Addressing the Skilled-Worker Shortage Head-on

[jhertzig]

Manufacturers that invest in the right training and employee development will gain competitive advantage.
By Jason Tuma, Senior Manager, Assurance Services, BCG & Co.
Economic news tends to focus on layoffs and job cuts these days, especially when it comes to plant closings and production slowdowns. While job loss certainly is a harsh reality for millions of former production workers, U.S. manufacturers themselves are dealing with a much different reality: They can’t find enough qualified employees to fill thousands of high-paying, high-skill jobs.
“This is certainly an employer’s market, but not as much with manufacturers,” Mark C. Tomlinson, executive director and general manager of the Society of Manufacturing Engineers (SME), said in November 2009 when addressing the shortage. “Manufacturers are looking for employees who are the opposite of the stereotypical factory worker doing repetitive, assembly line work. They are in need of 21st-century workers with specialized technical training such as machinists, operators, and technicians.”
The manufacturing skilled-worker shortage predates the 2008–09 Great Recession by at least a decade and is the result of combined demographic, technological, and societal changes. Groups such as SME, the National Assoc. of Manufacturers (NAM), and the nationwide Manufacturing Extension Partnership (MEP) network have been addressing the shortage with research, training partnerships, and outreach programs for years.
But these alone won’t solve the skilled-worker shortage, particularly with the sting of last year’s economic collapse still lingering. While many manufacturers have not laid off workers or closed plants, high-profile companies in industries such as autos did so in droves, and this has furthered the notion that manufacturing is no place for stable, rewarding employment.
Manufacturing companies will need to address this shortage head-on by taking a dedicated, innovate approach to training and labor management, and by working to reverse the negative image that continues to plague goods-producing industries.
Investing for the Future
One of the most insidious causes of the skilled-worker shortage is the corporate propensity to target labor and labor-associated costs (i.e., training) as an immediate reaction to a drop in revenues or profitability. While there are many good reasons to eliminate positions that no longer add customer value, manufacturers need to recognize that they are no longer simply providers of one-size-fits-most products. The most successful manufacturing companies are solving customer problems, and this type of value is directly tied to daily employee performance. What employees do – to say it another way – has become more important than what they make, and so production workers should no longer be seen as expendable, easily replaced resources. Companies that have recognized this and have invested in their workforces are solving their skilled-worker shortages.
For example, Ron Bullock, chairman of Bison Gear and Engineering Corp., said recently during a TV news segment about the company that Bison “has invested in building two balance sheets: a financial balance sheet and what we call a ‘human capital’ balance sheet.”
Bison, of St. Charles, Ill., recognized that in order to stay competitive in a global marketplace, it needed a briskly flowing pipeline of highly skilled employees. So the company implemented the nationally recognized Manufacturing Skill Standards Certification (MSSC) program. MSSC awards Certified Production Technician certificates for completion of training modules in safety, quality, practices and measurements, and manufacturing process and production. Bison awards employees financially when they complete a module.
SME, NAM, and community colleges also have developed various manufacturing certification programs, some of which focus on skills tied to growing markets and management practices, such as the merging of “lean manufacturing” techniques with environmental sustainability.
In addition to certification, manufacturers can create performance incentives to encourage employees to cross-train for other in-house production jobs. Having employees with multiple skills increases a manufacturer’s flexibility, which in turn increases its ability to serve customers and efficiently deploy resources. The U.S. steel industry came back from near-devastation early in this decade in part by working with its unions to rewrite contracts to encourage cross-training instead of rewarding employees based mostly on years of service. Union members at some companies now receive incentives tied to company performance, which tends to improve as the workforce becomes more flexible and efficient.
Trying New Approaches
On a big-picture front, the NAM’s Manufacturing Institute is using a grant from the Bill & Melinda Gates Foundation to build a skills-certification program through community colleges. North Carolina (Forsyth Technical Community College), Ohio (Lorain County Community College), Texas (Alamo Colleges), and Washington (Shoreline Community College) are among the first to implement the Manufacturing Skills Certification System.
“We need to engage kids in learning, and we need to give them options,” said NAM President John Engler, when announcing the program. “Moving these industry-recognized skills certifications into community college programs will provide meaningful, relevant education for students and ultimately produce a highly skilled and mobile workforce – making us more competitive in the global economy.”
Manufacturing Institute President Emily DeRocco said the program promotes “stackable” industry-recognized credentials that provide more flexibility for students. Instead of students training in one skill that is applicable to one or a few industries, the program focuses on skills that are valuable across manufacturing sectors.
“The system offers more ‘on’ and ‘off’ ramps in post-secondary education, and each credential earned increases the student’s value in the manufacturing workplace,” DeRocco explained.
Image Makeover Needed
Despite the admirable outreach and education efforts by groups such as the NAM, it’s clear that manufacturers need to improve their image in order to attract enough qualified employees for today and tomorrow. A recent survey of 500 U.S. teens by the education arm of the Fabricators & Manufacturers Association International found that 52 percent have little or no interest in a manufacturing career, and another 21 percent were ambivalent about the possibility.
“Unfortunately, manufacturing often is not positioned as a viable career by groups such as educators and counselors, and at times factory work even is maligned in pop culture and the media,” said Gerald Shankel, president of Nuts, Bolts & Thingamajigs (NBT), which sponsored the poll. “Based on this environment, these findings are not surprising.”
Bob Chapman, CEO of industrial manufacturer Barry-Wehmiller, also believes that U.S. manufacturing needs to change its attitude toward labor in order to regain global competitive advantage. His story is featured in the final 2009 issue of Target, the magazine of the Association for Manufacturing Excellence, which also offers training and certification to manufacturers.
Chapman has successfully turned around many near-dead U.S. manufacturing companies by using a management formula that reverses traditional thinking that corporate financial success is enough to keep valuable production employees because it provides them with financial security. His leadership team is directed to focus on employee fulfillment first – and then lead and motivate these fulfilled employees in contributing to corporate financial success, which rewards everyone with security.
A huge part of fulfilling employees is opening new opportunities for them within the company through training and education. According to the Target article, Chapman even created an internal “university” that has a budget, a staff, and his full support. Its mission: Train today’s employees to be tomorrow’s leaders. The university puts on weeklong training sessions at each of the company’s sites on various skills and practices. Teachers are experienced team leaders within the business units, and students from across the company participate.
At Paper Converting Machinery Co. (PCMC) in Green Bay, Wis., the success of the Barry-Wehmiller philosophy on employee fulfillment is palpable. The family-owned company was on the verge of closing when Barry-Wehmiller purchased it in 2005. Today, PCMC is successful and a great place to work, say the United Autoworkers of America members who manufacture the huge paper-converting machines used by consumer goods manufacturers.
Notably, one of the first orders Chapman gave after buying PCMC was to build a cafeteria, which the plant had never had. How can people talk to one another if they don’t have a place to do it, he concluded.
“They tore down the walls of mistrust,” 45-year employee Larry Pierquet, a mechanical assembler, told Target. “The facilitators were listening to everyone. Everyone was sharing. People just came alive.”
What Barry-Wehmiller and other manufacturers that have solved their skilled labor shortage have learned is that treating employees as expendable commodities might be a short-term financial solution, but it erodes long-term value creation and, thus, competitive advantage.
In manufacturing, value no longer is created simply by manipulating materials, but by engaging employees to deliver exactly what customers want, when they want it. This makes employees more valuable than ever, which is why all manufacturers need to be focusing on skills improvement within their companies and their industries.