As discussed in previous posts, the manufacturing skills gap is a critical risk that demands effective risk management strategies. The real world impacts that can be felt from this risk include:
- Increased wage costs
- Production inefficiencies
- Increased workers’ compensation expenses
- Inability to meet customer demand and potential loss of market share
- Inability to expand
- Decreased R&D effectiveness
In addition to the skills gap, manufacturers face numerous other risks arising from factors that include new regulations, geopolitical shifts, supply chain vulnerabilities, and environmental impacts. Added on top of that are the traditional risks that face all industries such as market risk, disruptive competitors, technology obsolescence, and health/safety risks. Collectively, manufacturers must address a larger number of risks, that change more frequently, and are more interconnected than most industries.
As covered in more detail in a recent post, executives surveyed as part of a 2015 skills gap report published by Deloitte Consulting LLP and the Manufacturing Institute indicated that “maintaining or increasing production levels (in line with customer demand)” was at the top of their list of concerns related to the labor and skills gap in manufacturing.
Given studies showing that younger, less experienced workers are more likely to experience higher rates of injury than their longer-tenured counterparts, as well as those indicating that extended working hours and overtime schedules are often accompanied by a rise in injury hazard rates, manufacturers should also be aware of the potential impact the labor and skills gap can have on workplace safety.
The well-documented skills gap in manufacturing, already critical, is poised to get much worse. In Deloitte Consulting LLP’s 2015 Skill Gap Study, 82% of respondents believe that the skills gap will impact their ability to meet customer demand. At the time, 6 out of 10 positions remained unfilled due to the skills gap. The authors note, “This clearly indicates there are not a sufficient number of workers in manufacturing to fill these positions.” Demographic trends are making this crisis exponentially more challenging.