Manufacturing Competitiveness Relies on Talent

The U.S. ranks second on a global manufacturing competitiveness index, according to the 2016 Global Manufacturing Competitiveness Index by research firm Deloitte Global and the Council on Competitiveness. The U.S. ranking has improved in each of the past studies and is poised to take over that top spot from China by 2020, the study maintains.  However, executives from across the world in responding to the study, noted that talent is the leading factor in determining manufacturing competitiveness, and finding and cultivating that talent is a topic that has received increasing attention from the manufacturing sector. While such rankings provide an interesting focal point, their real value lies in the discussion and attention focused on the subject matter. SSTI recently interviewed several leading thinkers on the subject, finding common calls for changing the approach to the talent pipeline in manufacturing, as well as a cautionary note on rankings.

Sridhar Kota, director of MForesight: Alliance for Manufacturing Foresight, cautions that policy and issues surrounding competitiveness are somewhat different from those affecting innovation, and it is innovation that leads to new industries, while competitiveness applies to existing companies and is largely driven by regulations, taxes, affordable energy and access to tools and infrastructure.  The common factor, Sridhar maintains, is the availability of a highly skilled workforce at all levels. While China may enjoy a low cost advantage in the manufacturing marketplace, it is Germany, which enjoys a robust manufacturing base, that the U.S. should be comparing itself to, Sridhar said. Germany enjoys a skilled workforce at all levels, from engineers to production workers. One of the differences between the two countries is the desire among students to enter engineering careers, he said.

“There is a lack of interest in kids in going into engineering,” Kota said. “If we want to promote engineering, then we want to inspire kids about designing and making things.” He said that while Germany excels in that regard, it is something this country has forgotten.  To reignite that interest, we must return to the fundamentals like engineering education and apprenticeships. While adults may have preconceived notions about dirty factory jobs, youths today don’t have the same notions. Those dirty jobs have largely been replaced; factories today are cleaner and demand a more highly skilled workforce that can operate computer numeric controlled (CNC) machines and perform other tasks. 

To spark an interest in engineering and manufacturing, Kota recommends factory tours for students, inspiring them with how things are made and allowing them to create things. “Once inspired, some may choose to attend a four-year degree college to become an engineer and others may pursue vocational training to master the advanced manufacturing trades like CNC machining that are desperately needed in industry,” he said.

“At the end of the day, people here are more creative and more entrepreneurial than anywhere else,” Kota said. “When we lose that, what will we have?”

Ned Hill, a professor of public affairs at the John Glenn College of Public Affairs at Ohio State, says there are components of the Deloitte study that align with his research, but such reports make no guarantee of future standings. Looking ahead, manufacturing competitiveness will be dependent on many factors, including a country’s financial stability.  While the U.S. is more stable, the European Union is facing more uncertainty with Brexit and China is subject to greater politics, Hill said.

What he sees as some of the drivers shaping the manufacturing environment are the forces driving the new digital factory floor.  Once mass customization can be achieved in real time, and machine intelligence increases, the intermediary labor market will be reshaped and there will be a higher demand for new tech-based jobs, Hill said.

Currently there is a cognitive dissonance in workforce discussions: people are looking for jobs and manufacturers say they are looking for employees, yet those successful connections aren’t happening.  Hill pointed to a lack of training happening at the managerial level in manufacturing, compounded with the expectation that a skilled workforce can be produced through a six-week program. To remain competitive, Hill says U.S. manufacturing must train a new generation of workers, training systems must deliver industry-recognized credentials, and engineering technologists of the future will have to know how to deal with both production and people. 

To feed that pipeline of the future workforce needs, students should be exposed to manufacturing opportunities while still in high school, both Hill and Kota agree.  Internships, mentorships, apprenticeships and factory tours all serve to get students interested in manufacturing. Corporate culture that values the worker and long-term investment are more likely to pay off for the manufacturer than short-term investments and part-time help.

“As a nation, we need to elevate the importance of these things,” Kota said. 

While talent may be an important driver in competitiveness, Ronil Hira, an Economic Policy Institute research associate and an associate professor of public policy at Howard University, cautioned that the problem with competitiveness is that it can mean different things to different people and lacks a standard measure. “What you use to measure it makes a big difference,” Hira said.

Competitiveness discussions also are sector-dependent, he said.  For instance, when the semiconductor industry is considering a new site, while talent matters in the overall discussion, the decision depends more a favorable tax policy.

“All these things are important elements,” Hira said.