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Closing the Gap Between Manufacturing Employers’ Needs and Workers’ Skills

A resurgent manufacturing sector, and shifting workplace technology, has government, business, and academic leaders combining to build a modernized system of work and learning capable of equipping the workforce for 21st century careers.

Workforce 2014
The rates of change for technology, cultural shifts, economic cycles, and educational restructuring are nowhere near the same. It is that asynchrony, as much as any single cause, that has resulted in the “skills gap” that so occupies the conversations of CEOs and corporate hiring managers, particularly at manufacturing firms, says a new Georgetown University study (Failure to Launch: Structural Shift and the New Lost Generation).

It wasn’t long ago that American students were led to understand that manufacturing would, for the most part, occur overseas in countries paying a fraction of the U.S. wage; and if they hoped to have a sustainable career, it would be in finance, healthcare, design, communications — service rather than production. Couple that understanding with Bureau of Labor Statistics (BLS) data on earnings, unemployment, and educational attainment showing a 63 percent premium in median weekly earnings for those with a bachelor’s degree over a high school diploma, and a 4.5 percent unemployment rate for the BA holder vs. 8.3 percent for the high school grad — and it isn’t hard to see why the sons and daughters of well-off baby-boomers choose college over vocational training. In 1970, only one in four jobs required more than a high school education. Today, close to 70 percent require more training, but that training, in many cases, is more specialized and skills-based than might be found in a traditional liberal arts education.

Now, with a resurgent manufacturing sector, the U.S. finds itself in the anomalous position of having four million job openings at the end of 2013 (BLS data), but only one out of three adults in their early 20s and just over half of adults in their late 20s are employed in full-time jobs according to the Failure to Launch study by Georgetown University’s Center on Education and the Workforce.

There’s been a dramatic shift in workplace technology over just four decades. In 1970, only one in four jobs required more than a high school education. Today, close to 70 percent require more training, but that training, in many cases, is more specialized and skills-based than might be found in a traditional liberal arts education. The Georgetown report notes, “As a result of increasing human capital requirements for both young and old, the education and labor market institutions that were the foundations of the 20th century industrial system are out of sync with the 21st century economy. The first step to a modernized system of work and learning is greater transparency in the alignment between post-secondary programs and career pathways. In addition, young adults will need to mix work and learning at earlier stages in the on-ramp to careers, and older adults need a less abrupt transition from working to retirement.”

Where Government, Companies, and Colleges Combine
The good news is we’re beginning to find answers. The answers are coming where government, education, and companies are each putting skin in the game.

Louisiana may be doing it as well as any state. Recognizing the direct connection between workforce training and economic development success, the Louisiana legislature last year authorized more than $250 million in workforce-related projects at community and technical colleges across the state. That’s on top of the $250 million already spent between 2007 and 2012. Called “Facilities with a Purpose,” the plan requires a 12 percent local match for project costs. What’s being done in Louisiana is exciting...It’s a once-in-a-lifetime partnership for Sasol to be able to influence training at a public education institution in this way.Mike Kane, Sasol operations manager for the ethane-cracker project

The investment is beginning to pay off. In Shreveport, state and local governments are building a $22 million workforce center at Bossier Parish Community College. The commitment to build the training center helped convince German steelmaker Benteler Steel/Tube to invest $975 million in a hot-roll steel tube-making facility that will employ 675 when it is complete. “We are making a long-term commitment, so we need to have certainty about the workforce of the future,” says Matthias Jaeger, president and CEO of Benteler Steel/Tube. “The value of the training facility is almost immeasurable.”

In southwest Louisiana, a new $20 million training center at SOWELA Technical Community College will train welders, process technologists, and other skilled workers, many of whom will land some of the 1,250 jobs in a new $16 billion South African natural gas-to-liquids facility.

In both the steel and gas projects, the companies are playing a direct role in developing curriculum. “What’s being done in Louisiana is exciting,” says Mike Kane, Sasol operations manager for the ethane-cracker project. “It’s a once-in-a-lifetime partnership for Sasol to be able to influence training at a public education institution in this way.”

Tackling the Skills Gap State by State
Louisiana isn’t the only place crafting workforce solutions. In fact, nearly every state that’s serious about business attraction is in the game. Here are some examples:
  • In Lexington, South Carolina, Michelin has developed a Technical Scholars Program that pays tuition, fees, and books for selected Midlands Technical College students. It’s coupled with a paid co-op position in the Lexington Michelin plant.
  • Tennessee Governor Bill Haslam is pursuing a $35 million “Tennessee Promise” — a guarantee that every high school graduate in his state can attend a community or technical college free of charge if he or she so chooses.
  • The Texas Skills Development Fund awards job training grants up to $500,000 to companies that partner with a community or technical college. In 2012, awards totaled over $22 million.
  • In addition to offering workforce training grants, Ohio is developing a predictive model that overlays federal labor market information with real-time job postings, coupled with company surveys in various industry clusters. The result is data that schools can use to develop curriculum to meet skill requirements in a particular region at a particular time.
  • Michigan is considering a statewide version of Bekum America Corporation’s apprenticeship program in Williamston, Michigan, where students receive 8,000 hours of hands-on training coupled with 60 hours of academic instruction in a partnering community college. The training is free to the apprentice, with a job promise at the end of the session. Bekum calls it “The Other Four-Year Degree.”
This partnership has not only increased the number of future employees in the Michelin workforce pipeline, but also has effectively spread the word that manufacturing jobs are available, pay well and can lead to even greater career opportunities...It was very clear to us, that to be successful in the long term, we needed to think differently about how we go about developing and recruiting the right people to meet our growing employment needs. Michelin’s Lexington Site Manager, Peter Sutton Company Schools
Unsatisfied with the quality or quantity of STEM-competent graduates available for its programming positions, IBM is getting heavily into the education business. Working with colleges in New York and Chicago, the tech giant is creating its own schools, called P-TECH academies. Eight are open and the company has plans for at least 29 more. IBM helps develop curriculum, heavy in STEM courses, for the six-year program. Graduates emerge with an associate’s degree, no debt, and the promise of a $40,000/year job with IBM.

The IBM P-TECH schools are similar to the German-style apprenticeship programs being organized in Michigan, Wisconsin, and several southern states by the German-American Chamber of Commerce. Under the German model, the company partners with an area community college to develop curriculum that coordinates with in-company on-the-job training. Students apply to the company for available apprentice positions. If accepted, they are paid a stipend and their education is paid for. Graduates earn an associate’s degree and a nationally recognized journeyman’s certificate and, in return, promise to work for the company for at least two years. “The first relationship is with the company,” says the German American Chamber’s Mark Tomkins.

Honda of America Manufacturing, Inc., facing the demographic challenge of eventually replacing its Ohio-based workforce, has developed its own in-house technical training program, but Honda is also putting $75,000 toward development of a mobile technology lab that can be parked outside high schools within its labor-draw area. Students visit the lab for a hands-on experience in modern manufacturing technology, and the hope is that they begin to understand that today’s manufacturing environment is quite different from the one their parents or grandparents experienced. The concept of taking the technology to the students “came together through a series of discussions with other businesses and our economic development partners in multiple counties,” says Caroline Ramsey, Honda’s assistant manager for Government and Community Relations. The mobile lab concept is borrowed from similar efforts under way in Michigan and Wisconsin.

Fixing Basic Education
Even before skills training, basic education needs attention says Ohio State Associate Professor Josh Hawley, recently tapped to head the Ohio Education Research Center, a collaboration of six universities and five research centers whose mission is to develop an Ohio preschool-through-workforce agenda. Compared with other developed nations, Hawley says, U.S. high school graduates have relatively low average skills. And that’s graduates — but what about those who don’t get that far? “From a policy perspective, you cannot ignore the fact that 25 to 30 percent of kids drop out anymore. Because there are no jobs for those people,” says Hawley. “No employer is going to routinely hire high school dropouts without training.”

Ohio’s governor, John Kasich, is taking note. He spent 20 minutes of his State of the State speech this year discussing education and workforce issues, proposing, among other things, vocational training for seventh-graders and online career road maps that could be downloaded on cell phones. “Our kids need direction,” said the Governor. “They need to understand where they are going.”

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