The good news from the annual ThomasNet Survey (www.ThomasNet.com/imb) is that North America's manufacturing sector is on an upward trajectory. The bad news is that a shortage of young talent, compounded by Baby Boomers' negative perception about Millennials, could impact its continued expansion.
The results from the survey of nearly 500 product and custom manufacturers, released this week, 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, said ThomasNet.
There are plenty of positive indicators including manufacturers getting more business from 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.
That's the same problem that concerns suppliers to the automotive OEMs, revealed in the Original Equipment Suppliers Association (OESA) Automotive Supplier Barometer released last week (www.oesa.org). This most recent survey looked at Human Resources issues where the majority of the 79 respondents said that finding qualified, available candidates for open positions is of great concern. Positions that continue to be most difficult to fill are in engineering (general, software, electrical and process), production and controls engineering; technicians and hourly skilled trades people. On average, respondents to the OESA survey said it takes three months to fill engineering positions.
ThomasNet's President Mark Holst-Knudsen commented: "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 the fundamentals have to be in place, and one of them is missing - a robust pipeline of talent."
The solution, said ThomasNet, is the Millennial generation. That group is the next best hope for filling that pipeline needed to replace the steadily retiring Baby Boomers. "Nearly half of this year's respondents (49%) are 55 and older," noted ThomasNet's survey summary. "Moreover, thirty-eight percent plan to retire in one to ten years, and most (65%) lack any succession plan." However, 62% of the respondents said that Millennials represent a small fraction of their workforce, and eight out of 10 (81%) have no explicit plans to increase those numbers.
However, noted ThomasNet, 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, executive vice president of American Crane, 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 ThomasNet 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, noted the ThomasNet survey results. In addition, respondents cite innovations in design and manufacturing software, automation/robotics, and 3D printing as intrinsic to today's jobs.
However, 46% of the ThomasNet survey 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. Forty-three percent 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," said ThomasNet's Holst-Knudsen. "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."