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Steps to Stop the Skills Gap

Steps to Stop the Skills Gap

A comprehensive look at programs and policies aimed at training better employees, for your sake and for theirs.

A paradox exists in the U.S. workforce—unfilled jobs in an economy with high unemployment. Overall, American manufacturing has experienced a decline in employment since the high in the late 1970s, but it started rebounding after reaching a low in 2010, according to figures from the Bureau of Labor Statistics reported in various articles.

As this rebound continues, a new concern for American manufacturers is a skills gap. A survey of the manufacturing industry as a whole conducted by SME in May 2013 found that, “from small job shops to the largest manufacturers, 89 percent of U.S. manufacturers indicated they are having a hard time filling skilled jobs, and it is directly hurting the bottom line,” according to Jeannine Kunz, managing director of workforce and education for SME.

This is particularly true for middle-skilled (some refer to as high-skilled) jobs, such as welders, electricians, machinists, tool and die makers, CNC programmers and maintenance personnel.

The skills shortage is keeping some manufacturers from meeting customer demand and expanding production. “They are struggling to meet business requirements and can’t take on new customers,” said Gardner Carrick, vice president of strategic initiatives at the Manufacturing Institute, a research arm of the National Association of Manufacturers. “They have to rely on overtime, which is fine for the peaks and valleys of manufacturing, but not good as an overall day-to-day strategy. If you can’t add new people, you are at capacity in terms of your ability to produce.”

Photo Credit: Tooling U – SME

Why the Gap?
A variety of reasons exist for the manufacturing skills gap. One of the biggest is the transformation of the workplace. pushed by technology and automation that requires a higher skill set than previous manufacturing skills.

“The pace of technology is creating a skills gap,” Kunz said. “At no other time has technical innovation moved so quickly. It can be looked at in two ways—trying to find qualified new hires as well as ensuring workers are able to keep pace and are not left behind. [Following is also a pull-quote] Manufacturers are finding that while they were investing in technology, they did not make the same commitment to investing in training. You can’t evolve people to full competency in their jobs overnight. It is an ongoing and annual investment.”

Related to this is that training is one of the areas that got cut back over the period manufacturing was losing jobs, and during the recession. “Back in the 1960s and 70s, most manufacturers had robust in-house training,” Carrick said. “As the industry declined in terms of employment, most companies got rid of that robust training, in part because it was expensive and in part because they didn’t have jobs for those people after they trained them. Most companies are not in a position to restart that in-house training because of the expense and the realities of competing globally today.”

Another reason for the skills shortage is the number of Americans retiring out of the workforce. Years of knowledge are leaving manufacturing and the replacements do not have the same expertise. “In the late 1990s and early 2000s when a lot of manufacturing went overseas, there was no longer a need to produce skilled workers,” said Scott Covert, training coordinator for the L.I.G.H.T. training center at Penn United Technologies, Cabot, Pa. “Manufacturers stopped training and the industry stopped recruiting so we’ve lost that whole generation. There isn’t anyone in the early 20s to 30s age group to pick up the slack when people retire.”

And there are definitely a lot of people getting ready to retire, he added. “One manufacturer in this area in Western Pennsylvania has 150 workers ready to retire in the next five to seven years.”

A third reason for the skills gap is the reshoring movement, creating an even bigger demand for skilled workers. According to Harry C. Moser, founder and president of the Reshoring Initiative, in 2003 offshoring was costing about 150,000 U.S. manufacturing jobs per year. In 2012, however, the rate of new offshoring was approximately balanced with the rate of reshoring plus foreign direct investment. The net 2013 effect was approximately 20,000-plus jobs. “As offshoring continues to shrink and reshoring and FDI grow, we will see more jobs here in the United States,” he said. “And there have been cases of companies already reshoring and not finding the skilled workers they need. Will it keep some companies from reshoring in the near future? Probably yes.”

A final major reason for the skills gap is perception. Negative perceptions about manufacturing careers have a lot to do with the lack of younger workers. “Manufacturing has the image of being dark and dirty,” Moser said. “And equally so is the image of manufacturing in decline. There is a perception that you won’t have a job after you complete training or schooling. There is also a perception that technical training is lower status than a four-year university degree.”

To improve the perception of manufacturing and attract more young workers, the industry needs to show that modern manufacturing is a high-skilled, high-tech, high-paying career choice. There needs to be development of relationships with high school students and educators to foster an interest in manufacturing careers.

Moser also recommends ending the use of the terms “vocation” and “trade.” “We need to refer to the skilled occupations as professions and the workers as professionals, as is done in Germany and Switzerland.”

Photo Credit: Tooling U – SME

Get an Education
To address the training issues, the industry needs to increase the number and quality of manufacturing education programs offered in high schools, community colleges and technical schools. “We work with community colleges that partner with local manufacturers to align with their needs and design programs with their input,” SME’s Kunz said. “Working together, the colleges and manufacturers can ensure there is a pipeline of qualified workers with the right skills, knowledge and abilities to operate in the most advanced manufacturing environments.”

Community colleges also do a good business based around customized training for manufacturers. Most offer a specific course for a company, almost like a training vendor.

A successful example of a community college working with manufacturing to provide a great curriculum is Wichita Area Technical College.

WATC is the managing partner for the National Center for Aviation Training, which is a world’s premier center for aviation and advanced manufacturing training, which opened in 2009. In addition, WATC offers traditional manufacturing courses, such as welding, machining, electromechanical, maintenance and robotics. It also offers an advanced coating and painting course, which is one of two in the nation.

“Our entire curriculum has been developed by subject matter experts in the manufacturing and aviation industries,” said Sheree Utash, vice president of academic affairs at WATC. “They indicate the skill sets we need and then the faculty put that into an academic program. Industry advocate teams comprised of the experts come in twice a year to oversee the programs and explain the kinds of students they are hiring, and how prepared the students are, among other things.” WATC also offers external industry-recognized certifications.

WATC’s JumpStart program encourages high school students to begin a pathway to a technical career. The program takes advantage of Kansas Senate Bill 155, which allows for tuition reimbursement for high school students who complete college-level career technical education (CTE) courses, and a certification incentive program, which helps high school students get their diploma and a certification at the same time so they can go to work earlier after graduation.

“This is really changing the image of CTE,” Utash said. “The whole skill set needed is much more high-tech and sophisticated than ever before. We have to build on that and help parents, students and high school teachers and counselors understand what manufacturing is like today.”

And WATC is seeing results. “Our enrollments are increasing year after year and we have a 94 percent placement rate of students out to industry,” Utash noted.

Photo Credit: Tooling U – SME
Back In-House
While most manufactures have eliminated in-house training, some are still making the effort. Open since 1999, the Learning Institute for the Growth of High Technology (L.I.G.H.T.) is a 17,000-sq.-ft. manufacturing training center located on the main campus of Penn United Technologies in Western Pennsylvania. Employing 600 workers, Penn is a diversified manufacturer that offers a range of services to a variety of industries.

In addition to its own employees, L.I.G.H.T. offers hands-on manufacturing training, which can be customized, to customers and other local manufacturers. State-approved apprenticeships are also available.

“Back in the late 1990s, we weren’t getting the level of skilled workers we needed,” said Covert. “We were sending workers off campus for training. But we were very specific in some of the skill sets we needed so we decided to bring that in-house.”

He added that Penn is more the exception than the rule. [Following is also a pull-quote]“When there was a big drop in manufacturing, smaller companies couldn’t afford the expense of in-house training. While you do get the return on investment, you need that initial investment capital upfront. Penn is fortunate in that we are diversified enough that we can survive a downturn to keep the training program running.”

In an effort to contribute more to the community, L.I.G.H.T. offers the Students an Acquiring Technical Skills (SATS) high school program. SATS offers online courses through Tooling U-SME to complete at school, coupled with visits to the training center to get hands-on experience for free.

L.I.G.H.T. also offers a Basic Manufacturing skills program offered to local veterans and the general public. It is an eight-week course that gives students entry-level manufacturing skills along with nationally recognized credentials at no cost to the student.

Photo Credit: Tooling U – SME

Apprentice Answer
The Reshoring Initiative’s Moser believes apprenticeships are the best solution to the skills gap, such as those based on the German and Swiss models where students spend time getting hands-on training while still in school. “In Switzerland, 70 percent of the high school students go into apprenticeship, and not just in manufacturing but in all areas such as banking and medical.”

Moser suggests the federal government offer apprenticeship loans similar to student loans to make apprenticeships cost-effective for the employer and the apprentice. The company would pay off the loan over a specific time if the apprentice stays at the company. “It would broaden loan focus from university degrees that are often in excess to training that the economy actually needs.”

Wichita Area Technical College offers traditional manufacturing courses, such as welding, machining, electromechanical, maintenance and robotics. WATC also offers external industry-recognized certifications.

Government Involvement
Aware of the skills gap, the federal government has made several advances in programs supporting the manufacturing workforce in recent years. The U.S. Department of Labor’s Trade Adjustment Assistance Community College and Career Training (TAACCCT) Grant program, a nearly $2 billion initiative, has helped expand the capacity of the community college system to provide training programs that connect workers to available jobs in growing industries in their communities.

Other examples include President Obama’s executive action plan announced in October, aimed at boosting manufacturing. The plan involves several government agencies investing a total of $300 million to help develop emerging manufacturing technologies and provide grants to develop manufacturing apprenticeship programs. Also, the Workforce Innovation and Opportunity Act of 2014 streamlines federal job training programs and provides access to billions in training grants.

At the state level, there are countless programs available to address the skills shortage. A recent report from the Manufacturing Institute looked at several “best actor” state policies that are being implemented to decrease the skills gap.

Both Kansas and Wisconsin offer high schools a $1,000 grant for each student that graduates with industry‐recognized CTE certification.

Oklahoma’s Career Technology Centers allow high school students to complete their school requirements while earning college credits toward an Associate of Applied Science (AAS) degree at technology centers and colleges, at a cost of only $8 per credit hour to students.

The Kentucky Federation of Advanced Manufacturing Education was created through Toyota Motor Manufacturing and is growing to include between 10 and 15 regional manufacturers. These manufacturers partner with their local community college to operate a program whereby students attain an AAS degree, earn 70 to 80 college credit hours and have two years of paid experience, at little to no cost to the students.

Industry Organizations
Most industry organizations and associations recognize that finding skilled workers is an issue for their members and that they should try and address it.

SME works with high schools, colleges and industry to close that gap. “Manufacturers often feel the problem is just too big and complex to solve themselves,” Kunz said. “We use our experience to share best practices and help structure and streamline the process toward measurable outcomes.”

Within education, SME’s Partnership Response in Manufacturing Education (PRIME) program is designed to build a network between students, educators and industry to grow and educate the next-generation workforce. Hands-on experience is core to manufacturing education. SME provides high schools and colleges online classes aligned to industry certifications, providing instructors more time to teach the hands-on practical skills that are most important.

The Manufacturing Institute works to improve the quality of college programs through industry-recognized certifications. “It is the difference between a college saying you can weld and the American Welding Society saying you can weld,” Carrick said. “It is a widely recognized standard defined by an industry group, not a faculty member. We have 15 certificating organizations that we have endorsed at the national level. Our approach has been to make those certifications the final exam for any course.”

Many excellent and varied ideas exist to recruit the next generation of skilled workers. As manufacturing continues its upward trend, now is the time to begin implementing them. Government, educators, industry organizations and manufacturers all agree on the importance of well-trained workers to drive productivity and growth, and increased cooperation between all four can fast-track solutions to address the skills gap.


L.I.G.H.T.’s Students Acquiring Technical Skills high school program offers online courses through Tooling U-SME to complete at school, coupled with visits to the training center to get hands-on experience — for free.