It’s not news to say there’s a skills gap in manufacturing. Industry leaders have been spearheading change and implementing initiatives to find and train new workers for more than a decade. And while there has been significant progress, the last few years – thanks in large part to the Covid-19 pandemic, supply chain bottlenecks and demographic changes – have reshaped the entire labor force and accelerated challenges for every employer from large to small. The list of impacts is long: changes in what employees want from work and their careers; advancing technologies radically altering traditional roles, and a fiercely competitive, tight labour market with competition for top talent across industries. From shop floor to sales, and manufacturing to back-office teams, the story is the same. Good people with the right skillsets are hard to find and are hard to keep. And more must be done as an industry if we are to build the manufacturing base the future already demands.
EY and The Manufacturing Institute spoke with United States (“US”) manufacturing leaders to learn first-hand what key issues are top of mind across the industry. Leaders told us:
- The pace of change is increasing, requiring organizations to be more agile and make decisions faster.
- Manufacturing 4.0 continues to play a major role where data-driven manufacturing is required for visibility and effectiveness.
- Automation is impacting the way in which people must work with machines, data, technology and each other as part of their core job requirements.
- Talent scarcity is having a direct impact on their business where they feel the need to better attract, retain and develop talent across their businesses but particularly on the ground where the work happens.
Perhaps, we also need to take a fresh perspective on the skills gap and lack of talent. Maybe, one of the answers to addressing this shortage lies less in finding the exact experience and manufacturing skills to fill specific roles, but more in adapting a flexible view of potential talent? Individuals who aren’t square pegs for square holes but bring transferrable skills from other industries, academic institutions and backgrounds as well as the aptitude to evolve and grow with their jobs. Doing this will help manufacturers begin the journey of transitioning their workplaces to ones that value forward thinking, engaging and digitally enabled work and that attract and retain this crucial talent. Let’s take a closer look.
Accelerating pace of change is creating a burning need for talent to keep up
One thing is certain: As manufacturing continues to evolve, so must its talent. By 2030, an estimated 2.1 million manufacturing jobs could go unfilled if the skills gap is not adequately addressed.¹ Manufacturers face a critical opportunity to close the skills gap, and they need to do so quickly.
In response to these developments, leaders consistently told us that they need a workforce with the agility to develop new capabilities as their organizations change and with the ability to respond to data-driven decisions, and redefined roles. Leaders also made an important connection that to successfully attract and retain today’s workforce there must be a win-win value proposition. Specifically, it is crucial for employers to invest in reskilling in the areas that benefit both the employees and employers while doing so through impactful experiences. Successfully creating this win-win value proposition will engage employees while accelerating learning to maximize business and employee outcomes.
While there were a number of ideas about how to achieve this, employers unanimously felt that a unique win-win opportunity to accelerate business and employee impact was through adaptive skills. Manufacturers know that they cannot remain competitive and future ready as the industry rapidly evolves without a workforce with adaptive skills.
What manufacturers told us
In 2022, building upon the research by EY and Oxford Saïd Business School, EY and The Manufacturing Institute collaborated to uncover how manufacturing industry leaders can identify, develop and operationalize adaptive skills to meet the current and future demands of the industry.
We analysed thousands of data sets and conducted in-depth interviews with workers and leaders to paint what we believe is the first complete picture of the critical importance of adaptive skills in a rapidly evolving manufacturing sector. Through those interviews, we found that leaders agreed or strongly agreed that:
These insights are based on The EY and Oxford Saïd School of Business’s research on transformative leadership and the EY and Manufacturing Institute’s research on adaptive skills in manufacturing.
The EY and Oxford Saïd School of Business’s research is composed of both qualitative and quantitative interviews. In it, 935 CXOs and their direct reports, and 1127 members of the workforce provided responses to the quantitative interviews. These CXOs and members of the workforce were split across industries and sectors, including Advanced Manufacturing and Mobility, Consumer Good, Energy and Resources, Financial Services, Government, Health Sciences and Wellness, and Technology, Media and Entertainment Telecommunications.
EY and Oxford Saïd School of Business conducted qualitative interviews with 25 senior leaders across more than 10 sectors. The sectors included Real Estate, Finance and Banking, Motor Sports, Consumer Goods, and Health Care. Interview participant titles include DEO, CTO, COO, chairman and managing director.
EY and The Manufacturing Institute conducted interviews with 18 manufacturing industry leaders. Interview participants held leadership roles across the industry, including in Industrial Products, Chemicals and Advanced Materials, and Building Materials. These individuals held leadership roles at manufacturing organizations in the following functions: HR, Talent Acquisition, Operations, Public Affairs and various executive positions.
Tony Demarinis, Cate Mork, Margaret Carlson, Andrew Nachenberg and Brett Van Hoven also contributed to developing this report.