and product-related expenses. Two-thirds will upgrade their facilities.
EXPANDING WITHOUT A WORKFORCE
Not all is rosy, according to the report. Challenges remain. And according to respondents, they include price pressure, domestic and overseas competition, customers cutting back on purchases or going out of business, rising energy costs, and unfavorable business conditions such as taxes, trade barriers and regulation.
But the prevailing theme from the study suggests that the above concerns – while certainly legitimate and worrisome – are fairly hogwash in comparison to the skill gaps that lingers among youthful workers.
Manufacturing, ThomasNet.com officials say in the analysis, is heavily populated by employees who are 45 and older. In fact, about 78 percent of survey respondents describe themselves as between 45 and 65 years old. Of these, 35 percent are between 55 and 64 years old.
That’s scary news considering much of the Generation Y – those who lack sufficient abilities – will occupy up to 75 percent of the national workforce by 2025. Combine that generation with Generation X– those between 32 and 48 – and “it’s apparent that the industry needs a viable succession plan to recruit them,” the report says.
In addition, three-quarters of manufacturers in the survey say that 25 percent or less of their current workforce is in the Generation Y age group. While 29 percent say they’ll soon increase employment of Generation Y workers in the next two years, 49 percent expect the percentages to remain the same.
As Orr explains, manufacturing’s “biological clock” is quickly ticking away.
“The crack is if manufacturers are not bringing in new people and they have all this growth and all this opportunity, what will the succession plan be, and how are they going to meet the demands of this expanding market without the proper, qualified workforce?” she says.
Numerous manufacturers are finally beginning to take action. A prevailing trend, Orr says, is for firms to work closely with local high schools, community colleges, technical schools, and universities to jumpstart internships, fellowships, and apprenticeships to sway students to consider manufacturing as a future career path. In a number of cases, Orr says, manufacturers hire the students soon after they complete the training programs.
And according to the study, 51 percent of manufacturers recruit young workers from apprenticeship and internship programs.
“Manufacturers are getting the staff that they need, trained the right way, the way that they need,” Orr says, adding that ThomasNet launched its North American Manufacturing Scholarship Program earlier this year to help replenish the industry’s talent pool.
But the best way to stem the tide, Orr says, is to prove to youngsters that manufacturing is not what they think it is. It’s not a dying industry – it’s booming. It’s not dirty – it’s clean. It does not have a less-educated workforce. In reality, its workforce is highly-educated and highly-analytical. It has to be, now that many jobs entail additive and automated manufacturing.
“This notion of the biological clock is about negative perceptions and how they’re masking positive attributes of a career in manufacturing,” Orr says. “In many cases, manufacturing is the exact opposite of what many people – students, parents, and teachers – think it is. We need to get the word out there, and we all need to do it now.”
ThomasNet is an information and technology company that connects manufacturing and industrial buyers and sellers. Buyers and engineers worldwide rely on ThomasNet.com, industry’s leading free platform for industrial and commercial sourcing and supplier discovery. ThomasNet News delivers industrial news and trends via a family of online publications and newsletters.
We enable suppliers to leverage their product content to increase sales, using our proprietary Navigator Platform technology. We also offer a suite of Internet and digital media solutions, from websites with product catalogs, to SEO/SEM services, to social media. Our Enterprise Solutions offer suppliers the benefits of syndicating product data across systems and sales channels.
For a free copy of ThomasNet.com’s IMB report, please see www.thomasnet.com/imb