Overcoming the Manufacturing Skills Gap by Keeping Skilled Workers on the Job instead of Retiring

First the good news: Manufacturing jobs have grown by 4.8 percent from 2010 to 2014.

That is the extent of the good news because the manufacturing skills gap is dire and has real consequences.  Ask an operations manager, plant manager, or shift supervisor unable to hire new workers as needed.  The solution, short-term, is keeping skilled workers on the job as long as possible.

The median age of the manufacturing workforce rose from 40.5 years in 2000 to 46.1 years in 2013; the average age of a high-skilled worker is 57 according to the U.S. Department of Labor (which defines this group as workers with technical training and industry certification, or an associate’s or bachelor’s degree in a manufacturing-related field.)

The overall growth in manufacturing is hampered by a severe skills gap.  ManpowerGroup’sTalent Shortage Survey, indicated that vacancies for skilled trades workers are the most difficult to fill globally. More than a third of manufacturers report difficulties in filling positions due to a lack of available talent.

The Boston Consulting Group (BCG)’s “Made in America” research series estimates the shortage at 100,000 highly skilled manufacturing workers. This research shows that the most significant manufacturing skills gaps are concentrated in the following five cities: Baton Rouge, Charlotte, Miami, San Antonio, and Wichita. Occupations in shortest supply are welders, machinists and industrial-machinery mechanics.

A Deloitte/NAM survey estimates the shortage of U.S. manufacturing workers at 600,000. Lack of skilled labor reduces productivity and profit, and affects the overall U.S. economy, hindering job creation and gross domestic product. Using analysis by the U.S. Bureau of Economic Analysis, NAM estimates that filling these 600,000 positions would result in 406,441 additional jobs being created, plus an increase in GDP of 1.03 percent.

The BCG report warns that if manufacturing continues to expand and the Baby Boomers continue to retire at present rates, the shortage of highly skilled manufacturing workers could grow to approximately 875,000 machinists.

More than half, 53 percent of skilled-trade workers in the U.S. were 45 years and older, according to EMSI, and 18.6 percent were between the ages of 55 and 64.

The Bureau of Labor Statistics just reported last month the median tenure of workers ages 55 to 64 (10.4 years) was more than three times that of workers ages 25 to 34 years (3.0 years). A larger proportion of older workers than younger workers had 10 years or more of tenure. Among workers ages 60 to 64, 58 percent were employed for at least 10 years with their current employer in January 2014, compared with only 12 percent of those ages 30 to 34.

Within the private sector, workers in manufacturing had the highest tenure among major industries, at 5.9 years in January 2014. In contrast, workers in leisure and hospitality had the lowest median tenure (2.3 years). These differences in tenure reflect many factors, one of which is varying age distributions across industries; on average, workers in manufacturing tend to be older than those in leisure and hospitality.

The ability to keep these seasoned, skilled, knowledge-filled, experienced workers on the job, while acquiring and training the next generation of skilled workers is essential; it can only happen if the communication from management encourages, supports, and inspires these older manufacturing professionals to continued engagement in lieu of retirement.

Louise Dickmeyer, President of People Driven Performance, urged, “If more than 5% of a manufacturer’s workforce is scheduled to retire by January 2016, immediate action strategies and solutions need to be implemented.  There are specific tools to stop the hemorrhaging and manufacturers cannot afford to ignore the value of retaining older workers and proactively engaging in knowledge transfer to the next generation of workers.”

We want to hear more about manufacturing employee retention challenges.  Please add a comment below or send us your challenges at info@pdpsolutions.com.

To Bold Moves.

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