Every month, the United States Bureau of Labor Statistics releases an employment report chronicling economic progress from hourly wages to the unemployment rate. In this series of blogs, we'll be defining key terms from the report and deep diving into a specific industry. This month, we take a closer look at Manufacturing. View our past posts here and here.
We are officially into Fall with the passing of Labor Day. Ahead of us is a busy last quarter, including the final hiring blitz of the year and the holiday season.
It was a busy in the job market too, with the August 2019 jobs report showing 130,000 jobs added and a 3.7% unemployment rate. Notable job gains were seen in healthcare and financial services, while areas such as manufacturing and construction stayed stable.
One notable data point from this month’s report was the number of discouraged workers, which numbered at 467,000. Discouraged workers are defined as a person who is available for work and has sought employment in the past year, but isn’t currently looking due to perceived poor employment prospects. According to the Bureau of Labor Statistics, workers are discouraged due to incidences including the lack of schooling, absence of training, existence of discrimination, and age.
Digital transformation’s emergence has created upheaval in various industries, especially as software has overtaken traditional ways of doing business. One area of note is manufacturing, which has seen a comeback since the dark days of the Great Recession.
Moving with Manufacturing
Health in the manufacturing industry is historically a strong indicator of economic vitality, contributing $2.38 trillion to the American economy and nearly one-third of GDP and employment. Emerging technologies such as artificial intelligence (AI) and blockchain are also increasing manufacturing efficiency, allowing firms to increase output.
Notable to manufacturing is also the generational transition in employment. Few Millennial and Gen Z professionals are exposed to manufacturing as a career, leading Deloitte Insights to report an estimated 2.5 to 3.5 million unfilled jobs in the coming years even as wages average $70,000 per year.
What does all this data mean? This month, we interviewed Scott Renner, Senior Director of Manufacturing Industry Marketing to gain his insights about the field.
Scott, manufacturing appears to be very healthy, even with emerging technologies. Are you noticing this too?
SR: Absolutely! With little public fanfare, the manufacturing sector has been on a ten-year growth cycle. It’s actually been quite remarkable, as the total number of manufacturing jobs available decline, combined with an increasing number of job vacancies. Yet, manufacturing productivity has continued to steadily increase. Advanced technologies in the areas of automation, data analytics, and cloud computing are a large part of the reason.
Our data shows that Millennial and Gen Z workers are less interested in manufacturing careers nowadays. What are employers doing to attract younger professionals?
SR: This is a major market dynamic for the whole manufacturing industry. Just as the industrialized baby boomers are approaching their final employment years, there appears to be a lack of job seekers willing to back fill these positions. Clearly the next generation of workers are less interested in manufacturing. There are many reasons for this, but this situation is causing the HR functions, and manufacturing management in general, to be more proactive and sophisticated in recruitment and retention.
Employers are quickly learning that the new worker does not have the same values as the out-going worker. The intangibles, AND your ability to market them to prospective employees are very important to filling a needed position. Of course, total compensation is important, but work conditions, time off, perceived stress levels, and social status elevate a job’s desirability.
As we look ahead in manufacturing, where do the opportunities lie?
SR: I think the opportunities in the manufacturing sector are going to come from two major areas. Advanced technologies, and helping to transition manufacturing into the next era.
The area of technology opportunity is easy to understand. There are a number of skillsets that are required to continue to transition companies through their digital transformations. Areas of investment will continue for AI, VR, additive manufacturing, blockchain commerce, and data analytics. Opportunities are in these areas for the foreseeable future.
The second area is not necessarily tied directly to technology. Many opportunities exist in helping, facilitating, leading companies through this digital transformation. Manufactures need employees that not only understand technology, but how it can be applied to their businesses. A skillset that is rooted in manufacturing knowledge combined with creativity and leadership skills to drive companies to new customers, new sources of income, new business models will be in very high demand.
Companies not only need to continue to increase their productivity, but will need to accelerate efficiency gains as demands for more product differentiation increase. Global and asymmetrical competition threatens every producer. This will require more agility, innovation, and efficiency to keep pace and succeed. This second area of opportunity is for manufacturers that not only master technologies, but utilize them as a tool to transform their business.
Interested in continuing the conversation with Scott? Send him a message to continue the conversation.
About Scott Renner
Scott Renner has guided industrial manufacturing companies through major operational and management system transformations for more than two decades, leveraging deep operational and technical skills for today’s business challenges. He recognizes that as the business model (challenges) for manufacturing and supply chains ever evolve, the ability to recognize changes in the market and new available capabilities are critical to competitiveness and success.