Here are three indisputable facts about manufacturing employment in 2019:
- Manufacturing workers are in high demand, and there aren’t enough current employees to fill all the job openings.
- Young people are not entering the manufacturing workforce at a high enough rate.
- The most knowledgeable employees (baby boomers) are retiring in droves, draining the industry of their decades of valuable experience.
This is a triple whammy that has the power to significantly affect the ability for companies to grow and thrive. Clients of ours have confided in me that they are scared to death of essential employees leaving their companies. It would have devastating effects on their businesses.
The manufacturing economy has been expanding since the financial crisis of 2008-2010. According to the National Manufacturing Association (NMA), as of the end of 2018 there were nearly half a million unfilled manufacturing jobs in the US. And 73% of manufacturing companies site the lack of available workers as their #1 concern. According to a 2018 study by Deloitte by 2028 more than 2.4 million manufacturing jobs will go unfilled.
Baby boomers are retiring at the rate of 10,000 per day from all sectors, taking their institutional knowledge with them. More than 25% of all manufacturing workers are over 55. And according to the Bureau of Labor Statistics (BLS), the manufacturing industry has the highest tenure compared to other sectors. Those factors combine to a pretty steep uphill battle for today’s manufacturers.
There are many efforts afoot to improve the situation. Investment in STEM education is exciting to see. New programs to get young kids interested in manufacturing are everywhere – Robotics, 3D printing, maker spaces. There is a new resurgence of apprenticeship programs similar to what existed decades ago, and still is strong in Europe. And retraining of displaced workers has gained significant traction. Even as these all these initiatives have success, and you are able to find workers to hire, there will still be a big gap between what they know when you hire them, and what they need to know to be fully productive. Employers need to take things into their own hands and assure their own destiny. These are difficult problems to solve, but are entirely doable with some creativity and work.
Here are a few things that manufacturing leaders can do about this.
1. Capture the knowledge before it’s gone. Those experienced workers hold the keys to your business in their heads. They know the essential tricks to setting up difficult jobs, where to look to find the right tools and information, and the process to ensure that you get the desired outcome of your proprietary processes. If they leave, the company will scramble to fill the gap in knowledge that left with them. It’s essential to provide tools, time and systems to allow those workers to record what they know, and to train the next generation of workers. A formal system and software to allow this knowledge to be easily documented, organized and distributed is very important. This includes not only general company business processes, but also specific details, processes and information needed for individual jobs, part numbers and customers. This can take many forms, from simple paper documents, to complex Learning Management Systems (LMS). The essential part is to formally launch initiatives to systematically collect, aggregate and store that knowledge. Most companies have a mish mosh of paper and electronic records which are not well organized and are often incomplete out out of date. It’s an investment of time and money to document all of this in a way that can be easily accessed and shared with others, but the alternative of putting your head in the sand and hoping it works out is a recipe for disaster.
2. Develop formalized training systems to share that newly captured knowledge with your younger workers. One suggestion is to think about it from the perspective of organizational structure. Draw out your org chart. Write down the essential functions of each position. What are the roles, responsibilities and performance metrics for each roll in the company? Document in detail all the tasks that each role performs. And then develop series of training documents, photos, or videos for each task.
And make sure to include both the formal, and informal things that people do – like what is the process when you realize you have an order that will be late. You likely work through a series of logical steps like seeing what you can do to recover so you won’t be late, moving jobs around, asking for overtime, expediting an outside process, shipping it faster, etc. If those won’t be enough, then you let your client know that there is a risk of a job being late (I hope you let them know in advance!). While that process isn’t likely a formal one that is written down, it’s part of how your company works and it’s important to train your newer staff, so when the people who perform that function retire, you can have a smooth transition.
When this organized structure and system of learning based on company position is in place, it becomes much easier to hire employees and have them successfully ramp up to speed and be productive. Hiring less experienced employees and training them yourself becomes more feasible. Especially when paired with point #1 and providing the documented knowledge from your experienced workers.
3. Focus on building the best culture you can. One of the keys to hiring and retaining workers is having a create company culture. All employees care about working for a company they believe in, can feel good about their work each day, and get to work in an enjoyable atmosphere with coworkers they respect. Millennials will make up about 50% of the workforce by 2020, and they care deeply about making a difference, having a good work/life balance, and a strong company culture. And for the newest generation of workers that are just about to enter the workforce (those born after 2000 – Gen Z, iGen, post-Millennial…), who have grown up in a digital world, upgrading your digital culture is essential. Paper forms, or antiquated software isn’t going to cut it for those who are used to finding out anything they want to know about in a few seconds.
4. Focus on diversity and inclusion. According to the US Census, in 2017 women only made up 30% of the jobs in manufacturing, while men made up 70%. And the trend is on the decline.
That’s a huge pool of talent that you’re missing if you don’t focus on diversifying your workforce. Women make up 47.5 of the working population, so are definitely underrepresented in manufacturing. Plus it’s better to have more women on your team anyway. Consider the fact that companies that have higher percentages of women on their board of directors far outperform those that don’t. According to Harvard, those companies in the top quartile of highest number of women on their boards had 42% higher return on sales. Your company may not be big enough for a board of directors, but you still have a lot to gain from making your workforce more balanced. With the recent focus on STEM education, there are lots of young women who are coming into the workforce excited about technology and manufacturing. Ensure you’re making your company and culture as open and accepting as possible to them.
It’s a very exciting time for manufacturing in North America. Most companies are growing and are optimistic about the future. But many can’t grow at the rate they want because of challenges in hiring enough new people. Let alone backfilling the baby boomers who are retiring in droves. Those companies with a solid plan to retain their institutional knowledge and get it passed to the next generation will fare better than those that don’t. Make sure you’re doing what you can to be prepared.
How does ProShop help with this?
1. Capturing Tribal knowledge – One of the tenents that ProShop was built around was capturing tribal knowledge. Being a paperless system, and eliminating paper job travelers and setup sheets requires that all job information is ProShop. When you can capture video, photos, text and attachments onto specific operations on each part, it’s easy to provide visual work instructions (VWI) in the software and allow employees to add to that knowledge base as they work. No longer are work instructions and setup notes in people’s heads and on pieces of paper which can get lost.
ProShop also has a continuous improvement feature built into it, which allows employees to quickly capture details about jobs that need improving. Those items can then be assigned to employees and worked through to resolution. ProShop will keep reminding employees until a solution has been provided. With a single click you can browse through or search for a complete history of the problems that have been solved by employees in the past, which allows your team to leverage that knowledge for solving current and future problems.
2. Training – ProShop has a complete set of modules for documenting every work instruction, business process, and task in the company and provides a corresponding training document. This feeds into our Company Positions module which allows you to define all the roles in the company, what training is needed to be in that roll, and visually display in an org chart who is in which roll, and what percent that they are trained and still need training in. It’s never been easier to see the big picture of who needs to be trained on what. When an employee does get trained, they will be assigned a proficiency rating which can correspond to the minimum requirements needed to be considered fully trained in any roll. Those new trainings can also automatically unlock new features and capabilities for each employee in ProShop.
3. Culture – We can’t help directly with culture too much, but employees who use ProShop are considerably less frustrated at work compared to their old systems. We’ve been told time and time again that going to work is more fun after switching to ProShop, because it’s easier and more productive. People are spending less time searching for or manually aggregating data, can quickly find what they need, and are more focused on throughput and doing a great job for clients. That reduced amount of daily friction helps to elevate how people feel about performing their jobs every day. And of course, people want to succeed, so when your company is making more profit and delivering jobs on time, it’s amazing how that positivity permeates into how everyone is feeling about the company in general.