Skilled factory workers hard to find

A report says more than half of American companies are having trouble finding enough skilled workers to hire, especially in the manufacturing industry.

Kai Ryssdal: OK, wrap your head around this one if you can. A couple of weeks ago the OECD -- that's the Organization for Economic Cooperation and Development -- issued a report that said more than half of American companies are having trouble finding enough skilled workers to hire. That's with 8.2 percent unemployment. We're doing worse than Germany, China, England and Canada.

And get this: the skills gap -- as it's known -- has actually grown in the past five years, in spite of more people looking for work and ever-more Americans walking around with college degrees and trade school certificates.

What gives? Marketplace's Mitchell Hartman reports.

Mitchell Hartman: Where you hear about the skills gap most is in high-end manufacturing.

Darlene Miller: This is one of our CNC multi-axis lathes.

The kind of factory where the floors are squeaky-clean and the machines are run by computer.

Miller: We have job openings. The people are not trained for the jobs that are open today.

That’s Darlene Miller, who runs Permac Industries. It’s an aerospace and medical-device manufacturer outside Minneapolis.

In Reading, Pa., Elaine McDevitt’s Rose Corporation is about the same size -- 50 employees. They make precision machine parts.

Elaine McDevitt: Ten years ago, it was a lot easier to find welders with a lot of skill. Not just a welder that said he was a welder, but welders that could do the type of welding we need. People are coming out of school not with the math skills that they used to.

Gardner Carrick at the Manufacturing Institute has the numbers on this for 2011.

Gardner Carrick: Over 80 percent of manufacturers were having a moderate or serious shortage of skilled production workers. Over 600,000 jobs were open in manufacturing because companies were unable to find qualified applicants.

Really? With so many Americans looking for work? Many of them middle-aged -- presumably they got a decent education back when such a thing was possible.

Peter Cappelli: I think a lot of employers are just being irrational about this.

Management professor Peter Cappelli at the Wharton School is what I call the ‘big skeptic’ on the so-called ‘skills gap.’

Cappelli: If employers really are willing to leave a position open for months and months while they keep searching, rather than spend a week or so training somebody, or, just give them a week or so of ramp-up time, they’re doing something wrong.

Basically, Cappelli thinks employers are just being cheap. He says this is something they learned from the downsizing of the 1980s. It was so easy to snap up laid-off workers somebody else had already trained. So then companies downsized their own training programs to save money.

Meanwhile, they’ve steadily raised the bar on job applicants -- demanding ever-more credentials and work experience -- then complain they can’t find good help.

Cappelli: This is sort of like saying, 'My pants don't fit anymore. The problem, I believe, is that the fabric is shrinking.'

Carrick: It's a clever analogy, but I think that in some regards, it misses the point.

Again, Gardner Carrick of the Manufacturing Institute.

Carrick: Nobody expects a hospital to take someone just out of high school or just out of college and train them to be a nurse or a doctor. Why is it that manufacturing are the ones that are expected to do all the training of their workers on their own?

It should be easy enough to check whether the amount of time and money companies spend training their workers has fallen. Except, no one tracks this comprehensively.

The best estimate comes from the American Society for Training and Development. It finds spending-per-employee has been essentially flat for a decade, even as the skills required by new technology in the workplace have gone up.

So let's go back to the employers we started with, the ones with job openings they can't fill for skilled workers they can't find. Darlene Miller at Permac Industries says she's committed to training. But new hires need machinist experience and advanced math, first.

Miller: We need people who can come in and be value-added the day they start.

And she's guilty of the sin Peter Cappelli talked about: holding out. She searched two years for a machinist to run a new shift at the plant -- she says it was worth the wait to avoid costly mistakes.

Elaine McDevitt in Reading, Pa., wishes she could do more to train people up.

McDevitt: Now, the marketplace is so competitive, the margins are just so tight. So maybe when we say we can’t find experienced people, it’s because we don’t have the monetary resources to put into training from scratch like we used to.

And which employees do companies provide with the most skills-enhancement? According to the training organization’s data, it’s not production workers, or customer service reps or new employees. It’s supervisors, managers and executives.

I’m Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.
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I wish that Mitchell Hartman had asked both Darlene Miller and Elaine McDevitt if they had looked at older workers and decided that they (the older workers) were too expensive. My sense is that there are people willing to work, but that these companies really want young (cheaper) workers. Very frustrating.

It would be good to add that these American companies are saying that because they are pushing for immigrant labor being let in to work these jobs at rock-bottom cost. They are creating their own overseas sweat shops. Here in Baltimore we have a Mayor that is keen on this 'New Economy' and has an immigration department the size of all agencies combined. The driver here is Johns Hopkins wanting cheap healthcare labor, but each regional of the country has its own industrial needs, all looking for the relaxation of laws restricting green cards workers. That is why they manufactured this none existent need.

I think we are witnessing the end of the Industrial Revolution, and changes are occurring that are so fundamental that we have a hard time thinking of them. For example, it sounds to me like the industries having the hardest time finding skilled employees are those who are coming to the end of their life cycle. Who would want to spend tens of thousands of dollars to become qualified for an industrial or production job when those industries are fading away. One look at the Bureau of Labors projections turns people away from that path, and with good reason. But there is something else to be learned from this as well. For the last couple of decades jobs have become gradually more scarce, and the education industry has done a great job of marketing ever more education. The problem is that education no longer gets one a job. Only the right combination of education, experience and values will result in employment. It is a national scandal that we are the most educated country on earth, and that student loans now exceed credit card debt, yet the ROI on education is negative.
Vic Napier

Another thing I wanted to add, these aren't high paying jobs compared to what someone can make in other parts of the economy with a similar amount of work ethic and skills could earn.

I've heard these kinds of stories before and they always make me nuts. What kind of business person doesn't understand the concept of investment? You think you're you're supposed to make money without any risk or investment in the skills and tools of your labor?

It's like if I said there was shortage of doctors that will work for $20/hr because my business is renting them out for $30/hr to hospitals. I can't find anymore of them, so their must be a shortage and I need someone to train up a bunch of doctors for me so they're more affordable.

If your labor is more expensive, you raise your prices. All your competitors have the same cost pressure if they're making things the same ways as you are. If margins are really so low, either you personally are running your business the wrong way, OR there is a surplus of suppliers in that sector and the last thing it needs is more capacity to be added.

And this notion that you can't train people because they might leave after they get their training... Why would someone leave if you offered them competitive pay and good working conditions?

I suspect that some of these companies are in a condition I call "The Cheap Shop". They have a fixed pool of long time employees that are earning less than market rate. This pool of workers doesn't quit for greener pastures for some reason like union restrictions on seniority, or ignorance about pay. When the company want to add another person, they have to compete on the market for that labor, and what they find is the "new guy" is going to make more than the current rate in the "Cheap Shop". So instead of upsetting their little island of cheap labor, they don't hire anyone and try to get by with OT and just keep looking for that unicorn to show up. Or they go on the news and say they can't find the skilled labor they need and want someone else to do their training.

If they have profitable work if they had more capacity, they're train people, as I've done at the companies I've worked, anything else is just wishful thinking like "I could sell a boat load of thse dollar bills if I could just find another supply of them for 75 cents..."

Fifteen years ago the local University complained to me that their engineering program was losing people . . . to finance. Easy money was the rule of the day, and now that these people are in the companies they choose to milk instead of build their "wha-wha-wha" is falling on deaf ears.

I spent six year training and doing in the US Navy, but because I don't have my name on a sheet of paper I'm "Unemployable."

The true irony of this argument is that the new fangled technology is built on the old, so most people who are willing to do the job, for far less pay than they are worth, only do need refresher training. However every job I've ever had required me to learn it "their way" on "their machines" so some sort of turnover training was always required anyway.

Now the real problem is that we value people with dollar signs instead of human values - depreciating dollars mean depreciating people. Easy money is a lie, and so is the American Dream in the mire of greed commonly called business. So dream on because a dawning of truth always arrives too late.

I can't believe the lack of Critical Thinking in the Professor's comments. Does he really believe that a week of ramp up time or training will qualify a person to operate a half to million and a half dollar multi axis CNC machine tool?

Does he believe that a buck or two an hour is what is preventing employers from hiring people qualified to operate a million dollar profit center? Do they teach Opportunity cost at Wharton? I can assure you that our small business men and women can do that math. Even at the depths of the recession in 2008 and 2009 there were plenty of ads for Machinists in most major metro papers around the country.

Expecting an employee to add value from day one is no sin. It is built into the cost structure of manufacturing. No OEM wants to pay for anything that does not add value. There is no room in the prices paid for goods today to cover training costs or training failures. Surely they know that at Wharton. Cutting to short sound bytes did no one any service in this piece.

Perhaps the professor would like to know that the parts produced by that one week of experience trainee were installed on the airplane that he is flying in? or the antilock brake system in his car. Or the airbag inflator. Or that the trainee that operated the machine that made the bone screw implanted in a family member didn't really have the experience after that" one week of ramp up time" to recognize the burr that they left on the part due to inexperience.

Consumers and OEMS have created a world where 100% On Time and Zero Defects is what they get from 'ordinary suppliers.' In such a world, why would an employer open themselves up to risk of using unprepared untrained people?

Ms Miller, to her credit, through the President's Job Council, helped to create the Right Skills Now program to give math qualified people the skills needed for entry level CNC operation. I can't understand how your reporters missed this HUGE aspect of this story.

Normally I'm a fan but I think this story missed the mark.

I see your point, but I'm not so sure you have to be a genius to do so. Right now, I am in a 6-month fast track Machinists Certification Program and was a little encouraged by the fact that our online courses were not offered in Spanish, but, then discouraged to find them in Chinese!!! Even one of the instructors has conceded that once we complete the necessary training to become proficient Machinists, we will probably only be in demand for maybe 10 more years. Also, a friend of mine has made the observation that while you need 1 to 1 for a milling machine, 1 to 1 for a lathe...with a CNC Machine you can theoretically have 1 to five of them or more!!! Yes, tighter tolerances mean higher costs and more skill to produce the part. However, those skills can be gained through observation and tenacity. I think the program I'm in is what you are referring to...and I've got news for you...About half this class can barely add and subtract or read, yet they can read a micrometer or calipers, and most of them are completely failing the tests; but I know they will still "pass."

What you have here is another manifestation of the focus of management on short-term profits and the conservative war on labor, especially unions.
I've watched this in our field from the standpoint of a professional trainer and member of a professional society for the last 30+ years.
Have none of the current managers in companies ever heard of apprenticeship programs? All those unions you have been trying to destroy were the ones running apprenticeship programs that prepared workers so you could train them to become productive after a few weeks of in-house training.
Didn't you think of this when you laid off your trainers in the last recession? Or shut your training facilities and offload training to your suppliers?
This is just more evidence that many managers at American companies are overpaid incompetents who only understand how to maximize quarterly results and are clueless at running businesses.
And many fit the description of Dan Ariely's book on "The Honest Truth About Dishonesty" reviewed today on Marketplace - everybody's doing it so I can too! (http://www.marketplace.org/topics/business/dishonesty-financial-world)

There needs to be more aof a public/private strategy to organize alternatives to the general education that is causing the ever increasing Gap, and employers should contribute to this- perhaps in groupings of similar industries. Moreover, apprenticeshp training, technical and Trade school training needs to be valued as much as academic and theoretical training. This is the case in Switzerland- which has a good education and training system. Review it briefly here http://www.about.ch/education/index.html.


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