Worsening Skills Gap

Here at Industry Today we talk a lot about the skills gap in manufacturing. The reason we talk about it a lot is because the skills gap in manufacturing is getting worse instead of better. As David Lees, CTO of Basis Technologies, points out in this week’s feature article:

“The manufacturing skills gap is well documented. Deloitte states 83% of manufacturers see attracting and retaining quality talent as a top challenge. In the US, the gap is predicted to reach 2.1 million roles by 2030 and Wiley reports that 69% of US businesses are facing a skills gap as of 2023, up from 55% in 2021. Equally, 79% of US CEOs are concerned about a shortage of key skills.” 

A large portion of unfilled labor demand relates to IT skills. “As technology continues to reshape global business, a tipping point has been reached between new technologies, available skills, and unoptimised back-end systems. This misalignment is dampening the sector’s growth potential – a loss that has been forecast to cost US manufacturers GDP $2.5 trillion by 2028,” Lees notes.

The good news is that while new technologies are forcing manufacturers to scramble for qualified talent, technology is also helping to address skills shortages in other non-IT areas. “Manufacturers implementing automated processes can remove considerable burden from workforces encumbered by manual tech-based tasks, taking on a significant portion of the ‘heavy lifting’ required by technology teams,” Lees writes. “In doing so, more resources can be directed toward creating the optimal products. Equally, automation reduces the dynamic of workers ‘jumping in’ on tasks they are not fully qualified for, reducing the risk of human error associated with an ‘all hands on deck’ approach.”

For more details, read the complete article, Skills Gap a Tipping Point for Manufacturing’s Future. 

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Join a New Career

According to the Northeast Advanced Manufacturing Consortium, 70% of all manufactured products require welding (the joining of metal parts by applying heat) at some point in their creation. “The industries that use welding to manufacture their products are the driving force of a modern economy. They are largely responsible for the infrastructure, capital goods, and commercial products that sustain a relatively high standard of living for billions of people across the world.” 

Unfortunately, welding suffers the same labor gap as other skilled jobs in manufacturing. More than 159,000 welders are nearing retirement, according to The American Welding Society (AWS), while 330,000 new welding professionals are projected to be needed by 2028. Welding Digest notes, “Fixing the [welding] labor gap is on everyone’s mind right now.”

AWS points out that the national median salary for welding jobs is $53,500. Water Welders notes that in many cases welders are making $75,000 or more.

So why is there a shortage of new welding talent?

The problem is one Industry Today has reported on for a long time. Despite the increasing use of automation and digital technology, many young people entering the workforce view manufacturing as a dirty industry involving boring jobs. Efforts such as Manufacturing Day help dispel some of those perceptions.

But welding in particular may find it hard to shake off that image. Welders do work under hazardous conditions and do get injured. Which is why proper training is essential. And, as the AWS points out, “Attending a technical school to become a welder is an investment that pays off quicker than pursuing a four-year degree.”

One response to address the shortage in trained welders is robotic welding. As Mikko Urho, CEO of Visual Components, points out in How OLP Can Solve the Welding Skills Shortage in U.S. Manufacturing, “The welding skills shortfall is a significant threat to the manufacturing sector in the U.S. As the potential impact on the production of essential goods looms large, robotic welding deployments present themselves as a viable solution to maintaining productivity levels.” It is not a perfect solution, however, as robotic welding requires effective programming and skilled programmers, bringing us back to the whole problem of attracting and retaining the necessary talent. And there are always certain welding tasks, particularly for custom manufacturing where human welders are required.

How is your organization affected by the looming shortage of welding talent and what steps are you taking to recruit and train qualified welders? Please see our editorial guidelines to share your experiences with our readers.

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Red Sea Disruptions

Two years ago Industry Today was covering supply chain issues caused by the COVID-10 pandemic. As pointed out in Supply Chain Disruption Continues to Steer M&A, “The COVID-19 pandemic led to a series of border shutdowns, resulting in challenges for markets heavily reliant on imports and exports of materials and products. As the global economy slowly began to recover from the after-effects of the pandemic, geopolitical tensions loomed in some regions, resulting in businesses grappling with severe supply chain issues.”

A geopolitical tension in particular is the Israel-Hamas conflict and its effects on Red Sea trade routes. According to a World Economic Forum report, some 30% of the world’s container traffic, accounting for over $1trillion in annual movement, passes through the Suez canal and the Red Sea channel. Houthi forces in Yemen have to date attacked 33 ships in the Red Sea, with 16 experiencing direct hits from missiles or drones. Despite efforts by US, UK, and European allied forces to stabilize the region, this vital choke point in global shipping remains vulnerable.

The report also notes that, “The Red Sea crisis has highlighted the critical need for resilience within global supply chains. To navigate this turbulent landscape, companies must excel in real-time monitoring of global events, grasp the implications of these developments and rapidly deploy alternative operational strategies. Cultivating such resilience serves as a bulwark against imminent disruptions and fortifies long-term business sustainability in a global marketplace characterized by its increasing unpredictability.”

Heidi Benko, VP of Strategy for Infor Nexus, points out in Supply Chain Reacts to the Red Seathat shippers seemed to have learned their lessons after COVID.  “The short-term impact on the global supply chain seems to—surprisingly—fall short of ‘crises’ level. Shippers are coping with the challenges despite uncertainty on how long the hostilities will last or how far reaching the ripple effects will be…The ‘new norm’ of ongoing disruptions has caused supply chain professionals to be more alert, proactive, and ready to make timely decisions, rather than take a ‘hope it resolves it itself’ approach to response planning. Professionals in the industry have also learned the value of modern software solutions and process improvements…With smart strategies in place, no matter what disruption may be around the corner— or beyond the strait—the modern supply chain organization can respond with agility.”

Is your organization affected by supply chain issues due to disruptions in the Red Sea? How are you managing any bottlenecks? To share your experiences, please see our editorial guidelines.

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Understanding Today’s and Tomorrow’s Workforce 

Two articles courtesy of the U.S. Chamber of Commerce are of particular relevance to Industry Today readers. The first is Understanding America’s Shortage: The Most Impacted Industries. Specifically related to manufacturing, authors Stephanie Ferguson and Makinizi Hoover note that, “The manufacturing industry as a whole faced a major setback after losing roughly 1.4 million jobs during the onset of the pandemic. Since then, the industry has made significant strides toward recovery, making a concerted effort to address job vacancies. While durable goods manufacturing has seen a more substantial recovery compared to nondurable goods manufacturing, as of August 2023, a gap persists, with 616,000 total manufacturing job openings yet to be filled.” 

Industry Today has been covering this topic and no doubt will continue to cover it for quite some time to come. Just one example is 48 States Have a Manufacturing Labor Shortage, in which Matt Heerey, President of ECI Software Solutions Manufacturing Division sounds a pessimistic note: “The labor crisis may be getting worse.” 

The problems, according to another U.S. Chamber of Commerce report, is a combination of a smaller, aging, and more diverse population, along with challenges in labor force participation rates as well as education and skills development. Data Deep Dive: The Workforce of the Future, points to the key trends of: 

  • A dropping rate of labor force participation, with men leaving the workforce at a faster rate than women. 
  • An aging workforce coupled with a declining birth rate.  
  • Below average levels of legal immigration. 
  • Women will outnumber men in the workforce, who are more likely to have their participation affected by caregiver responsibilities. 
  • While the workforce as a whole is more diverse, there is an underrepresentation of Black and Hispanic workers in STEM fields. 
  • Increasing automation, combined with international competition, is expected to limit employment demand in the manufacturing sector.   
  • The workforce is well-educated but needs new skills. 

Co-authors Ferguson and Jenn Shrove note, “ To navigate these transformations successfully, it’s crucial for businesses, policymakers, and educational institutions to adapt and collaborate effectively for a prosperous workforce in the years ahead.”   

How is your organization addressing its talent needs and managing a changing workforce? To share your experiences, please see our editorial guidelines. 

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Embracing New Technologies

According to Rockwell Automation’s 9th annual State of Smart Manufacturing Report, a global survey of more than 1,500 manufacturers across 17 countries that is the largest to date, generative AI ranks as the top factor in determining quality business outcomes. Which is not to say that AI is going to solve manufacturing’s labor shortage. Indeed, the canard that technology replaces people is once again turned on its head: the report notes that the overwhelming majority (94%) of manufacturers plan to maintain or expand their workforce as a result of adopting new smart manufacturing technologies. 

As the report notes, “The severity of today’s global labor shortage and skills gap intensifies the problem of attracting, managing and retaining skilled workers, but there is hope. New and emerging technology, like GenAI, robotics and wearables, are filling skills gaps and amplifying effort rather than replacing workers.”

The report goes on to say that, “Helping employees adapt to seismic shifts within the industry will distinguish successful manufacturers from the rest. Change management and training employees on updated processes are [top concerns, as well as] helping employees stay engaged and feel valued in their roles.”

For the second consecutive year of the Rockwell Automation survey, inflation is cited as the primary obstacle to growth. Rising energy costs ranked second as an obstacle to growth, while cybersecurity ranked third, appearing in the top five for the first time.

The key takeaway from report findings is that manufacturers must figure out how to combine people, processes, and technology to achieve long-term growth and resilience. One way to address this is through Rockwell’s PartnerNetwork™, a global ecosystem of market-leading technology, superior support services, and an integrated and streamlined business approach.

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Employee Recognition—Still Relevant

Here at Industry Today, we’ve been covering the talent shortage in manufacturing for quite some time. The latest example is how many states are facing a nearly 90% jobs deficit.

So you might be wondering what companies have been doing all these years to address it. I’ve been wondering myself, particularly since I just came across a Gallup article about the importance of employee recognition to attract and keep top performers. But here’s the thing: this article was originally published eight years ago and was just recently updated.

It seems the more things change the more they stay the same: “At any given company, it’s not uncommon for employees to feel that their best efforts are routinely ignored. Further, employees who do not feel adequately recognized are twice as likely to say they’ll quit in the next year. This element of engagement and performance might be one of the greatest missed opportunities for leaders and managers…to increase productivity and loyalty to the company, leading to higher retention.” 

I’ve been running a business for quite some time, well over a quarter of a century. Granted I’m not operating with thousands of employees over multiple locations, but recognizing people for their accomplishments isn’t something I need a Gallup report to tell me. It’s just how you treat people. It’s why many of the people working here at Industry Today, as relatively small as we are, have been with me since the beginning, accounting for over a hundred years of collective industry experience that helps make us the media platform of choice for industry.

How does your organization recognize its people and what role do you think it plays in retaining your talent? Please see our editorial guidelines.

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Deus Ex Machina?

It’s hard to ignore AI. It seems every news article has something to say about how AI is going to transform society, for good or for bad. Indeed, here at Industry Today we’ve published 666 articles on the topic (yes, that just happens to be the actual number, there’s no hidden demonic message). Whatever your thoughts on the dangers or promises of AI, the proverbial genie is out of the bottle. How is industry going to use that genie to make a better world not only for the products it makes, but for the people making those products?

According to a new report by Markets and Markets, “The Global Artificial Intelligence in Manufacturing Market size is estimated to be valued at USD 3.2 billion in 2023 and is anticipated to reach USD 20.8 billion by 2028, at a CAGR of 45.6% during the forecast period. The market growth is ascribed to emerging industrial IoT and automation technology. AI in manufacturing market’s growth in the US is fueled by automation for increased efficiency and lower costs, with predictive maintenance and quality control optimizing products.” 

That said, there remains a reluctance among manufacturers to adopt AI-based technologies. It isn’t some science fictional fear of the robots taking over, but rather that potential mismanagement of AI investment might lead to more costs than potential savings. Additionally, there is some skepticism that AI benefits are all that they are claimed to be. Additional challenges include lack of a skilled workforce to manage AI-based systems and concerns about data privacy and cybersecurity regulations.

No question that AI is revolutionizing business processes. But it’s not a deus ex machina (meaning “god from the machine,” a convention of Greek theater in which plot lines were resolved by actors portraying gods who were were literally lowered to the stage as if coming from the heavens; the phrase is sometimes used to characterize certain ideas as magical thinking). The reason we refer to the “digital journey” is that we need to tread carefully to learn each step of the way. 

To what extent is your organization employing AI? What results have you achieved and what have you learned? Please see our editorial guidelines.

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Grid Resilience

According to a just-released report by the National Centers for Environmental Information (NCEI), “In 2023, there were 28 confirmed weather/climate disaster events with losses exceeding $1 billion each.” Of particular concern is the steady increase in these events—an average of only 8.5 events in the period from 1980 to 2023, and 20.4 average events over the last five years,

I live in South Carolina, where our governor proclaimed March 3-9 as Severe Weather and Flood Safety Week for 2024. Because properly planning for weather hazards helps mitigate the consequences of potentially disastrous conditions.

The same thinking applies to another recently released Deloitte report, 2024 Power and Utilities Industry Outlook; a key finding is that “Extreme heat and drought conditions will likely continue to disrupt electric power sector operations. However, the good news is the industry is “modernizing and decarbonizing the grid while addressing potential reliability challenges,” helping to eliminate factors contributing to climate change while ensuring sustainability.   

As Mishal Thadani, CEO and co-founder of climate resilience software company Rhizome, points out in this week’s Industry Today feature article, “As climate hazards of all varieties intensify, the power grid is seeing a greater number of outages that are also becoming more costly for utilities to recover from. So much that in 2023, U.S. electric utilities spent a record $171B on their capital expenditures, with the largest spending category for transmission and distribution utilities being directed to hardening the grid against growing extreme weather threats.”  

The question is not whether utilities can transform our power infrastructure to be more climate-resistant, but what is the most effective and efficient way to combat extreme weather conditions. Thadani believes it is a toolkit of hardware and software solutions, combined with growing use of renewables as well as customer and community programs that both conserve energy and make optimal use of it.

Read the complete article, Utilities Prioritize Resilience to Modernize the Grid. 

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