[WRE ADVISOR | BUSINESS] SKILLED LABOR CRUNCH:
THE NEXT GENERATION OF EMPLOYMENT
BY JOE NOLAN I
f you’ve been following employment trends in U.S. manufacturing, you’ve likely found more than one study showing that companies are currently struggling to secure skilled laborers to fi ll open positions. T is narrative
off ers, that in the midst of a struggling economy, there are thousands of positions standing vacant while unemployment numbers remain high. A 2011 Deloitte report stated that U.S. manufacturing had as many as 600,000 jobs just waiting for the skilled workers to fi ll them. According to Deloitte, the paradox that fi nds empty manufacturing jobs during a time of unemployment can be explained by the changing nature of the industry: as manufacturing becomes more specialized, workers with outdated skill sets are unable to keep pace. A recent issue of the Northern Nevada Business Weekly
refl ected on problems facing companies in that region. Construction projects in the area – and around the country – really do seem threatened by a lack of skilled-labor. While companies like Elko Wire Rope and Mining Supply are currently seeking new hires, their small, specialized teams demand skilled and experienced workers. However, the company is receiving a crush of resumes from people who have never worked in the mining industry. As the director of customer service for Ram-Enterprises,
Sharon Horn witnesses this struggle fi rsthand. She says there’s no shortage of able-bodied laborers, but fi nding the kind of highly-skilled mechanics, millwrights, construction workers and craftsmen that are in demand in the mining industry has become another challenge altogether. T e NNBW article quotes Horn: “We get hundreds of applications every week, but we are not looking for more applicants; we are looking for people with a good work ethic who believe in becoming skilled craftsmen.” T e shortage of skilled labor in Elko stems from a combination of factors. First of all, expansion of the mining industry in the area has depleted an already-shallow pool of trained and experienced workers. In addition, the skills that make a worker valuable to a company like Ram-Enterprises or
76 JANUARY-FEBRUARY 2013 WIRE ROPE EXCHANGE
Elko Wire Rope and Mining Supply are the same skills that are valued by the mining companies themselves. T e result is that a company like Ram and Elko can end up competing with their own clients for top employees.
While no one is saying that a skills-gap doesn’t exist, a new
study from the Boston Consulting Group suggests that it’s far less serious a problem than many might think. According to this new report, the manufacturing sector is only in need of “80,000 to 100,000 highly skilled manufacturing workers, less than 1 percent of the nation’s 11.5 million manufacturing workers and less than 8 percent of its 1.4 million highly skilled manufacturing workers.” One indicator of labor shortages is job off ers showing
increases in compensation, suggesting employers who are competing for workers need to make positions with their companies more attractive compared to their competitors. With this in mind, the BCG study looked for wage growth over 3 percent above infl ation for each of the last fi ve years, conducting a one-month study that surveyed 100 manufacturing executives at companies with annual sales of at least $1 billion. Among the country’s 50 largest manufacturing centers, these kinds of increases in compensation were only found in Wichita, San Antonio, Charlotte, Miami and Baton Rouge. T e diff erence between those who perceive an extreme skills-gap and those who do not is often a question of geography. In established companies, in large manufacturing centers, the problem is not as challenging as it is in places like small towns in Northern Nevada for instance. However, these localized problems might become systemic as an older, experienced generation of skilled workers prepares to retire across the entire manufacturing sector. Over the course of this next decade, the BCG study predicts a shortage of approximately 875,000 machinists, welders, industry engineers and industrial-machinery mechanics if current trends continue. T e obvious solution to both current and pending shortages of skilled labor is training. However, some labor experts say not
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