ATS survey underscores critical need for skilled workers at U.S. factories as baby boomers retire

Manufacturing executives estimate retiring workers will cost their companies an average of $43 million each year over the next five years and that training budgets aren’t sufficient.

03/16/2011


As the first wave of U.S. Baby Boomers begin retiring this year, American manufacturing companies are highly concerned with their ability to find skilled workers, according to the results of a survey of industry senior executives commissioned by Advanced Technology Services, Inc. (ATS) and conducted by The Nielsen Company, a consulting and custom research firm. Among the survey’s key findings, the pending retirement of highly skilled Baby Boomer workers will cost manufacturing companies $43 million each, on average—with nearly one in five estimating their cost at over $100 million.

Many companies (58% of all respondents) are expecting to train and educate the next generation of skilled workers—defined as those qualified in machine calibration, electrical systems, machine operation, tool and die manufacturing and machine maintenance—themselves. However, funding is inadequate; half of those executives surveyed said their training budget was only 1 to 5%.

“Despite the perception that U.S. manufacturing jobs are scarce, the undeniable trend is that skilled workers will be in very short supply in coming years,” said ATS President Jeffrey Owens. “What’s more, while much of the political debate centers around healthcare and basic or higher education, what matters to most manufacturing employers is vocational training.”

The online survey, completed this month, found that two in three respondents agree that a robust training program is key to the future of U.S. manufacturing, and 90% feel high schools are not doing enough to prepare students for non-college careers. Executives stated that discrete (product-centric) manufacturing, electrical equipment manufacturing and motor vehicle parts manufacturing are the top areas most affected by the nascent labor shortage.

Other top findings from the survey:

  • Among CEOs taking part in the survey, the estimated per-company cost of the skilled labor shortage is even higher: $63 million, on average.
  • Most costs will be incurred in training and recruiting, followed by problems caused by lower quality and resulting decreases in customer satisfaction.
  • 20% of respondents currently have more than 15 job openings on their factory floor. Over twice as many (41%) anticipate having more than 15 such job openings within five years.
  • On the question of how important production machine maintenance is to achieving lean manufacturing, “very important” was checked by nearly 70% of those surveyed.
  • On a positive note, 77% of surveyed executives agreed that the technical skills of U.S. military veterans transfer well to today’s manufacturing needs.

The ATS survey included responses from 103 senior manufacturing executives with the title of Vice President, Plant Manager or CEO. Eighteen percent worked at manufacturing companies with revenues of $1 billion or higher; surveys were completed by individuals representing over two dozen manufacturing industry verticals.

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Advanced Technology Services, Inc.

- Edited by Amanda McLeman, Plant Engineering, www.plantengineering.com