Manufacturers are facing a growing skills gap as technology continues to advance at a dizzying pace. Many traditional manufacturing jobs are becoming obsolete thanks to automation, robotics, machine-learning artificial intelligence and other innovations. At the same time, manufacturers are finding that the skilled workers they need to operate a modern facility are in short supply. A tight labor market and millions of retiring Baby Boomers exacerbate the situation.
Manufacturers Survey Results
Attracting and retaining a quality workforce is the greatest challenge manufacturers face according to the National Association of Manufacturers’ (NAM) 2019 4th Manufacturers' Outlook Survey. Approximately 64% of survey respondents cited this, and it has been the top concern for nine consecutive surveys.
According to NAM's 3rd Quarter 2019 survey, nearly 79% of respondents said they had open positions they were struggling to fill. In addition, the inability to find sufficient talent had forced nearly one-third of respondents to turn down business opportunities.
Bridging the Gap
So what can manufacturers do to close the gap? Here are four strategies:
- Offer internships and returnships. Internships provide a relatively risk-free environment in which prospective employees can explore new job opportunities, hone existing skills and learn new ones, while the employer has an opportunity to evaluate potential new hires. Interns are typically students or recent graduates.
However, this focus on young people potentially ignores a rich source of talent: those who have been out of the workforce for several years. Internships designed for people who have taken career breaks for various reasons, such as raising children, serving in the military or recovering from a long-term illness are called "returnships." Returnships may also be offered to retirees who decide to re-enter the workforce for financial or other reasons.
- Make the most of long-time workers. Encouraging long-term employees to stay beyond retirement, or even hire workers who are approaching retirement age is an often-overlooked strategy. These individuals may lack certain new technical skills, but they often possess irreplaceable institutional knowledge, manufacturing experience and “soft” skills, such as interpersonal and communication abilities. A highly effective strategy is to have these employees mentor and train new hires, developing the younger generation, who may possess the newer skills, but often lack the business knowledge and professionalism their jobs require.
One approach is to offer these employees a phased retirement. You can accommodate their need for more flexible schedules, while promoting the knowledge and experience transfer to the next generation by gradually reducing their workloads and transitioning them into less demanding roles.
- Upskill and reskill your current workforce. Many manufacturers believe that the only way to keep pace with technological change is to hire new people. But the skills gap may prevent this. Consider, instead, teaching new skills to existing workers, enabling them to thrive in their current roles or transition to new technology-focused jobs. Providing this training requires a significant investment, but so does recruiting and onboarding new talent.
Taking inventory of your workforce is the first step. To determine whether upskilling and reskilling are viable options, consider whether your current workers have the ability to learn the new skills they’ll need to adapt in an ever-changing work environment.
- Partner with local schools. Collaborating with local high schools, community colleges or vocational schools gives you access to certification programs and facilitates internships. These partnerships not only help local talent develop the skills you need, but they also serve a public relations function: they help combat the myth that manufacturing jobs are tedious, low-skill and devoid of intellectual stimulation.
The Digital Revolution Continues
As the manufacturing industry continues to change at a staggering pace, manufacturers must adapt to new technologies. This means taking steps to ensure the workforce is able to adapt with them.
FASB Defers Major Accounting Standards for Private Companies
Last fall, the Financial Accounting Standards Board (FASB) gave private companies extra time to implement several major changes to the accounting rules under U.S. generally accepted accounting principles (GAAP). The Accounting Standards Update No. 2016-02, Leases (Topic 842) deferral from 2020 to 2021 is most relevant to privately held manufacturers.
Manufacturers often lease property and equipment, and the updated guidance will require them to report leased assets and related liabilities on their balance sheets. The FASB’s deferral is intended to give private companies time to observe best practices by public companies who implemented the changes for 2019.
Implementation has proven to be more difficult than many companies had initially expected — particularly for those with so-called "embedded" leases. The deferral isn’t intended to give private companies the option to procrastinate starting the implementation process for another year.
Currently, the FASB is conducting additional research to determine whether the rules for reporting leases could be amended, and made simpler and more cost-effective for private companies. For the latest developments, or for help complying with updated guidance on leases, contact us today.