By Laura Lee Rose, Missouri Enterprise Project Manager
Let’s begin with a brief history of post-world war II manufacturing in the United States: high demand for products; the rise of the middle class; the eventual advent of offshoring due to higher U.S. wages; manufacturing fell out of favor as a career.
Despite an average earning of $79,533 in 2014 (including pay and benefits) per the National Association of Manufacturers (NAM), and 92% of all employees eligible for health insurance benefits in 2015 (Kaiser Family Foundation), it is doubtful that any child today says they want to grow up to work in a factory.
According to NAM there are 12.33 million manufacturing workers in the United States, accounting for 9 percent of the workforce. In addition, manufacturing supports an estimated 18.5 million jobs in the United States—about one in six private-sector jobs. Over the next decade, nearly 3.5 million manufacturing jobs will likely be needed, and 2 million are expected to go unfilled due to the skills gap. Moreover, according to a recent report, 80 percent of manufacturers report a moderate or serious shortage of qualified applicants for skilled and highly skilled production positions.
This shouldn’t come as a surprise to anyone, especially manufacturers, many of whom have watched their workforce age, as the baby boomers continued to recognize manufacturing as a great way to make a living and get benefits. But those boomers are now being replaced by millennials, and the game has changed. As a consequence, one of the biggest challenges facing manufacturers over the next decade is the ability to attract and retain skilled workers.
There are three responses to this challenge: 1) make do with fewer people by continuing to practice “lean enterprise” concepts that eliminate or reduce the waste; 2) change the way we attract people to manufacturing, and get rid of the stereotypes of manufacturing as hard, dirty work in dark, noisy factories; and 3) get on the Industry 4.0 bandwagon which will use new technology to make even more products with fewer workers.
LEAN: REDUCING THE WASTE
Lean manufacturing has been around in the U.S. for more than 30 years, and has made a huge difference in bottom line efficiency for many manufacturers. According to NAM, output per hour for all workers in the manufacturing sector has increased by more than 2.5 times since 1987. In contrast, productivity is roughly 1.7 times greater for all nonfarm businesses. Note that durable goods manufacturers have seen even greater growth, almost tripling their labor productivity over that time frame.
In addition to making manufacturers more productive, lean concepts have also made them more flexible and responsive to customer demands, and helped them better compete in the global market. American manufacturing is seeing a resurgence as production comes back to our shores from some of the low-cost labor countries in order to concentrate on quality and faster delivery.
Many Americans still view factories as places they don’t want to work. And while there are still many manufacturers with work that is hard and hot in malodorous and noxious environments, many facilities have employed machines to take over their hardest and least attractive tasks.
So, the balance of manufacturing jobs are now leaning heavily towards skilled labor, which better fits the millennials who are coming into the workforce. Millennials are defined as those born in the years 1984-1998, and they represent the next generation of employees, likely to comprise about 75% of the US workforce by 2025.
I’d venture to guess that when these millennials were in grade school, not many of them said they wanted to work in a factory when they grew up. Unfortunately, the baby boomer leaders in manufacturing today are doing little to change these negative attitudes towards manufacturing careers.
Understanding millennials and what drives them is a first important step, not only for those who hope to attract them as employees, but also for those who hope to have them as customers (see infographic). Doing some PR on the reputation of manufacturing is another must. The annual national Manufacturing Day (this year October 7, 2016…call Missouri Enterprise at 800-956-2682 to learn more.) is one way to change stereotypes of industry, but it’s not enough. Manufacturing needs to look for more opportunities for paid internships, and support career and technical education at both the high school and post-secondary level.
Just as Lean helped make US manufacturers increase productivity, technology can and will continue to advance and make manufacturers more competitive, and less reliant on unskilled workers. Industry 4.0 is another name for what some are calling the Fourth Industrial Revolution, and is a move toward using advanced technology to achieve results that weren’t possible 10 years ago. In an article for TechRadar, Paul Carreiro, Executive Vice President and Managing Director, EMEA at business applications specialists Infor, says there are three key parts to Industry 4.0, namely:
- The Internet of Things (IoT)
- The advancements in Big Data and powerful analytics
- Secure communications infrastructure.
To succeed into the future, smart factories will gather information for a high level of automation and digitization. General Electric coined the phrase “Industrial Internet” to describe the way big data analytics combined with the Internet of Things can produce extended opportunities for industries.
The Internet of Things is not a new idea, but up until today has been applied primarily to consumer goods. (Think smart refrigerators, air conditioners and so on that can be programmed with a smart phone, or fitness watches and bracelets that gather individuals’ personal health data.). This kind of thinking, leveraging the advantages of big data to create everyday products that have network connectivity, could be a huge leap forward for manufactured goods, but of necessity this will also require the development of an infrastructure secure enough to be used by heavy industries.
To develop their “Smart Factories” of the future, smart manufacturers need to learn more about Industry 4.0 today, which is fast growing out of infancy and looks to become a recognized best practice towards profitability in the all-too-near future.
The concepts are there, the advancements and infrastructure are in development and being deployed, and although just how it will look in the end is still evolving, Industry 4.0 is happening now, and will be a part of every manufacturer’s future. Stay tuned for more as the Fourth Industrial Revolution unfolds.
Check out this infographic presentation of Industry 4.0.