The Great Skills Mismatch

Despite persistently high unemployment numbers, companies are struggling to find engineers and skilled laborers. What’s behind this gap—and what can today’s CEOs do to find the talent they need?

February 26 2013 by William J. Holstein


PENNSYLVANIA: Finding Hope in High Schools

Carlos Cardoso, CEO of Kennametal, a $3 billion industrial metals company based in Latrobe, Pennsylvania, argues that education is at the heart of helping the U.S. expand its manufacturing sector and save what is left of the middle class. The future of American manufacturing will consist of highly innovative, highly skilled, high margin jobs, he says. But the problem is Cardoso says young people, parents and high school teachers are not interested in engineering or the types of education that lead to jobs in manufacturing. “The United States is No. 1 in manufacturing, but we rank No. 23 among the world’s 30 advanced economies in terms of graduating engineers from college,” says Cardoso. “The kids graduating from high schools have a terrible aptitude for math, science and reading.”

The same is true of the people who could operate Kennametal’s highly computerized equipment. “We are running out of skilled labor,” Cardoso says. “About 30 percent of our manufacturing employees will be retiring in the next 10 years.” Kennametal already has 150 job openings in the U.S. it has not yet been able to fill.

All familiar complaints, but Cardoso does more to address the problems than the vast majority of CEOs. His company offers student internships and apprenticeship programs, it partners with community colleges and technical schools, and it offers tuition assistance to employees. About 50 employees are receiving reimbursement this year, costing the company $73,000. The company also reaches out to high schools near its headquarters in Pennsylvania and near a major manufacturing facility in Solon, Ohio, through its “Young Engineers Program.” Juniors and seniors take part in classroom discussions about manufacturing and develop hands-on projects with help from Kennametal engineers and scientists. About 70 have “graduated” from the two programs since they started in September 2011.

Most talent-hungry CEOs limit their outreach efforts to community colleges, reckoning that it does not make financial sense to target high schools because the students are so young. But Cardoso, who is chairman of the Manufacturing Alliance for Productivity and Innovation, consisting of 400 companies, argues that the war for talent starts there. “I want to create a bigger pool of people in high schools who want to come into manufacturing and engineering,” he says.

“The parents are a challenge because a lot of them don’t want their kids to go into manufacturing,” Cardoso explains. “Teachers also don’t understand manufacturing or engineering. We bring the parents in to an open house when we launch the program and then bring them in at graduation. The whole point is to send the message out to teachers, neighbors and parents that this is a smart thing to do.”

What if the students don’t eventually go to work at Kennametal? “If we get 10 percent of them to come [to] work for Kennametal, that’s okay with us,” Cardoso says, adding that the other 90 percent could work for other manufacturers—reviving the nation’s industrial base and thereby benefitting his company in the long term.