The Skill Gap: Why It’s a Problem and What Manufacturers Can Do About It

May 30, 2023

In 2021 87% of companies said that they currently had a skills gap or were facing an imminent skills gap; the current talent they possess is simply insufficient to fill the demands of the company. Since then, in the aftermath of the COVID pandemic, companies have indeed found themselves in the position of needing to fill vacancies that applicants just aren’t qualified to fill. As companies grapple with the widening gap between “skills possessed” and “skills needed,” it is the leadership’s responsibility to confront this multifaceted problem. This can be done in a number of ways, including creating apprenticeship opportunities, better education, and simply making manufacturing more attractive. 

What Is the Skill Gap? 

The “skills gap” is a term that was coined in the 1970s after a period of high inflation and high unemployment. The term refers to the increasingly large vacuum that exists between the skills that manufacturers need to continue producing products and the skills that workers possess. Despite growing demand for skilled labor from manufacturers, interest in manufacturing careers among those entering the workforce continues to decline. 

The widening of the skills gap can be attributed to several different markets and demographic factors like rapid technological advancements, aging workforces, and disinterest in manufacturing careers among youth. The inability of manufacturers to attract and retain highly skilled workers may eventually be an existential threat to the entire industry as we know it. The effects of this are wide-reaching, affecting both individuals and the entire economy. 

The Impact of the Skills Gap on Manufacturing 

The consequences of failing to bridge the skills gap are concerning and may affect the long-term well-being of the manufacturing sector. First, the exodus of aging professionals after 2020 reduced the human knowledge base of manufacturing techniques. When older workers retired, they took with them the knowledge and wisdom they had won during decades of working in manufacturing. This has led to declining productivity levels. To make matters worse, there’s a notable lack of young workers who are willing and able to refill the positions left by the retiring workforce. Not only aren’t there enough skilled hands, there just aren’t enough hands period.  

A widening skills gap will result in less innovation, loss of competition, and loss of operational efficiency. There will be fewer qualified people to handle advanced robotics, artificial intelligence, and other such technologies which will impede innovation. Other countries that aren’t suffering the same crisis will, as a result, begin to drive innovation and North America will likely lose market share to foreign actors. Operational efficiency will also suffer simply because there aren’t enough workers to manage the throughput and output of different products. 

How Manufacturers Can Address the Skills Gap 

While the skills gap does indeed merit “all-hands” attention, it is still certainly a solvable problem with the right initiatives and enough gumption. Manufacturers can (and must) take proactive steps to guarantee a bright future for the industry. There are three main things that can be done: Workforce development programs, collaboration with educational institutions, and partnering with the public sector to incentivize development. 

Workforce programs can take several different forms like apprenticeships and internships. These workforce development programs allow manufacturers to tailor their workforce development programs to suit the exact skills they’re missing. These initiatives benefit both the worker and the company; the worker benefits by having employment immediately after finishing the apprenticeship and he or she doesn’t have to pay to learn extraneous skills just to  “graduate.” The manufacturers benefit by having access to a pool of talent that has been trained specifically to solve a problem that they have. Beyond entry-level workforce development programs, ongoing on-the-job training and skill upgrades for existing employees will help employees and manufacturers alike stay ahead of the curve and remain competitive. 

Manufacturers can also look to formal education institutions such as technical and vocational schools to help attract, train, and facilitate a steady flow of talent into the manufacturer’s ranks. When partnering with educational institutions, manufacturers must be able to take an active role in helping to develop the curricula for manufacturing careers. Not only does this help fill the pipeline of potential candidates for manufacturing positions, but it can also help manufacturers craft the narrative about vocations in the manufacturing sector. 

Leveraging government and private sector support through tax initiatives and creating private-public partnerships can be another excellent way to incentivize training and development. This can provide a robust framework to enable the manufacturing sector to bridge the skills gap and reclaim its competitive edge. 

Long-Term Strategies for Bridging the Skills Gap 

When looking towards the future, manufacturers must invest in long-term strategies to prevent the skills gap from widening even more and impeding future growth. Most importantly, embracing technology and automation can complement human labor, ultimately improving productivity and reducing the burden of skill-intensive tasks. Manufacturers must also advocate for a culture of lifelong learning and continuous skill development, enabling employees to adapt and excel as the landscape of the industry evolves. This culture of growth and self-improvement helps organizations become more resilient in the face of rapid technological advancements.  

In addition to looking toward the future, manufacturers must also look inwards and foster a culture of innovation and adaptation. By encouraging employees to think creatively and embrace change, manufacturers can maintain a competitive edge in an increasingly global market. In effect, these long-term strategies provide a blueprint for a thriving manufacturing industry that will overcome the challenges presented by the skills gap. 

Conclusion 

The skills gap is a real phenomenon with emerging real-world consequences. However, companies can and must take concrete steps to avoid falling victim to a lack of skilled labor and to create a bright future for the manufacturing sector. Some companies need short-term talent supplementation to remedy acute production crises. To help solve these problems, our team of specialized operational consultants works alongside manufacturers and acts as a support structure to optimize logistics and operations. Our advisors are former management at many suppliers and OEMs and are experts in production, operational efficiency, and crisis management. Contact us today to schedule a discovery call, or see our case studies for more information. 

About Seraph 

A global enterprise consulting firm that partners with business leaders to handle their most complex problems in areas such as supply chain, operations, and manufacturing challenges while delivering long-term operational and leadership improvements. Seraph has extensive on-site industry experience in the automotive, private equity, defense, medical device, electronics, energy infrastructure, and engineering sectors. The Seraph leadership team brings vast expertise across; crisis management, mergers, acquisitions, due diligence, restructuring, turn-around services, product launches, and logistics. Our four-phase process has been proven to provide quick payback and positive ROI, which is measured throughout customer engagement. Learn more at www.seraph.com and follow Seraph on LinkedIn.

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