Reshoring and skilled workforce: One hinges on the other
The United States is facing a crucial workforce skills gap. For more rapid reshoring to take place, we need a more highly skilled and larger workforce. Availability of a skilled workforce is often the No. 1 criterion in factory site selection, retention and expansion. Recruiting that workforce also requires that reshoring be visibly successful so our youth see manufacturing as a stable career. Reshoring and skilled workforce go hand in hand—you simply can’t have one without the other.
According to a study by Deloitte and The Manufacturing Institute, 3.5 million manufacturing jobs will likely need to be filled over the next decade, but a skills gap is expected to leave 2 million of those jobs unfilled. Eighty-two percent of the manufacturers surveyed report that a shortage of workers with properly aligned skills adversely affects their ability to meet demand, and 78 percent say it hinders their ability to implement new technologies that increase productivity and competitiveness.
Between 2015 and 2025, some 2.7 million baby boomers—22 percent of the workforce—are expected to retire. This will not only be a dramatic headcount loss, but also a drain of valuable embedded manufacturing knowledge. The surge in reshoring and foreign direct investment is only exacerbating the problem. For the first time in decades, more jobs were reshored than offshored in 2016. The U.S. added 77,000 jobs and offshored 50,000, for a net gain of 27,000. In contrast, an average of 220,000 jobs were lost annually from 2000 to 2003.
The bottleneck in the skilled workforce development system is an insufficient quality and quantity of recruits, especially in or graduating from high school. The problem stems from misperceptions about manufacturing, leading many to believe that manufacturing work will continue to be offshored, and making it appear to be a poor career path. Although nine out of 10 Americans believe manufacturing is essential to the U.S. economy, only one in three parents would encourage their children to prepare for a career in manufacturing.
The problem started when publicly held companies began to view training as an expense rather than an investment. Most high schools and community colleges closed their training programs because of low enrollment and because “college for all” became the norm. Apprentice-type training and collaboration between schools and industry were largely eliminated.
A sufficient quantity of skilled workers is crucial for employing new technologies, such as advanced manufacturing, automation and the Industrial Internet of Things. The duties of almost every occupation in a manufacturing operation will be affected, causing widespread disruption to business models and labor markets.
This challenge will require the U.S. to tap into new talent pools, such as women, millennials and Generation Z to find qualified applicants. Recruits will need to be trained with new techniques, and prime-aged displaced workers will need to be retrained to fill the manufacturing workforce pipeline.
Words matter. Stop referring to “trades and vocations.” For jobs requiring significant postsecondary training, such as apprenticeships, adopt the wording that works in Germany and Switzerland: professions.
As equipment becomes more connected throughout the “smart factory,” companies will have to include lifelong learning in their business plans to keep up with new technologies. Workers will need continuous learning so they can adjust and repair equipment and achieve strategic production and performance objectives.
Creating a stronger skilled workforce is critical to reshoring and the country’s manufacturing growth. America needs a coordinated effort between our educational system, government and business leaders to provide the proper alignment between jobs and skills development. Visit the Reshoring Initiative website and the National Skills Coalition for effective actions to promote skills training.