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Why your workforce is your most important asset
Companies spend a lot of money in hard assets such as buildings, machinery and equipment and software. But when it comes to financing non-capital assets such as marketing, sales, and people, they aren’t as willing to make those other investments needed to optimize the so-called soft assets.
Clare Goldsberry
January 24, 2013
4 Min Read
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Companies spend a lot of money in hard assets such as buildings, machinery and equipment and software. But when it comes to financing non-capital assets such as marketing, sales, and people, they aren’t as willing to make those other investments needed to optimize the so-called soft assets.
In nearly every manufacturing survey that has been conducted over the past year, the one recurring issue that a high percentage of respondents cites as a “problem” or “challenge to business growth” is the lack of skilled labor. Simon Macpherson, senior director of operations for Kronos Inc. EMEA, a workforce management solutions firm, brought that to the forefront in a recent editorial for Manufacturing Business Technology, an online publication.
Skilled labor
Last year, Kronos sponsored a survey in 11 countries conducted by IDC Manufacturing Insights. The survey revealed that labor productivity ranked the highest among all 11 countries surveyed as the most important factor for achieving manufacturing success, according to Kronos’ report. Other factors including modern infrastructure, government support, and foreign direct investment ranked in varying degrees after labor productivity.
Of the respondents to the survey, 74.7% agreed that “a high level of labor productivity is very or extremely important for achieving manufacturing success.” Brazil, Mexico, and Spain scored the highest regarding labor productivity in this survey. So, just what are the factors that lead to higher workforce productivity?
The IDC/Kronos survey says that when asked about what it takes to improve workforce productivity, “training and continuous improvement of the existing workforce was the top choice, with 68.2% of all respondents noting it as effective. Investment in technology followed next, with 63.3%.”
What that says is that it doesn’t matter how much you invest in technology, if you don’t have the skilled, knowledgeable workforce that understands how to maximize the technology and optimize the processes, you won’t get a good ROI on your equipment investment. It always takes an investment in your workforce, even if you have the best machinery and equipment money can buy.
The respondents were also asked about one strategy that they would recommend for global competitiveness. The number-one recommendation they made—at a combined 45.5%—was that manufacturing companies should keep existing facilities as they are and invest in workforce operational excellence methodologies, which are comprised of strategies for more effective labor management and training.
With low-wage countries now paying higher wages; high levels of unemployment and falling wages in developed nations; and a somewhat renewed focus on manufacturing’s contribution to a nation’s economic health and wealth, all companies must have a workforce development strategy. Gregg Gordon, senior director, manufacturing practice group for Kronos and author of Lean Labor, stated in a Kronos release: “[Companies] will need to develop a skilled, productive workforce to compete globally. With increased global scrutiny, competition, and supply chain complexities, the workforce is becoming a competitive differentiator for manufacturers everywhere.”
Bob Parker, group VP of research for IDC Manufacturing Insights, added, “Complexity is a given in our global supply chains and it is not just information that gives us advantage, but people with the skills to use that information. As our surveys and detailed interviews confirmed, managing corporate capabilities through the workforce is a competitive necessity.”
Over the past two decades we’ve watched as apprenticeship programs and trade schools have gone by the wayside, in large part because everyone figured they had enough employees with the skills and know-how to keep business in mold shops and processing plants humming. It’s taken offshoring of manufacturing, the retirement of many of the most skilled, and the difficulty of replacing those skilled with the next generation to get companies thinking about a training strategy.
We hope you enjoyed the first two articles featured in PlasticsToday (here and here) that addressed this topic and what some in our industry are doing to promote a skilled, knowledgeable workforce. We will be presenting a series of articles, from companies as well as from schools, on what is being done to address these needs for the future success of our industry.
If you have an idea for this special series, or if your company or school is doing something noteworthy, please contact Tony Deligio at [email protected].
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