Local manufacturing encompasses a mind-boggling array of stuff, from Little League trophies to biopsy needles. But there’s something manufacturers can’t get from a production line, and it’s what they need most: skilled workers.
Say “skills gap” to any manufacturer, and invariably they’ll respond with the number 600,000. That’s the gaping hole of unfilled jobs at U.S. manufacturers — for Illinois, estimates point to 30,000 unfilled jobs. The talent shortfall carries serious consequences. In a Manufacturing Institute 2011 skills gap report surveying more than 1,100 U.S. manufacturers, 74 percent of respondents said a lack of skilled production workers was harming productivity or hindering their ability to expand operations.
That skills gap will widen. The Society of Manufacturing Engineers, based in Dearborn, Mich., predicts the number of unfilled manufacturing jobs will reach 3 million by 2015.
Despite the dire outlook, some say there’s a relatively simple way to defuse the sector’s talent bomb. Peter Cappelli, for one, likens manufacturers’ talent complaints to shopping for a car, not finding the vehicle you want within your budget — and then concluding there’s a car shortage. “If you want to get people into a particular field, you might start by paying them more,” says Mr. Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School. “Or make the training more attractive and easier to do.”
Entry-level wages for machinists in Illinois were $12.74 an hour in 2011, or $26,500 annually. The median, meanwhile, was $18.82, or $39,150 annually, according to the Illinois Department of Employment Security. By contrast, the average wage for a machinist 25 years ago was $12.08 an hour, according to a survey conducted in 1986 by the Illinois Manufacturers’ Association. Adjusted for inflation, that wage would be $25.51 today.
And for young people considering a career in manufacturing, recent employment trends could be discouraging. Manufacturing employment statewide stood at 594,800 in September, according to IDES; 10 years ago, the figure was 799,100.
Filling the skills gap will become even more critical in coming years, as manufacturing equipment becomes more technical, requiring an even higher aptitude for math and computer skills.
And then, there’s the retirement problem.
“One of the largest manufacturers in the world is telling us that they’re going to lose 40 percent of their workforce in the next couple of years,” says Jeannine Kunz, SME’s director of professional development. Confidentiality prevents her from naming the company, she says, “but if I told you, it would scare you.”
To address the skills shortage, Ms. Kunz says she’s seeing manufacturers invest more in training. She acknowledges that’s a shift from the economic boom at the end of the 20th century, when many manufacturers cut training programs. “Now we’re kind of paying the price,” she says.
It’s possible that the retirement wave could have an upside, says Steve Ferrara, chief operating officer of BDO USA and a member of the Chicago-based accounting and consulting firm’s manufacturing industry group. He sees it as “an opportunity for innovation, because some of the older people are afraid of technology,” he says. “These kids today, they grow up with a computer in their crib.”
Of course, that opportunity hinges on the ability to sway tech-savvy youngsters toward careers in manufacturing. The sector has an image problem.
“You’re dealing with people whose great-uncle worked in manufacturing, and their memory of manufacturing is of a shrinking industry,” says Michael Sloan, dean of agricultural and industrial technologies at Illinois Central College in East Peoria. At his school, culinary arts classes fill quickly, but that’s not the case for the one-month classes that give 160 hours of training to operate computer numerical control machines—even though local manufacturers have about 250 CNC jobs open. The school has trained two dozen CNC operators this year, an improvement over last year, when about five people signed up.
‘GROW THEIR OWN’
The solution, as Pam McDonough sees it, is for manufacturers to “grow their own” via training. But training can be expensive and time-consuming, particularly for smaller firms. The organization she heads, NORBIC (the North Business and Industrial Council)—a sister organization to the Alliance for Illinois Manufacturing—aims to help businesses handle the paperwork required to get state and federal training grants. “The little guys don’t even know about programs like this because they’re so buried in trying to run their business,” she says.
Some manufacturers are training lower-skilled employees to take on higher-skilled jobs. For several years, that strategy has succeeded at Nation Pizza Products in Schaumburg. That includes providing language training, because some higher-skilled machines require a certain level of English comprehension.
But lifting lower-rung employees up the ladder doesn’t fill every open position, says Michael Alagna, Nation Pizza’s chief operating officer. For many employees in lower-skilled positions, like assemblers, today’s skills gap looks more like a chasm. Many lack the basic math or computer aptitude required to operate more sophisticated machinery.
“In the past, a maintenance mechanic had a wrench, a hammer and a screwdriver,” he says. “Today, if you’re talking about running or maintaining a machine, you have to know ratios. You have to be able to go into the computer and find what might be at fault in the program.”
Last year, Nation Pizza spent about $200,000 on training, and received about $100,000 in reimbursement from the state Employer Training Investment Program, a subsidy launched in 2003 that reimbursed manufacturers for up to 50 percent of training spending. But grants have dried up, says Mr. Alagna, especially from the state; he says he hasn’t received any ETIP reimbursement for training costs this year.
That’s not a surprise: ETIP funds have shrunk to $9.9 million this fiscal year, from $12.5 million in fiscal 2010. For fiscal 2013, job-training funds available to the Illinois Department of Commerce and Economic Opportunity plummeted to $615,000. In addition, the Illinois General Assembly redirected $6.75 million in job-training funds to five private entities, including the Illinois Manufacturers’ Association and the Chicago Federation of Labor.
At Trelleborg Sealing Solutions in Streamwood, managers have seen another, harder-to-measure cost of the skills gap: burnout.
Five years ago, Trelleborg had three CNC machines; now it has 33. In late 2011, it often spent up to six weeks trying to fill CNC positions. “It hurts the bottom line,” says Kathy Keblis, human resources director. When positions went unfilled, other employees had to work six days a week, and fatigue set in. “When you work people too many hours, you start to have quality issues and absenteeism.” In response, the company started an in-house CNC apprenticeship program in
January, which is training 27 employees.