How Some Companies Are Battling the Skills Shortage

Several recently-released studies are underscoring the dire cost to U.S. manufacturers of the acute shortage of skilled workers. But at the same time, manufacturing CEOs and company owners continue to show innovation and resilience in tackling the problem and not allowing the worst outcomes for their businesses.

May 30 2014 by Dale Buss


For example, in the Philadelphia area, about 56% are training their existing staff more, the Philadelphia Fed reported in their latest survey. Almost two-thirds of manufacturers surveyed said they were stepping up their recruitment efforts. Many also are pairing up with area schools, including high schools, junior colleges and community colleges, to align a school’s curriculum with a company’s skill needs. In fourth place in the survey was the offering of higher wages. About one-third of respondents reported increasing salaries.

These companies are motivated, just like counterparts across the United States, by the increasingly steep costs of going without qualified personnel. In fact, U.S. manufacturers may be losing up to 11 percent of their earnings each year as a result of increased [hiring and training] costs stemming from a shortage of skilled workers,  according to a new study by Accenture and The Manufacturing Institute.

Meanwhile, the National Federation of Independent Business reported that 41 percent of small-business owners are said to be seeing few or no qualified applicants for their job openings. As a result, fully 24 percent said they have job positions they can’t fill right now.

In the Accenture study, 39 percent of manufacturing executives surveyed described the shortage of skilled, qualified applicants as “severe” and 60 percent said it has been difficult to hire the skilled people they need. Meanwhile, more than 50 percent of respondents were planning to boost output by at least 5 percent over the next five years and many will likely need to add personnel to manage the growth.

The cost damage comes in overtime, increased cycle and down times, higher amounts of scrap materials and reductions in quality.

Accenture’s report suggests that companies hiring for quality traits and then doing their own training are on the right track. “Given today’s limited pool of relevant talent, companies may have to forget the notion of the perfect candidate,” said Matt Reilly, senior managing director of Accenture Strategy, North America. “Instead they should look for more generalist skills in candidates and develop them to match the specific work that needs to be done.”

Overall, the skills shortage has become a huge constraint on growth of U.S. manufacturing, even while many other more favorable factors have emerged to encourage it. Solving this particular problem needs to be looked at as a long-term proposition with collaboration from the entire leadership team.

Additional reading:

Out of Inventory: Skills Shortage Threatens Growth for US Manufacturing

How Some Companies Are Bridging the Skills Gap