Volume 2 | Issue 2 | Year 2006

Imagine a world without access to adequate energy resources or enough investment capital to respond to market demands. Or a world in which roads reach only halfway to their destinations and the Internet works in just a few communities. Clearly, business would struggle to make and sell its products, and commerce would slow to a trickle if not an outright standstill. But this scenario seems pretty unlikely, doesn’t it?
Now imagine a world without enough skilled human capital – a world where there are plenty of people, but too few with the right skills to help industry create, innovate, and compete. Imagine what might happen to our economy, to our families, to our country, and to our world if the pipeline of skilled workers – people with the knowledge, skills and abilities needed to generate new ideas, new products, new processes, and new thinking – stopped flowing. Now stop imagining, because it is becoming a reality. And this reality it is just as much a threat to business as any shortages in energy, technology and investment capital.

A recent survey by the National Associ-ation of Manufacturers, The Manufacturing Institute, and Deloitte Consulting exposed a widening gap between the supply of skilled workers in America and the growing technical demands of the high-tech manufacturing workplace. In the 2005 Skills Gap Report: A Survey of the American Manufacturing Workforce the skills shortages are having a widespread impact on the ability of manufacturers to achieve production levels, increase productivity and meet customer demands.

The pain is most acute on the front line, where 90 percent of manufacturers are experiencing a shortage of qualified skilled production employees: machinists, operators, craft workers, distributors and technicians. These are challenging jobs with high wages and good benefits. Front-line positions require advanced technical skills beyond those taught in high school, along with the ability to interact with computer systems, work in a team and solve problems.

The NAM’s Skills Gap findings are reinforced by Manpower’s Talent Shortage Survey, which describes employers in the United States, as well as across 22 other countries having difficulty filling jobs for engineers, technicians, production operators, and skilled manual trade positions.

The shortage of U.S. manufacturing workers is destined to get worse as the baby boomers retire from the workplace with no generation of skilled employees coming up to replace them. In fact, if current trends continue, experts estimate that the United States will face a shortage of roughly 15 million qualified employees by 2020.

The key words here are “skilled and qualified.” For many industries, but for manufacturing especially, even entry-level workers need a higher skill set than in the past. These skills include analytical thinking, the ability to work in teams as well as autonomously, to communicate effectively through both the spoken and written word, and to understand and work with computers. “Workers today must be equipped not simply with technical know-how, but also with the ability to create, analyze, and transform information and to interact effectively with others,” former Federal Reserve Board Chairman Alan Greenspan said.

Pundits sometimes argue that the manufacturing sector is laying off people, not hiring them – so why bother with that workforce pipeline if those jobs are going away? But this perception is misguided. Manufacturing jobs are changing – they mirror the changes now taking place in our world – in technology, globalization and demographics. So, while “old jobs” are, in fact, being eliminated, new jobs are being created. These new jobs are in burgeoning fields such as nanotechnology, geospatial applications, biomedicine, and pharmaceuticals, as well as in “old” fields such as tool and die making, metalworking, electronics and automobile manufacturing. And they all require a wide array of basic knowledge, technical skills and the simple ability to adapt to new circumstances and work requirements.

“So what’s the problem?” you might ask. “What about all those Gen Y-ers coming up? They can take those new manufacturing jobs.”

If only it were that simple.The U.S. ranks seventh among developed countries in its high school completion rate and fifth in college going, but the United States is the only developed country in which the college-going rate is dropping, not rising. And while not every young person needs to get a four-year degree to go into manufacturing, most need some post-secondary education. In fact, more than half of the manufacturers responding to the NAM Skills Gap survey said that job applicants with a high school diploma or GED were not prepared for an entry-level job in manufacturing. However, the great majority of respondents said that applicants were prepared if they had earned a certificate from a two-year college. These young people need to understand how career success is tied to educational achievement and how economic rewards are available for skilled workers with the right credentials.

This is especially true when it comes to math and science education. In manufacturing, math and science knowledge are the keys to the kingdom, as many of the jobs have their basis in those disciplines. Just about every job in manufacturing requires some math and science education, and the higher-level jobs demand sophisticated knowledge of them. Yet, according to Education Insights at Public Agenda, “American high school students are not sufficiently skilled and knowledgeable about math and science in general,” even though parents believe their children are.

On the other end of the spectrum, we need to think about new approaches for supporting experienced employees who want to work beyond the traditional retirement age or, at the least, stay active in work in satisfying ways. The economic value of keeping older individuals in the workforce can exceed their incremental compensation and benefit costs, states the American Association of Retired Persons, and their immeasurable maturity, motivation and experience continue to provide value to their employers as long as they stay on the job.

And we need to think about the growing immigrant workforce. During the 1990s, immigrants represented one of every two new entrants into the workforce and were the only source of growth in the workforce. Most immigrants come to the United States to work and earn money. The challenge with this growing workforce is they often lack the requisite language, workforce readiness and technical skills to be as productive as they can be.

So what are we to do? What must both the public and the private sectors do to ensure that we have qualified workers to fill our pipeline and maintain America’s leadership in manufacturing?

The NAM supports the following course of action as an immediate start toward addressing the shortage of skilled employees:

ÿEducators must emphasize math, science and technology-related programs in K-16 curricula, foster effective teacher education programs in those disciplines, and gear career guidance and graduation requirements to 21st century employment. State education standards should include career education as a measure for K-12 success.

State and federal government should invest in community and technical colleges’ capacities to prepare individuals for careers in high-growth industries such as manufacturing. The Higher Education Act’s funding sources should look to provide increased access for adult learners.

Individuals must take responsibility for their own employment prospects by earning industry-relevant certifications built upon competency models such as the one developed for advanced manufacturing by manufacturers and the U.S. Department of Labor’s Employment and Training Administration, and endorsed by the National Association of Manufacturers.

Employers should invest at least 3 percent of payroll whenever possible to provide training opportunities for their current employees – particularly in areas that will enable them to join the high-performance workforce – and learn new methods to attract, retain, develop and motivate workers.

The public workforce system, companies and their business associations must become more involved in guiding Workforce Investment Boards on business investments, skill needs, employment requirements and economic trends.

And public/private partnerships should support career awareness campaigns that help individuals understand all the career options available to them. A model for this is The Manufacturing Institute’s “Dream It Do It” manufacturing careers campaign.

These are steps we must begin to take if we are to continue to maintain America’s standard of living, foster a dynamic economy and succeed in the face of intense global competition. Our workforce is the foundation upon which our American manufacturing base is built, and now is the time to ensure that foundation is stable and strong, able to support our nation as our economy changes and grows.

Michigan Governor John Engler is president of the National Association of Manufacturers, whose mission is to enhance the competitiveness of manufacturers by shaping a legislative and regulatory environment conducive to U.S. economic growth and to increase understanding among policymakers, the media and the general public about the vital role of manufacturing to America’s economic future and living standards. Visit: www.nam.org.