The US may be first for investment, but don’t ignore the skills shortage

Good news and bad news came out of a recent joint report from Accenture and The Manufacturing Institute. Called “Out of Inventory: Skills Shortage Threatens Growth for U.S. Manufacturing,” the report shows that more than 50% of respondents plan to increase production by at least 5% in the next five years. That’s the good news.

Now the bad: U.S. manufacturers may be losing up to 11% of their annual earnings because of increased production costs stemming from a shortage of skilled workers. Thirty-nine percent of the 300 U.S. manufacturing executives surveyed described the shortage of qualified, skilled applicants as severe, with 60% saying it has been difficult to hire the skilled people they need.

However, the lack of skilled workers isn’t stopping investment in the United States. Last month, A.T. Kearney released its 2014 Foreign Direct Investment Confidence Index (FDICI), showing that the U.S. remains the country of choice for foreign investments, increasing its lead from the 2013 study.

That trend could change if the skills-shortage problem isn’t reversed. The Obama administration has taken steps to address it by launching Investing in Manufacturing Communities Partnership (IMCP) in 2013, and naming its 12 designated communities this year. The U.S. Commerce Department-led program, the IMCP, is designed to accelerate the resurgence of manufacturing in communities nationwide by supporting the development of long-term economic development strategies that help communities attract and expand private investment in the manufacturing sector and increase international trade and exports.

But, companies are building now, and they need a quick solution. Without skilled labor, there are not enough people to hire – and when manufacturers are unable to fill job openings, they face overtime, downtime, and increased cycle times; more material can get lost to scrap; quality can suffer.

The Manufacturing Institute/Accenture report offered a solid list of suggestions on how to stay in front of this skills gap – most important being: “Successful companies spend training dollars as part of an overall strategy designed to address critical skill shortages, with clear objectives set for the short-, medium-, and long-term.”

Additional ideas for companies: Maintain a current inventory of in-house skill sets regularly mapped against current and anticipated skill needs; take advantage of digital technologies to make skills training readily available; incorporate nationally recognized, certified training programs; and engage with educators to build a pipeline of future skilled workers.

While some European companies setting stakes in the U.S. bring with them well-known in-house apprenticeship programs, I would also suggest that businesses should encourage employees to attend trade shows and educational conferences frequently to keep current on the latest manufacturing equipment, trends, and techniques in order help counter skills shortage.

This is a plan that all sizes of companies should implement to keep manufacturing strong and to help teach specialized skills to manufacturing recruits.

I’d like to hear how your company is handling today’s skills shortage. Drop me your thoughts at emodic@gie.net.

– Elizabeth