There Will Be a Factory Skills Shortage. Just Not Yet

By: Peter Coy, Bloomberg Businessweek

A shortage of skilled manufacturing labor is on the way, says a new study by Boston Consulting Group. But, says the firm, it hasn’t arrived yet.

Many factory managers claim they’re already suffering from a skills shortage. Sixty-seven percent of respondents reported a moderate to severe shortage of available qualified workers in a survey last year by Deloitte Consulting for the Manufacturing Institute, an affiliate of the National Association of Manufacturers.

BCG senior partner Harold Sirkin, co-author of the research and a Bloomberg Businessweek contributor, says manufacturers could solve most of their problems finding good people by offering higher pay and training new hires. He says there’s no reason that a skills shortage need derail the “manufacturing renaissance” BCG has been forecasting. The consulting group predicts that rising U.S. exports and “reshoring” could create 2.5 million to 5 million U.S. jobs in manufacturing and related services by decade’s end.

The firm looked for places where manufacturing wages are rising rapidly as evidence that demand is exceeding supply. By that criterion, “only five of the nation’s 50 largest manufacturing centers (Baton Rouge, La., Charlotte, Miami, San Antonio, and Wichita) appear to have significant or severe skills gaps,” the study said. “Occupations in shortest supply are welders, machinists, and industrial machinery mechanics.”

The U.S. does face a longer-term problem, Sirkin says, because millions of older factory workers are retiring in the next five to 10 years at the same time that production is increasing. There’s no quick fix for shortages of skilled trades such as welding, he says. The minimum training is two years. “You don’t want a welder who hasn’t been trained,” says Sirkin. “You could burn the building down.”

On Oct. 15, General Electric is holding a press conference in New York at which Chairman and CEO Jeff Immelt is scheduled to announce an initiative to find jobs in manufacturing for veterans. Sirkin says he applauds the effort.

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