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U.S. manufacturing faces 2-million-worker shortage over the next decade, study says

The U.S. faces a need for nearly 3.5 million manufacturing jobs over the next decade, and 2 million of those jobs are likely to go unfilled, according to new research from Deloitte and The Manufacturing Institute.

Two parallel studies—“The Skills Gap in U.S. Manufacturing: 2015 and Beyond” and “Overwhelming Support: U.S. public opinions on the manufacturing industry”—draw together perspectives from U.S. manufacturing executives and the American public that reveal U.S. manufacturing companies face a significant skills gap over the next decade, largely fueled by baby boomer retirement and too few young people who see the industry as a career destination.

“The research shows that 84 percent of manufacturing executives agree there is a talent shortage in U.S. manufacturing, and this gap will be exacerbated by more than 2.7 million professionals exiting the manufacturing workforce through retirement over the next 10 years,” said Craig Giffi, vice chairman of Deloitte LLP and U.S. automotive sector leader. “Our research estimates that the cumulative skills gap—or the positions that likely won’t be filled because of a lack of skilled workers—will grow to 2 million between 2015 and 2025.”

Eighty-two percent of manufacturing executives responding feel that workforce shortages or skills deficiencies in production roles have a significant effect on their ability to meet customer demand, and 78 percent indicate that it affects their ability to implement new technologies and increase productivity. Manufacturing executives responding to the skills gap survey indicated that 6 of every 10 skilled production openings they have are unfilled today because of the talent shortage.

While 80 percent of executives report they are willing to pay higher salaries than the market rates in workforce areas reeling under the talent crisis, the industry appears to suffer from an inability to fill positions expeditiously. Manufacturing executives surveyed report that it takes more than 90 days to recruit highly skilled workers such as engineers and scientists and an average of 70 days to recruit skilled production workers. According to Benjamin Dollar, principal with Deloitte Consulting LLP and co-author of the studies, “Traditional past practices and methods used for recruiting and developing workers needed for the future of manufacturing are simply not going to be adequate.”

“The skills shortage pervades all stages of manufacturing, from engineering to skilled production,” said Jennifer McNelly, president of The Manufacturing Institute. “This challenge will only grow as the demographics of our workforce evolve with retirements, new technological advances requiring a higher level of training and certification, and our K-12 education system, which continues to lack the necessary focus on STEM education.” Added Gardner Carrick, vice president of The Manufacturing Institute, “With nearly half of executive survey respondents indicating they plan to reshore some portion of their operations back to the U.S. by 2020, the urgency to expand the domestic talent pool and address the skills gap is increasing day by day.”

In a separate survey of the American public, an overwhelming majority of Americans surveyed believe manufacturing is crucial to the country’s economic prosperity (90 percent), standard of living (89 percent), and national security (72 percent). However, only 49 percent believe the U.S. can compete globally in manufacturing today.

Despite this apparent support for manufacturing from the American public, respondents show a much different attitude toward manufacturing as a career path. While 53 percent of respondents believe the manufacturing industry provides careers that are interesting and rewarding and 52 percent believe a career in the manufacturing industry provides a good income relative to other industries, only 37 percent of parents would encourage their children to pursue a career in manufacturing, mainly because of lack of stability (66 percent) and their belief that manufacturing jobs are the first to be moved offshore (75 percent). As a result, manufacturing ranked fifth out of seven industries as their choice to start a career today, and it ranked last as a choice for those between the ages of 19 and 33.

Ninety-four percent of executives surveyed agree that internal employee training and development programs are the most effective skilled production worker development strategies. They also cite involvement with local schools and community colleges (72 percent), external training and certification programs (64 percent), and creation of new veteran hiring programs (49 percent).

“Manufacturers can no longer afford to wait for an educated and trained next generation of manufacturing talent,” said McNelly. “They will need to do more to develop their talent pool, and the same old approaches no longer apply. While much progress has been made in rolling out skills certification, we must accelerate our efforts to keep pace with the daunting challenge facing the U.S. manufacturing industry over the next decade.”