Manufacturing Skills Gap: What it is and How to Bridge that in 2023?
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As the manufacturing industry ventures into 2023, amidst a backdrop of ongoing challenges like the pandemic aftermath, the Great Resignation, and economic uncertainties, there is a pressing issue that demands immediate attention. It is a talent crisis unlike any other—a gaping manufacturing skills gap that threatens to reshape the industry’s landscape.
If the stats are to be believed, skills gap in manufacturing industry is gradually becoming an economical global problem and not only business problem. Following numbers paint a stark picture:
The Manufacturing Institute warns of a potential shortfall of 2.1 million skilled manufacturing professionals in the US by 2030, with a potential cost of up to $1 trillion to the industry.
With over 10,000 workers reaching retirement age every day, as reported by AARP, and a new generation of employees prioritizing health and well-being, as highlighted in Microsoft’s 2022 Work Trend Index, the workforce dynamics are undergoing a seismic shift.
Global employers are struggling to find individuals with the necessary blend of soft and hard skills, as revealed by a ManpowerGroup survey.
Addressing this manufacturing skills gap becomes paramount, not only for individual manufacturers but for the future vitality of the entire sector. In this article, we will learn more about the manufacturing skills gap, its current position, its causes, and how to solve the problem. In the end, we also share an innovative solution to fill the gap.
Manufacturing Skills Gap: Let’s Understand the Plight!
Manufacturing skill gap occurs when several job positions remain unfilled in the industry because the employers cannot find the right people for the open positions. Given the juggernaut position of the manufacturing industry in every type of economy, even a small mismatch between the desired skills and what’s available for the manufacturers is a big problem.
Technically, we can diagnose a skills gap when the recruiters can’t find people with the right mix of technical skills, industry knowledge, and expertise to take up the jobs available. The same Deloitte report, which predicted the number of unfilled jobs to increase, also finds that this gap can lead to a loss of over $1 trillion in GDP.
What was only a small issue in the past gained more traction after the pandemic. According to a report by the UKG of the Workforce Institute, 58% of the manufacturers had difficulty acquiring talent during the pandemic. At the same time, 49% were not able to retain the skilled talent.
Today the position is such that at least 63% of manufacturers are able to fill critical labor gaps. In the event that, collectively, the manufacturing industry is not able to fill this gap, it can lead to a serious recruitment crisis.
In the absence of the right people, manufacturers will lack the ability to respond to market preferences and customer demands. Failure to keep up with these trends means losing valuable customers.
Causes of Widespread Manufacturing Skills Gap
While we cannot limit the existence of this gap to one particular reason, as it depends on a number of factors. There are some commons reasons responsible for creating that:
It is true that manufacturers require relatively less technically advanced employees than an IT company. However, the need for technically skilled workers is increasing with advanced technology and machines integrated into the manufacturing unit.
So, when a manufacturer’s focus should be on digital transformation, they are still looking for the right people to take their digital transformation journey forward.
However, Peter Cappelli from the Wharton School of the University of Pennsylvania has a different view. He believes that employers today are demanding more from their candidates.
They want workers who can fill the role they are given from the get-go. And they want this to happen without having to provide the required training and coaching. Even though Mr. Cappelli said this about IT companies, can this statement hold true in the manufacturing industry? What do you think?
2. Aged workforce
The thing with the manufacturing sector is that a significant amount of workers are age 55 or above. As these workers who have years of experience and gained expertise retire, they take their training and knowledge with them. The manufacturing industry has traditionally depended on mentoring programs to train its workforce. With this, going with the old methods of training won’t be sustainable.
And because there is no system to pass on the skills to the next generation, there is a shortage of skilled workers. Taking a look at the 2022 data from the Bureau of Labor Statistics, more than 7300 people employed in the manufacturing sector are aged between 45 to 65. The total number of people employed in this sector in 2022 is 15,231.
So, the aged worker’s cohort is almost 50% of the workforce.
3. Perception and Image Problem
As the existing workforce in the manufacturing sector is close to retiring, the upcoming generations need more clarity about the manufacturing processes and operations. Their lack of clarity catalyzes negligent behavior toward the work and jobs in this industry.
Youngsters see manufacturing jobs as hard and labor-intensive after seeing their parents or grandparents come home from long work hours in challenging conditions.
This twisted belief about the manufacturing sector is a deterrent for the younger generation, hence making them not learn the necessary skills.
4. Lack of In-house Training
Even with the youngsters taking jobs in the manufacturing sector, there are not enough in-house training, reskilling, and upskilling programs in the manufacturing industry.
Manufacturers, on the other hand, say that giving training in this industry is chaotic. Given the vast number of elements in a manufacturing unit, training can take several forms and a lot of time.
So the lack of a system that can help manufacturers provide effective training is the culprit. As it’s a highly experiential industry, online courses, and book knowledge are insufficient to raise skilled workers.
5. Evolution of Required Skills
The manufacturing sector is changing with technology as new components, machines, and solutions are introduced. Existing workers don’t get enough training, which we have discussed before, and the new workers are skilled enough to operate with advanced technology.
Hence, this creates a gap between the skills employers require and the skills workers can offer. Manufacturers want their potential employees to possess digital skills and work with advanced technologies, which is seldom delivered by the new workers.
As the new workers are not getting enough off-the-job training in these advancements, this creates a gap.
Why Is It Essential to Address the Widespread Manufacturing Skills Gap?
It’s essential to address and solve the widespread manufacturing skills gap because:
1. Cost: Human errors cause 23% of unplanned downtime, resulting in an average of 800 hours per year or over 15 hours per week for manufacturers. This downtime can incur a staggering cost of up to $50 billion annually, equivalent to $20,000 per minute.
2. Efficiency: Envision a scenario where all members of your organization can effortlessly access expert assistance to complete any task, anytime, and on any device. Consider the availability of this expertise through live support or tutorials. Furthermore, imagine that the performance of every individual aligns perfectly with your efficiency, quality, and product integrity standards. For numerous companies, these standards are of utmost importance as they serve as a medium to improve efficiency of frontline employees.
3. Innovation: Skilled workers are more likely to innovate and deliver better products than unskilled workers. As a result, having a skilled team means your products can compete on the global market and bring better brand recognition.
How to Address the Skills Gap in Manufacturing Problem?
McKinsey Global finds through a survey that reskilling is the top priority for manufacturing industry to address the skills gap. They believe that reskilling and skill-building are more important than hiring new employees.
Following are the three ways to address the manufacturing skills gap;
1. Collaboration Between Manufacturing Industry, Government, and Education
The manufacturing industry has to be vocal about the skills they require today and in the future. Educational institutions and government agencies must hear these requirements and integrate the required curriculum to help students learn all the desired skills.
Hence it’s essential for manufacturers to partner with local schools, state and national level higher education institutions, and the requisite government authorities. Taking their help, manufacturers can hire employees who are ready for the job.
2. Vocational Training, Apprenticeships, and Upskilling
Training the existing and setting the ground for potential employees to gain the desired skills is another way to address the gap. In this, apprenticeships and reskilling is required to stop the employees from exiting the company.
If the employees get adequate training related to their job role, they won’t lose interest in doing their work. Plus, regular training and upskilling also allow them to learn new skills. Hence, the manufacturers won’t have to worry about the skill gap.
3. Using Technology for Reducing the Gap
Manufacturers need to find ways to leverage technology to close the skills gap. Where advancements in technology is one of the aspects of increasing the skills gap, the same technological innovations can address the gap.
For training purposes, manufacturers use Augmented Reality solutions to provide manufacturing-focused frontline training. Using AR, manufacturers can empower their workforce and can retain their existing talent as they will get training to work with advanced machines and systems.
The existence of a skill gap in the manufacturing sector shows that there is a substantial lack of knowledge, training, and aspirations among the people. Whether they don’t want to become a part of the manufacturing industry or they don’t have the required channels to learn the skills, the manufacturing industry is at a loss here.
Hence to close this gap, manufacturers need to create more effective learning & development programs for frontline workers, associate with educational institutions, and build a learning in-house training environment. As manufacturers cannot get the desired performance with whatever the market is offering, they need to take action and build solutions for themselves.
Minimize Skillgap & Train the Next Generation Frontline Workforce with Plutomen
Plutomen is an AR powered frontline operational platform that help your workers upskill and reskill themselves by gaining expert guidance, knowledgebase with remote visual assistance, digital work instructions, and immersive training. By using our product suite, employees can learn about operating machines, running real-time inspections, etc., in real-time using smart AR glasses. As the employees will be learning in a real-like environment, they will be able to learn better and retain their learnings.
The skilled labor shortage in the manufacturing industries implies to a lack of personnel with the knowledge and expertise required to perform the particular tasks. This may lead to decreased productivity, increased labor costs, reduced output, and straining the existing workforce.
As technology advances, manufacturers will require more & more amount of critical thinking, problem-solving, active learning with a growth mindset and adaptability.
Many industries, such as healthcare, manufacturing, construction, and energy, suffer from the skills gap.
Labor shortage can be addressed by improving employee engagement and retention, investing in right technology, upskilling and reskilling the existing workforce, and undertaking training initiatives.
With more than 12+ years of experience in the world of enterprises, technology, and metaverse, Keyur Bhalavat is leading Plutomen to gain meaningful partnerships & to have a strong clientele network. He is one of the board members of GESIA (Gujarat IT Association Ahmedabad).
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