Closing the Manufacturing Skills Gap: How Manufacturers Can Leverage Technology to Mitigate Workforce Challenges

Deb Geiger, Aegis Software

As a driving force for economic development, the manufacturing industry catalyzes efficiency, optimization, and productivity. But despite manufacturing’s pivotal role, the industry is grappling with a critical challenge that threatens its growth and stability: the widening skills gap.

According to this Deloitte and The Manufacturing Institute report, a staggering 94% of executives acknowledge a noticeable skills gap in the US workforce. As of June 2023, there’s a shortage of almost 600,000 US-based stable manufacturing jobs. If left unaddressed, the manufacturing skills gap could result in 2.1 million unfilled jobs by 2030, with the potential to cost the nation $1 trillion in 2030 alone. These challenges persist worldwide as well—the global manufacturing labor shortage could exceed 8 million people by 2030. In the recent World Economic Forum Future of Jobs Report 2023, almost three in 10 manufacturing and service firms reported production constraints in the second quarter of 2022 due to a lack of workers.

This skills deficit has far-reaching implications, impacting customer demand, technological advancement, productivity and output, product quality, customer service, innovation, and international expansion. So, what exactly can be done to close this widening gap in the industry? This article explores the progression of technology in manufacturing, the effect of poor knowledge transfer on the skills gap, and how the right systems and technology can enable the connected worker—driving tangible progress in narrowing the gap for the entire industry.

The Tech Evolution and Growing Skill Requirements

The skills gap doesn’t just affect individual workers; it has a ripple effect on manufacturing operations as a whole. Delays, disruptions, and increased production costs are only a few of the direct consequences of insufficiently skilled or trained workers. A study by Accenture reveals that 64% of manufacturers believe the skills shortage has negatively impacted their ability to meet customer demand.

As manufacturing continues to make technological strides, the skill requirements for the workforce have similarly risen in technical complexity. Industry 4.0, characterized by integrating smart technologies, automation, data exchange, robots, and smart machines working alongside people, demands a workforce equipped with digital literacy, data analysis skills, and a proactive mindset. Preparing the workforce for this evolution is crucial to bridging the skills gap.

These digital shortcomings are substantiated by a Deloitte and The Manufacturing Institute report, which specifies several functional areas that are most impacted by the skills gap. These include:

  • Digital skills: Digital skills encompass a range of competencies related to using digital tools, software, and technologies. In manufacturing, this skill set most often pertains to data analysis, process automation, and the operation of digital systems.
  • Technology use: Technological proficiency is a driving force in modern manufacturing. Using advanced machinery and other cutting-edge technologies is essential to enhancing efficiency, precision, and overall productivity.
  • Supply chain management: In the manufacturing industry, supply chain management involves coordinating raw materials, production processes, and distribution networks. Effectively managing these processes ensures timely production, cost reductions, and operational efficiency.
  • Problem-solving capabilities: In manufacturing, the day-to-day often involves overcoming complex challenges or unexpected setbacks. Because of this, problem-solving skills are essential for identifying and addressing issues in production, quality control, and process improvement.

Compounding this skills shortage is an aging workforce that will soon result in an institutional knowledge gap, which poses significant challenges in onboarding and retaining talent. According to Deloitte, 2.7 million baby boomers are expected to retire by 2025, creating a vacuum of experience and skills in manufacturing that needs to be filled. So not only does the industry need to attract new talent who can efficiently fill the skills gap, but it also needs to ensure that knowledge is adequately transferred from retiring workers simultaneously.

The Struggle for Information: Transferring Knowledge Between Workers

As the manufacturing industry witnesses the retirement of a substantial portion of its workforce, a pressing challenge emerges in the form of knowledge capture. The accumulated expertise and tacit knowledge held by veteran employees become vulnerable to loss, posing a threat to the continuity of efficient operations. The retiring workforce often possesses a wealth of experience and insights gained over years of service, yet the means to effectively capture and transfer this knowledge to the incoming generation of workers becomes a complex task. The lack of comprehensive knowledge retention strategies can lead to a significant skills gap, hindering the seamless transition of critical insights and best practices.

Simultaneously, younger workers entering the manufacturing sector encounter their own set of challenges. The conventional perception of manufacturing as a labor-intensive sector might discourage certain individuals from considering opportunities within the industry. Moreover, the perception of manufacturing jobs as being disconnected from modern technology and innovation can deter younger individuals who are more accustomed to digital environments. In addition, the fast-paced evolution of technology within the manufacturing landscape may overwhelm new entrants, making it essential for organizations to provide comprehensive training programs to bridge the gap between the skills these workers possess and those needed for modern manufacturing processes. Overall, the industry faces the dual challenge of preserving valuable institutional knowledge from retiring workers while actively engaging and preparing the younger generation for the evolving demands of contemporary manufacturing.

To mitigate these issues in information sharing, the efficient management of systems, training, and tools is truly vital for maintaining a well-informed and agile workforce. This allows knowledge to be seamlessly transferred as the makeup of the workforce changes. Striking the right balance between centralized (within the organization) and decentralized (individual) knowledge-sharing efforts is key, as this ensures information is up-to-date, accessible, and relevant while preventing it from being lost in personnel changes.

Collaborative platforms, learning initiatives, and more digital-focused teams are powerful tools for managing and transferring knowledge and can help manufacturers achieve this balance. However, their efforts are often hindered by outdated systems and a lack of integration in the manufacturing environments they work in. Investing in better processes and systems that facilitate collaboration, version control, and real-time updates can empower digital workers to contribute more effectively to knowledge management.

Technology’s Impact on the Connected Worker of Tomorrow

The right technology solutions can bridge the skills gap by enabling efficient work processes and facilitating skill development in a scalable way. Leveraging a composability approach in manufacturing solutions enables the creation of personalized and real-time, context-aware work instructions that can dynamically adapt to changing production variables, reducing downtime, and preventing costly mistakes. Composability, as a system design principle, revolves around the inter-relationships of components, allowing for their selection and assembly into diverse combinations that meet specific user requirements. Embracing composability can empower the connected worker and transform their interactions with manufacturing execution systems (MES), real-time work instructions, IoT integrations, and personalized user interfaces. Because of this, the connected worker can now operate in an environment where instructions align seamlessly with the evolving context, enhancing overall operational efficiency. This vast access to contextualized data gives operators actionable insights to facilitate informed decision-making. It allows connected workers to respond proactively to emerging trends, identify areas for improvement, and drive continuous innovation.

In addition, harnessing the true potential of automation and other advancements plays a pivotal role in managing knowledge and improving efficiency within the manufacturing sector. Implementing smart knowledge management systems that leverage artificial intelligence (AI) can streamline information retrieval, reduce errors, and enhance overall productivity. For example, AI-driven systems can analyze historical data to predict future challenges, enabling proactive decision-making. Manufacturers at the forefront of the industry already know this. According to a study by McKinsey, leading manufacturers are 25% more likely to leverage advanced analytics and artificial intelligence in their operations.

But staying ahead in an evolving industry requires more than technology—it demands a strategic solution that puts people first. Navigating the transition to Industry 4.0 involves adopting new technologies and defining a human-centric approach to connected frameworks.

According to a report by PwC, successful manufacturers are 50% more likely to prioritize human experience in their digital transformation initiatives. Creating frameworks that enhance the worker experience is critical for attracting and retaining top talent. These frameworks should prioritize continuous learning, collaboration, and a supportive work environment, combining the best technology and the human workers who power it. The merging of human and machine collaboration creates an exciting environment that can even be leveraged during the recruiting process, providing multiple career paths that may not have been possible before. This path empowers workers and positions them for success from day one.

Leveraging an MES that Drives Efficiency to Shrink the Skills Gap

Tackling the manufacturing skills gap requires a multi-faceted approach that combines strategic workforce planning, technological innovation, knowledge sharing, human-centricity, and a commitment to a collaborative work environment. Addressing these requirements starts with ensuring the right system is in place to enable more efficient and connected operations. Modern Manufacturing Execution Systems (MES) provide real-time insights, intelligent analytics, and a composable approach to designing personalized user experiences to bolster efficient workflows, streamline knowledge management, and enhance worker capabilities. It should give the teams tailored information and real-time feedback that enhances decision-making and productivity, enabling manufacturers to not only bridge the skills gap—but thrive in an era of constant change.