Business Trending up for Manufacturers, but "Biological Talent Clock" Ticking

North America’s manufacturing sector is on an upward trajectory. However, a shortage of young talent, compounded by Baby Boomers’ negative perceptions about Millennials, could impact its continued expansion, according to ThomasNet’s  (New York, N.Y., USA) latest Industry Market Barometer® (IMB) research. 

 

The annual survey of product and custom manufacturers shows continued growth for this sector. Companies are hiring, increasing production capacity, and investing for more growth to come. More than half (58%) grew in 2013, and 63% expect even more gains by the end of 2014.

 

Positive indicators are everywhere. Manufacturers are getting more business from their existing markets, and their average account values are rising. Nearly eight out of 10 (76%) are now selling overseas, and one-third expect that business to increase. In anticipation of what’s ahead, they’re investing in capital equipment, optimizing operations, upgrading their facilities, and retraining their people. More than half (52%) expect to add staff in the next several months, up from the 42% who planned to hire last year. Respondents’ companies are looking for trained, experienced people—manufacturing/production management, line workers, skilled trade workers, and engineers—to keep up with current and future demand.

 

But a deeper look under the hood raises questions about whether the manufacturing industry can continue its current momentum. "For the industry to sustain its steady climb, all of the fundamentals need to be in place, and one of them is missing—a robust pipeline of talent," said Mark Holst-Knudsen, president of ThomasNet. 

 

Last year’s IMB called attention to the "ticking biological clock" in manufacturing—the disruption that’s coming as Baby Boomers leave the workforce without people primed to replace them. This year’s survey depicts the "ticking" turning to an alarm. Nearly half of this year’s respondents (49%) are 55 and older. Moreover, 38% plan to retire in one to ten years, and most (65%) lack any succession plan. 

 

One solution is in plain sight—the Millennial generation (ages 18-32)—who can take the time to learn the business before their predecessors retire. Yet, most manufacturers (62%) say Millennials represent a small fraction of their workforce, and eight out of ten (81%) have no explicit plans to increase those numbers.

 

However, companies are making headway in the area of apprenticeships, which provide opportunities to bring in entry-level employees and career changers. For manufacturers where these programs are applicable, 51% now have them in place, and 23% plan to do so. They’re teaching apprentices trades such as machining, CNC milling and turning, and welding, while increasing their staff.

 

"We need new talent everywhere—on the plant floor, in the field, and in management—and getting young people to look at manufacturing isn’t easy," said Karen Norheim, EVP, American Crane & Equipment Corp., Douglassville, Pa. "To ensure our company’s success, our employees have become brand ambassadors for manufacturing. We’re bringing our children to our plants, looking at new internship programs, and reaching out to local colleges and trade schools. By making a local footprint, we’re helping to address a national problem." 

 

This year’s data shows that the manufacturing industry increasingly aligns with Millennials’ value systems and technology expertise. The research demonstrates that Millennials have an opportunity to make a social impact working with sustainable and green technologies, solar energy, and wind power. In addition, respondents cite innovations in design and manufacturing software, automation/robotics, and 3D printing as intrinsic to today’s jobs.

 

But 46% of respondents say that a larger issue is at work - younger people still perceive manufacturing as "blue collar" work. And Baby Boomers’ perceptions of Millennials exacerbate the challenge. Some 43% of respondents believe that this generation lacks the work ethic and discipline to succeed. 

 

"At a time when the American manufacturing sector is poised for a comeback, the talent shortage is the elephant-in-the-room that could impede progress. It will take the concerted effort of every manufacturer to reach across generational lines, and bring in the people who are critical to the industry’s continued success," said ThomasNet’s President Mark Holst-Knudsen. 

 

ThomasNet surveyed nearly 500 manufacturers, mostly from small and midsize companies, representative of their sector. The research is available online.