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The Coming Shortage of Skilled Manufacturing Workers

The Coming Shortage of Skilled Manufacturing Workers

Photograph by Gerenme/Getty Images

As many as 600,000 U.S. manufacturing jobs remained vacant across the U.S. due to shortages of skilled workers, according to the Manufacturing Institute’s most recent “skills gap” report.

Yet if there truly were significant shortages of skilled workers, employers would be increasing wages to attract them. That’s basic supply-and-demand economics. How do you explain the fact that manufacturing wages are not increasing significantly above inflation? The average hourly wage for U.S. manufacturing jobs has barely budged in three years, according to the Bureau of Labor Statistics (BLS). It stood at $23.08 in July 2009; $23.35 in July 2010; $23.75 in July 2011, and $24.00 this past July.

There are several reasons for this:

1. In a slow economy companies often don’t fill “open positions” that they appear to be hiring for because they don’t want to carry people they don’t absolutely need. This is a longstanding practice. It means the actual number of true vacancies is less than advertised.

2. Even when more help is needed, management often makes do by offering existing employees more overtime, which gives them the flexibility of more capacity, without having to hire more workers. This is a reasonable temporary fix.

3. Workers just don’t walk into manufacturing plants, even if they are highly experienced, and start working. They need training. Unfortunately, many companies cut training programs when the financial crisis hit and they haven’t reinstated them. If you fail to recruit and train workers, the problem isn’t a skills gap, per se, the problem is management’s unwillingness to spend money on training.

4. Finally, the numbers seem larger than they really are because nonmanufacturing jobs in manufacturing facilities are also included: Accounting, administrative, shipping, and other positions that may have been reduced when companies cut costs, are still classified as “open,” though many of them will never be filled—and they are not manufacturing jobs.

As I mentioned in my previous blog post on the skills gap, while we don’t have a skills gap today, demographics are working against us. The average age of a highly skilled U.S. manufacturing worker is 56. Now is the time to train the next generation. With all the unemployed and underemployed college graduates now living in their parents’ basements, we’d be foolish not to recognize this as a tremendous talent asset. We need to recruit them and train them to create the skilled workforce U.S. manufacturing will need as the baby boomers retire.

Maybe U.S. factories will have to change a bit to accommodate their interests: lattes, rather than lunch pails. But that’s not a bad thing.

The bottom line is that no one has repealed the laws of supply and demand. If we had a large nationwide shortage of skilled workers, wages would rise quickly and companies would aggressively hire and train.

America’s manufacturing renaissance could stall if companies don’t have the skilled workers they need to meet customer demand and quality expectations. Training is fundamental to the process. Putting it on the back burner can jeopardize the future.

Harold L. Sirkin is a Chicago-based senior partner of The Boston Consulting Group (BCG), a professor at Northwestern University’s Kellogg School of Management, and co-author, most recently, of The U.S. Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback (Knowledge@Wharton, November 2012).

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