October 2019

It’s a very interesting time for the U.S. manufacturing sector. U.S. manufacturing output continues to grow, albeit at a slower pace recently, and is near an all-time high. Competitiveness is also on the rise. The World Economic Forum (WEF) ranks the U.S. as the most competitive economy in the world², and the competitiveness of the U.S. manufacturing sector is on path to surpass China and claim the top spot globally in the near future³.

However, two mega-trends are posing significant challenges for American manufacturing: 1) the persistent shortage of skilled labor is forcing manufacturers to produce more output with fewer workers; and 2) the accelerating pace of technical innovation is forcing manufacturers to continuously adapt or risk being disrupted by more agile competitors. The intersection of these trends creates a tremendous opportunity for companies that leverage technology to enhance worker productivity, quality, and job satisfaction.

The U.S. unemployment rate is near a

50-year low. For the first time in decades there are more job openings than unemployed people looking for work. One negative consequence of this positive economic environment is that a half-million manufacturing jobs are going unfilled. And according to a report published last year⁴, this situation is going to get worse — much worse. The report expects the number of new jobs in manufacturing to grow by 1.96 million over the next decade in order to meet increased demand for U.S. manufactured goods. At the same time, over 2.6 million baby-boomers are expected to retire from manufacturing jobs. The problem is that the U.S. manufacturing sector is not attracting and training new talent quickly enough to fill the growing need. The net result could be 2.4 million unfilled manufacturing jobs by 2028.

The future is bright for American manufacturing, but companies will need to adapt to benefit from the intersection of talent and technology

The manufacturing talent pipeline problem is multi-faceted. Manufacturing has not been a career choice for many young people due to misperceptions that manufacturing positions are low quality, poorly compensated, and unstable. Negative perceptions began forming decades ago when major U.S. industries struggled in the face of global competition, and the industrial Midwest acquired the “rustbelt” label. This perception was reinforced in the Great Recession a decade ago when

manufacturing employment was dramatically reduced and still hasn’t fully recovered to pre-recessional levels. Today, popular belief that automation is eliminating industrial jobs continues to discourage manufacturing careers.

The atrophy of some career technical education (CTE) programs has also contributed by reducing learning opportunities for young people considering a manufacturing career. The need to

continuously update training programs and attract instructors to keep pace with new manufacturing technologies is also an ongoing challenge. Many companies are responding by working more closely with educators to attract talent, help upgrade training programs, and create more work/learn apprenticeship opportunities to strengthen their talent pipelines. While necessary, these efforts alone are unlikely to be enough to bridge the growing talent gap.

Technical innovation will also play a vital role in helping to mitigate the talent shortage. As digital connectivity of manufacturing takes hold, the “fourth industrial revolution” will impact 21st-century manufacturing talent requirements as much as the steam engine did in the 19^th century. The perception of manufacturing careers should continue to improve as technology makes jobs less physically taxing and tedious. While high-skill trades like welding will still be required for the

foreseeable future, new technologies promise to help people acquire necessary skills faster and extend their working careers so they can apply those skills longer (inset). Emerging automation technologies such as adaptive robotics, collaborative robots or “cobots”, machine learning, and artificial intelligence (AI), can reduce worker skill requirements while improving productivity and consistency. As automation becomes smarter and more adaptable it will also become more relevant to small and medium-size businesses and to a broader range of low-volume, high-mix applications. Automation will also work more closely with humans, rather than replacing them. Despite public perceptions to the contrary, industrial automation will support more stable jobs than it eliminates while increasing wages and improving working conditions.

Since the manufacturing talent challenge is multi-faceted, so must be the solution.

Manufacturers that adopt emerging technologies can help available workers perform at a higher level to increase productivity, quality, and profitability. To retain workers, employers must simultaneously create long-term advancement opportunities for workers who embrace new technologies, such as continuing education career pathways for technicians to become managers or engineers. Public-private partnerships can also help strengthen talent pipelines by supporting K-12 STEM programs that introduce young people, teachers, and parents to “cool” industrial technologies and raise awareness of CTE options that can lead to stable, well-compensated industrial careers. The WEF ranks the U.S. as the

world’s most competitive economy in part because “American companies are the most ready to embrace risk or disruptive business ideas.” The future will remain bright for American manufacturing if we continue to lead at the intersection of talent and technology.

About the author: Chris Conrardy is Chief Technology Officer for EWI. EWI is a non-profit manufacturing technology center that helps manufacturers of all sizes screen, develop, and implement advanced manufacturing technologies to solve manufacturing challenges and create sustained competitive advantage.

Citations:

1 “The Global Competitiveness Report 2018”, the World Economic Forum, Professor Klaus Schwab editor

2 “2016 Global Manufacturing Competitiveness Index”, Deloitte Touche Tohmatsu Limited and the Council on Competitiveness

3 “Deloitte Insights: The jobs are here, but where are the people?”, 2018, Deloitte Development LLC and the Manufacturing Institute