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North America's manufacturing sector is on an upward trajectory according to ThomasNet's latest Industry Market Barometer (IMB) research. However, a shortage of young talent, compounded by Baby Boomers' negative perceptions about Millennials, could impact its continued expansion.
The annual survey of nearly 500 product and custom manufacturers shows continued growth for this sector. Companies are hiring, increasing production capacity, and investing for more growth to come. More than half (58 percent) grew in 2013, and 63 percent expect even more gains by the end of 2014.
Positive indicators are everywhere. Manufacturers are getting more business from their existing markets, and their average account values are rising. Nearly eight out of 10 (76 percent) are now selling overseas, and one-third expect that business to increase. In anticipation of what's ahead, they are investing in capital equipment, optimizing operations, upgrading their facilities and retraining their people. More than half (52 percent) expect to add staff in the next several months, up from the 42 percent who planned to hire last year. Respondents' companies are looking for trained, experienced people — manufacturing/production management, line workers, skilled trade workers and engineers — to keep up with current and future demand.
A deeper look under the hood raises questions about whether the manufacturing industry can continue its current momentum.
"For the industry to sustain its steady climb, all the fundamentals need to be in place, and one of them is missing — a robust pipeline of talent," said Mark Holst-Knudsen, president of ThomasNet.
Last year's IMB called attention to the "ticking biological clock" in manufacturing — the disruption that's coming as Baby Boomers leave the workforce without people primed to replace them. This year's survey depicts the "ticking" turning to an alarm. Nearly half of this year's respondents (49 percent) are 55 and older. Moreover, 38 percent plan to retire in one to 10 years, and most (65 percent) lack any succession plan.
One solution is in plain sight — the Millennial generation (ages 18 to 32), who can take the time to learn the business before their predecessors retire. Yet most manufacturers (62 percent) say Millennials represent a small fraction of their workforce, and eight out of 10 (81 percent) have no explicit plans to increase those numbers.
However, companies are making headway in the area of apprenticeships, which provide opportunities to bring in entry-level employees and career changers. For manufacturers where these programs are applicable, 51 percent now have them in place, and 23 percent plan to do so. They are teaching apprentices trades such as machining, CNC milling and turning, and welding while increasing their staff.
"We need new talent everywhere — on the plant floor, in the field and in management — and getting young people to look at manufacturing isn't easy," said Karen Norheim of American Crane and Equipment Corporation. "To ensure our company's success, our employees have become brand ambassadors for manufacturing. We're bringing our children to our plants, looking at new internship programs, and reaching out to local colleges and trade schools. By making a local footprint, we're helping to address a national problem."
This year's data shows that the manufacturing industry increasingly aligns with Millennials' value systems and technology expertise. The research demonstrates that Millennials have an opportunity to make a social impact working with sustainable and green technologies, solar energy, and wind power. In addition, respondents cite innovations in design and manufacturing software, automation/robotics, and 3-D printing as intrinsic to today's jobs.
But 46 percent of respondents say that a larger issue is at work — younger people still perceive manufacturing as "blue collar" work. Baby Boomers’ perceptions of Millennials also exacerbate the challenge, as 43 percent of respondents believe that this generation lacks the work ethic and discipline to succeed.
"At a time when the American manufacturing sector is poised for a comeback, the talent shortage is the elephant in the room that could impede progress," said Holst-Knudsen. "It will take the concerted effort of every manufacturer to reach across generational lines and bring in the people who are critical to the industry's continued success."
For more information, visit www.ThomasNet.com/imb.