TMR Industry Report: Where Have All the Workers Gone?

January 12, 1998

Industry Report

Where Have All the Workers Gone?

Finding an adequate supply of qualified employees is the number one issue for American manufacturers, says recent NAM survey.

Nearly nine in ten manufacturers (88%) are experiencing a shortage of qualified workers in at least one job category, according to a survey of 4,500 manufacturers of all sizes conducted by the National Association of Manufacturers (www.nam.org) and Grant Thornton LLP. The survey is a follow-up to a 1991 NAM survey that first documented a serious skills gap across the country.

Other key findings include:

60% of manufacturers report that current workers lack basic math skills.

More than half (55%) find serious deficiencies in workers' basic writing and comprehension skills.

63% say that employees lack basic job skills such as arriving on time and staying at work all day.

Almost half (48%) believe too many of their workers lack the ability to read and translate drawings, diagrams and flow charts.

More than two-thirds are having difficulty improving productivity (37%) and upgrading technology (36%) due to employee skill deficiencies.

Half have found it difficult to empower employees to take on more line responsibility.

The new survey shows that while employers are investing more to educate and train their employees, the shortage of skilled workers has not improved since 1991. Moreover, a stronger economy fueling high demand for U.S. products and skilled labor, coupled with low unemployment rates and a slowdown in labor force growth, have made the lack of qualified workers an even more pressing problem today.
"The shortage of skilled employees is not a distant threat any more. The skills gap is now catching up to us and could threaten the amazing growth and productivity gains of the past decade," said Earnest Deavenport, chairman and CEO of Eastman Chemical and new chairman of the NAM. "Finding an adequate supply of qualified employees is the number one issue for American industry today."

According to the survey, manufacturers are making major efforts to close the skills gap:

Almost all (96%) currently provide some education and training for hourly employees.

Nearly half (47%) spend two percent or more of payroll to train their shop-floor and other hourly employees, compared to 1991, when companies were spending an average of less than 0.5% of payroll.

Two-thirds of the companies provide remedial training programs for employees in various subjects, including reading and writing, math and problem-solving skills.

Of the unionized firms surveyed, less than 20% say their unions provide any education and training to their members.

"Smart and skilled people are key to solving problems and boosting company performance," said Deavenport, who urged more companies to partner with their local schools, where possible, to help prepare students for the demands of today's technology-driven workplace.
"With only one in five manufacturers giving passing marks to their local schools, it is clear the public school system requires radical restructuring," said NAM president Jerry Jasinowski. "Companies can contribute to K-12 improvements with initiatives such as company/school partnerships, equipment donations, co-op programs, summer jobs programs and tutoring/mentoring programs.
"The smartest companies know that skilled workers are their most precious resource," Jasinowski continued. "Still, we need to see firms do more to promote lifelong learning by making it part of the company culture, providing incentives to learn, creating innovative learning systems and making the necessary resource commitment. The federal government, for its part, needs to consolidate its hodge-podge of training programs and provide better incentives to train workers on the job, including making permanent Section 127 tax benefits for employer-provided education."
"The survey shows that manufacturers are making impressive efforts to retain their best and brightest employees by contributing to the retirement accounts of hourly employees (78%), offering bonus (54%) and pay-for-performance plans (35%), encouraging employees to take non-job-related courses (43%) and paying the costs of these courses (56%)," said Deavenport.
"American employees hold the key to our competitive edge in the 21st Century. Employers must continue to lead the way in developing a high-performance workforce built on a foundation of skills, mutual trust, teamwork and incentives for excellence," Deavenport concluded.

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