Manufacturing is one of America’s largest industries. Manufacturers contributed nearly $2.4 trillion to the US economy in 2018. The manufacturing industry is growing as part of the US’s second-longest economic expansion in history. This period of growth has both negative and positive impacts on the industry as a whole, here’s what you can expect:
Employment Trends in Manufacturing
The US manufacturing industry is potentially facing a shortage of 2.4 million workers in the next 10 years. The jobs are there, but companies can’t fill them with qualified or interested applicants. According to a study conducted by Deloitte and The Manufacturing Institute, there is a “widening gap between the jobs that need to be filled and the skilled talent pool capable of filling them.” The study also cites 3 major reasons for the continued lack of skilled employees:
1. Baby Boomers are Retiring Out of the Industry
Baby boomers are retiring from all sectors of the manufacturing industry at a rate of 10,000 a day in the United States. On one hand, this opens up opportunities and clears the path for new hires and promotions. However, boomers are taking their institutional and technical knowledge with them into retirement and the younger generations don’t have the skills or knowledge to replace them.
2. Different Skill Sets are Needed Due to the Advancement of Technology
Not only will employers be faced with replacing 2.9 million retiring baby boomers over the next decade, but they will also be tasked with hiring new workers with a different skillset–digital skills–to replace the old. In the next 3 years, employers expect job categories where they have rated the current shortage “very high” in fields such as digital talent, skilled production, and operational managers, which will be 3 times more difficult to fill. Currently, many of these positions are already taking longer to fill causing companies to miss a key component of their workforce. This is resulting in delays in delivering open orders, expanding production, and responding to customer needs.
3. Misconceptions About Manufacturing Jobs
There are currently 12.75 million manufacturing jobs in the U.S. With an average yearly salary of $84,832, it probably comes as a surprise that there is an employee shortage in a seemingly lucrative field. Young people today don’t want to work in manufacturing for several reasons.
Many students have the preconceived notion that manufacturing jobs are dirty, dangerous, and require back-breaking labor. But, this idea “is far-fetched as in the present day; industries are fully automated and require highly skilled employees who can maintain and operate high tech equipment.”
People also assume that manufacturing jobs have lower educational requirements, when there are actually many jobs such as design engineering, production control, sales and marketing, and management positions that require various levels of post-secondary education. Even jobs that don’t require a higher degree require advanced technical training. Misconceptions about education requirements are one of the primary reasons parents, teachers, and counselors don’t encourage students to pursue a career in manufacturing.
Manufacturing is one of the US’s largest industries, generating over $2 trillion in revenue each year. But, the future of manufacturing faces a world of uncertainties and possibilities.
U.S. manufacturing output is higher than ever, second after China, and 2.5 times larger than Japan and Germany combined. “While it accounts for 11 percent of U.S. GDP—lower than other major competitors—it eclipses the economic output of entire nations, such as Italy, Brazil, South Korea, or Russia.” In addition, annual direct foreign investment in manufacturing has tripled to $1.6 trillion since 2006.
The ability to fill critical employment vacancies could be a major constraint on the manufacturing industry’s growth potential. In addition, the need for increasingly skilled workers will require manufacturing companies to raise wages.
Future of Manufacturing
The future of manufacturing is upon us. Manufacturing businesses that aren’t implementing Industry 4.0—the digitization of industry–are already behind. The fourth industrial revolution, as it’s called, is powered by the introduction of data, automation, and machine learning. Digital manufacturing will allow businesses of all sizes to get smarter without breaking the banks. For example, Kuka Systems recently linked over 60,000 devices, including 259 robots, and business software. As a result, its single assembly line runs 24/7 and makes one of eight different unpainted Jeep Wrangler body types every 77 seconds.