U.S. Manufacturing

U.S. Manufacturing: Job Training the Way Ahead to Bridge Critical Skills Gap

Manufacturing has been a major contributor to the US economy. Being the largest in the world, about 18.2% of the global goods are manufactured in the U.S. In 2016, $2.18 trillion was contributed to the GDP from the manufacturing sector alone which accounts for 11.7% of the nation’s economic output.

A recent survey by the Institute for Supply Management (ISM) shows factory outputs have reached a record high in December of 2017.  The rise in production and orders in 2017 has made it the strongest year for manufacturing since 2004. Job training programs and solutions are in highest demand in over two decades.

The latest data also support the estimate that the sector will continue to go from strength to strength in 2018. The growth is predicted to be faster than the overall economy and projected to reach 2.8% in 2018. With the recent tax incentives announced by the government, more investments are likely to occur in the manufacturing sector.

Manufacturing helps boost other sectors such as retail, business services, and transportation. Employing 8.5% of the total workforce in the U.S., there is a skills gap of more than 600,000 skilled workers to keep pace with the dynamic growth.

Skills gap haunts the manufacturing sector

A survey by ISM shows the challenge facing most manufacturing companies is in terms of the skills gap. Given the shortage of skilled labor, many companies are offering higher pays as well to attract the required talent.

Recruiting the right talent has been a challenge particularly for manufacturing companies that are high-tech with the result that many are offering jobs for retired people to fill the skills gap. Some surveys indicate nine out of ten manufacturing companies find it difficult to bridge the skills gap with the right talent despite offering higher wages.

In October of 2017 Illinois had close to 568,500 manufacturing jobs to be filled. The skills gap is further compounded by the rate of turnover due to highly experienced people retiring.

Job training to bridge skills gap

Developing in-house on-the-job training programs is one way of meeting the challenge. American business management (government and private sector) emphasis is being put on OJT, apprenticeships, and internship programs. “Earn as you Learn”. Unless companies invest in job training, the skills gap can affect long term quality, safety and innovation according to experts.

Although the unemployment rates are higher for people who do not possess college degrees, this fact alone has not been enough to fill the skills gap.  Weak training programs for new employees have led to a high attrition rate.

Job training programs will help develop a highly skilled workforce pool and also encourage other companies to locate to the area where there is easy availability of a trained workforce.

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