I’ve read every report on the US manufacturing labor shortage that I can get my hands on. I’ve listened to talks and read articles. But I wanted to know exactly how many hands-on employees are retiring and how many we are creating. So I headed on over to the website of my favorite government agency, The Bureau of Labor Statistics, to crunch the numbers myself.
The Problem: Not enough skilled tradespeople are graduating, and manufacturers can’t afford to have their most experienced employees spending their time training people.
There are 8,529,000 people over the age of 55 employed in manufacturing, transportation and utilities, and construction. It’s not precise, but if retirement happens at 65, then roughly a tenth of those people will retire each year. That’s about 850,000 new retirees per year.
Then I found my way over to the National Center for Education Statistics and discovered that in 2011-12, the most recent years with data, 592,000 students were enrolled in a non 4-year degree program in manufacturing, transportation, construction, and repair.
That’s not too shabby, until you realize that the rate of attainment for these programs is 58% over three years. So, in essence, 58% of those students will complete their degree (343,000), and each year, 1/3 of that have graduated and are ready to hire (114,000).
Here's the stark summary: only 114,000 new graduates are ready to be hired each year, 850,000 people are retiring, and we already have over 1.1 million jobs open across manufacturing, transportation, utilities, and construction. So even if a manufacturing plant is lucky enough to have a community college or trade school near it, there are 8 people ready to retire for every 1 graduate that you can hire from a program in a hands-on trade. You don’t need to be a labor economist to know that this is a huge problem, and the level of automation we will see over the next 30 years won’t make it disappear. No wonder people are terrified. Are people terrified? Personally, I am terrified of how much money the US is leaving on the table by not having all our production facilities fully staffed!
When a plant can’t find enough labor, it doesn’t necessarily go out of business, it just makes less money. Usually, when facilities have unfilled roles, they are just less productive than they could be, which equates to lower profitability for the company overall. Access to labor is one of the biggest factors that affects the revenue a manufacturer can generate.
From the outside, it might seem like the answer is for the manufacturer to just train their own employees, but it’s not that simple. Plants can’t afford to have their most experienced employees doing anything other than focusing on production. Distracting highly-skilled employees by requiring them to train people is a poor use of their time and bad for productivity. When there is an abundance of skilled labor, manufacturers can plan for the future and build apprenticeship hours into the company culture, but there hasn’t been an abundance of talent in the manufacturing industry for over a decade.
Manufacturers often rely on a churn of entry-level, lower-skilled workers from temp agencies to handle their basic work, but the middle-skilled jobs are harder to fill and represent more of the population at a production facility than the traditional tradespeople like welders and machinists.
The Solution: coding school-like “production schools” that provide focused, shorter-term training for middle-skilled manufacturing employees.
To get out of this situation, manufacturers need to learn from the journey that software companies have been on. In the past decade, there weren’t enough people trained in computer programming for all the software jobs, but you didn’t need a degree in computer science to be a great software developer. As a result, software companies began supporting organizations that offered coding schools. These shorter-term, highly-focused, less formal training programs efficiently produce middle-skilled software developers. An analogous solution will work in manufacturing.
Manufacturers need to begin supporting organizations with less formal certification programs that prepare people for middle-skilled roles. Hires from coding school-like “production schools” will be less expensive than hiring trained tradespeople to do middle-skilled jobs, and the people who have informal training can be up-skilled in formal trade school training programs later as needed.