Can tapping the power of the individual influence a more positive future of work in manufacturing?

Posted by Paul Wellener, Ben Dollar, and Heather Ashton Manolian on February 11, 2019.

As the Deloitte 2018 Human Capital Trends study highlights, the power of the individual is growing. And it’s being propelled by the rise of the social enterprise, a massive shift in which organizations are no longer judged solely on business performance, but on their relationships with their communities and their impact on employees, customers, and society at large. It’s a shift that is exacerbated by today’s hyper-connected world where individuals can research companies instantaneously and express their perspectives—anywhere, at any time. The new dynamics of the workplace are having a profound impact on how employees view their careers and, in turn, how employers need to approach talent management.

In manufacturing, there is an even more urgent need to rethink talent management, as the industry is facing one of its largest workforce shortages in decades. Our recent study, 2018 Deloitte and The Manufacturing Institute Skills Gap and Future of Work in Manufacturing, conducted in collaboration with The Manufacturing Institute, highlights the current shortage, identifies the shifting skills that could support manufacturing in the coming decade, and suggests a number of strategic approaches that manufacturers could take to influence a more positive employment future. Both this report and our 2018 Human Capital Trends study reveal that as the power of the individual grows, organizations are compelled to change their approaches to workforce management and career models in response.

The shortage of skilled workers is worsening in manufacturing
As recently as August 2018, there were 508,000 open jobs in US manufacturing, part of the best annual job sector gain in more than 20 years.1 While employment gains are positive indications the industry continues to recover from the Great Recession and reflect strong production levels, it also means that finding talent with the right skills to fill the open jobs could potentially reach crisis proportions. Deloitte and The Manufacturing Institute identify a widening gap that could lead to 2.4 million unfilled jobs by 2028 if the industry is unable to solve for the talent shortage.

Our study reveals that most manufacturers surveyed believe the No. 1 cause of the skills shortage is a “shifting skill set due to the introduction of advanced technologies and automation,” followed by a “negative perception of students/their parents toward the manufacturing industry.” Both of these issues and how they play out moving forward, are fueled in part by the growing power of the individual.

It is increasingly important that individuals adopt a continuous learning approach to ensure they have the skills needed to match the oncoming opportunities, especially as the desire increases to seek 21st-century careers that focus on experiences and diverse roles versus the linear job progression of old.

As young people consider different career pathways, they may be basing their decisions on potentially outdated or uninformed impressions of these organizations and, more broadly, the industry. The power of the individual is perpetuating a historical view of manufacturing—but there’s an opportunity for change.

Reversing public opinion to attract workers
Manufacturing has struggled with an image problem, and our 2017 Public Opinion of Manufacturing Study highlights this challenge. While 83 percent of respondents believe manufacturing is important to America’s economic prosperity, only two-thirds of Americans surveyed would encourage their children to pursue a manufacturing career. In the face of a widening talent gap, manufacturers need to embrace the rise of the social enterprise and demonstrate that the industry can provide pathways to 21st-century careers and appeal to workers of all ages, which will likely involve a series of developmental experiences that offer workers the opportunity to acquire new skills and perspectives. Manufacturing companies can and should promote the values they operate by because they may be important to potential workers: being fully made in America, sourcing from American and/or local vendors, driving community revitalization efforts, supporting public-private partnerships, and offering training and development programs. All of these efforts—and the broad communication of them—can help flip the switch on manufacturing perception and attract tomorrow’s talent.

Addressing the skills gap
Compounding the industry’s shortage of workers and image challenges is a notable shift in the skills needed to perform the tasks of the modern manufacturing organization. Today, in the early stages of digital transformation, there already seems to be a mismatch between the available workers and the skills necessary to fill open jobs. In fact, manufacturing executives surveyed stated the top five skill sets that could increase significantly in the coming three years due to the influx of automation and advanced technologies are: technology/computer skills, digital skills, programming skills for robots/automation, working with tools and technology, and critical thinking skills (see figure 1).

Of significance is the blend of technical and human skills that manufacturers have identified as necessary for success. Building the workforce of the future will likely require an entirely new way of defining roles within an organization, evaluating talent to fill those roles, and re-skilling employees to respond to the digital transformation taking place. In fact, our 2018 Deloitte and The Manufacturing Institute Skills Gap and Future of Work in Manufacturing study showed that enhancing HR management practices to attract, hire, and retain talent is the top technique manufacturers are adopting to navigate through the skills shortage.

Figure 1: Five key skills are expected to increase in significance in the coming years

Source: 2018 Deloitte and Manufacturing Institute Skills Gap Study

The power to influence a more positive employment future
Deloitte’s 2018 Human Capital Trends report notes that the traditional employer-employee relationship is being replaced by the emergence of a diverse workforce ecosystem—a varied portfolio of employees, talent networks, gig workers, and service providers that offers employers flexibility, new capabilities, and the potential for exploring different economic models in sourcing talent. In manufacturing, this phenomenon is slowly taking hold, with 12 percent of production positions being outsourced to gig workers. More encouraging, 38 percent of responding executives are “currently reorienting their workforce around agile, cross-functional training and creating ‘tours of duty’ across production.” These are just two examples of how manufacturers can change the way they structure their work demands, execute talent acquisition, and engage talent within the four walls of the factory to appeal to a new breed of workers.

The potential is here to satisfy the desires of the individual in the quickly changing landscape of manufacturing jobs. Manufacturers can take the next steps by communicating their social enterprise values, demonstrating that today’s workplace is safe, modern, and infused with advanced technologies, and building talent management programs that empower individuals to develop along unique career trajectories.

For more information about how skills and jobs are changing in the manufacturing industry, please read our full report, The Future of Work in Manufacturing.

Paul Wellener is a vice chairman with Deloitte LLP and the leader of the US Industrial Products Construction practice with Deloitte Consulting LLP.
Ben Dollar is a principal in the Global Supply Chain practice of Deloitte Consulting LLP.
Heather Ashton Manolian is a senior manager and research leader, US Industrial Products & Construction, Deloitte Services.

1 Bureau of Labor Statistics, Job openings levels and rates by industry and region, seasonally adjusted,” news release, accessed October 17, 2018.

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