Other Voices: The manufacturing and logistics skills gap

Editor’s Note: The following column by Leo Reddy, chairman and CEO of the Manufacturing Skill Standards Council, is part of Modern’s Other Voices column. The series features ideas, opinions and insights from end-users, analysts, systems integrators and OEMs. Click here to learn about submitting a column for consideration.

———

According to occupational data provided by the Bureau of Labor Statistics (BLS), manufacturing and transportation/distribution/logistics (M&L) make up approximately 13% of the U.S. labor force and 20.5% of U.S. GDP. However, according to recent studies, both industries are experiencing a skills gap in their labor forces, and that gap is expected to grow over the next 10 to 15 years.

A 2015 report by The Manufacturing Institute and Deloitte finds that by 2025 there will be nearly 3.5 million manufacturing jobs to be filled, but the skills gap is expected to result in 2 million of those jobs going unfilled. MHI reports that the supply chain industry will need to fill about 1.4 million new jobs between 2014 and 2018 – roughly 270,000 new jobs a year.

In assessing the causes and impact of the growing skills gap – and potential solutions – it is helpful to view them from the M&L perspective. Both industries are symbiotically linked within a broader global supply chain; it does little good to produce quality products unless they are delivered promptly and safely to customers wherever they are located.

Both industries are facing the consequences of a rapidly aging workforce. According to BLS, the number of workers 55 and older will increase by 43% between 2008 and 2018. Turnover is also a shared challenge. In transportation, distribution and logistics, the industry faces a turnover rate of 25% per year, well above the average 15%, with a manufacturing turnover rate of 17%. Both industries also share an image problem, with Generation Y (1982-1995) ranking manufacturing and logistics as their least preferred career destinations.

Both M&L industries are also using advanced technologies at an accelerating rate to increase productivity, innovation and global competitiveness. This creates a common interest in overcoming what the Wall Street Journal refers to as the “vast disconnect” between employers and educators. The Journal was reporting on a 2014 Gallup survey showing that while 90% of industry executives believed that education was not meeting their needs, 90% of school administrators believed that they were meeting those needs.

This persistent misalignment between education and industry needs is the most intractable obstacle to finding a solution to overcoming the M&L skills gap. In my next article, I will analyze the root causes of this misalignment, and cite success stories demonstrating solutions that are working around the country.