This article originally appeared in the May 2017 issue of MiMfg Magazine. Check out the magazine archive.
Manufacturing has made incredible strides in recent years. Seven and a half years ago the unemployment rate teetered on the brink of 15%. Thanks to hardworking employers across the state, Michigan’s unemployment rate is expected to end 2016 at around 4.6% — that’s below the national average. With unemployment steadily decreasing, the question remains — how much lower can it go?
In the West Michigan region, where Express Employment Professionals is working with employers and job seekers every day, the unemployment rate seems to have stabilized at 3%. Most economists would agree this is below full-employment, which is generally considered to be 4%. Throughout the state, manufacturers are feeling the impact of a tight employment market. Many companies struggle to attract the talent they need to grow their business and others struggle to retain the employees they already have.
Over the last several years there has been huge growth in manufacturing employment numbers. More than 120,000 new Michigan manufacturing jobs have been created since 2010; however, the growth rates are stabilizing to a more moderate level. In 2017, we project only marginal growth in total manufacturing employment. The primary reason for this is not because of a lack of jobs; but rather, a lack of qualified people to fill those jobs. The lack of available and qualified workers will be one of the top challenges facing small-to-mid-sized manufacturers looking to expand operations in 2017.
The Manufacturing Skills Gap
The “skills gap” is a topic that is becoming well known in the manufacturing industry. According to Fortune magazine, there is likely to be a shortage of about 40 million high-skilled workers and 45 million medium-skilled workers nationwide by 2020. Manufacturing jobs continue to become more technical and the retirement of skilled baby boomers remains on the rise and could soon hit 10,000 per day. The combination of the skills gap and low unemployment rates in Michigan will make it more challenging for manufacturers to find the employees they need in 2017 and beyond.
Your Competitive Advantage – Training & Development
Innovation and collaboration between businesses and educators continues to increase as both sides of the talent pipeline focus on preparing the workforce of tomorrow for the careers of tomorrow in high school and as early as middle school. Preparing our next generation to be career-ready is a top priority of our educators, government, and community partners; however, it may take many years before these efforts significantly impact the workforce.
In the meantime, companies that will dominate the market will be those with training systems in place to develop the talent they need. These employers should examine their current skill needs as well as forecast their future needs. They can then create a strategy to train current employees and available job seekers to develop the skilled workers they need. To be one of these industry leaders, you should look to re-institute apprenticeship or internship programs, engage the outgoing baby boomers in mentorship programs, and rely on training partners who can deliver customized solutions. Companies who invest in training and create a talent development strategy will have a clear competitive edge and will continue to be successful despite the tight labor market forecasts.