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Human Capital: Manufacturing and Logistics’ Biggest Challenge
“While low-skill (-25%) and mid-skill (-18%) jobs declined over last 20 years: “Employment in high-skill manufacturing occupations has risen 37%, an increase of roughly 1.2 million jobs. High skill jobs were the only source of job growth in the U.S. manufacturing sector during this period.” - Federal Reserve Bank of New York
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Manufacturing had the largest gap between job openings and new hires in 2009-2010 – showing the challenge of finding skilled applicants.(Wall Street Journal, US Dept of Labor)
80% of manufacturers list ‘finding qualified workers’ as their top concern – NAM employer survey
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Even more than the rest of the nation, Indiana falls short in supplying qualified workers
The 2010 Manufacturing and Logistics Report Card compares the state of Indiana’s AML industries with those of surrounding states: Human Capital is our lowest grade; Productivity follows Human Capital.
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• Recently, the Indiana Chamber surveyed 218 Hoosier employers for its Ready Indiana initiative
• A strong plurality of respondents (37%) in AML
• Key findings were consistent with the Conexus survey response:– Majority (86%) ranked employee skill weaknesses as somewhat/a
definite/severe problem for their organizations; 75% increase over 2009
– Applied skills, i.e. communication, problem solving most lacking in employees
– Nearly half say most current employees would benefit from additional training
– Training is seen as an ‘in-house’ issue, with limited awareness of/preference for industry certifications/credentials
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Conexus Employer Survey
• Conducted February/March 2011• Conducted by Conexus and Regional WorkOne partners in
Southwest, Southeast, Northeast, and Central Indiana• Selective survey approach
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Who Responded?
12.7%
9.2%
43.4%4.0%
4.6%
26.0%
Transportation
Logistics
Advanced Manufactur-ing
Energy
Aerospace
Other
134 Indiana employers from the following industry categories:
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Size by Revenue and Headcount
$20m-$50m; 21.2%
$5m-$20m; 18.9%
<$5m; 10.6%
>$50m+; 49.2%
0-100; 25.2%
101-250; 19.4%
251-500; 18.7%
500+; 36.7%
Annual Revenues Number of Employees
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Employers still hiring unskilled workers and shouldering the in-house training burden
What is your minimum educational requirement for entry-level employment?
High School Diploma
GED
No Requirement
Other
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%
Less than 10% of respondents require more than a high school diploma.
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High school completion and company-specific assessments valued far above industry credentials
Which of the following indicators of work readiness for entry-level employment does your company consider valuable and accurate?
Work experience 22%High school diploma 21%GED 17%Company-specific assessment 10%Associates degree 9%Bachelors degree 9%Industry-recognized certification/credential 7%WorkKeys 5%No indicator of work readiness is required 1%
Certifications not routinely utilized by respondents as a hiring indicator.
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So it’s not surprising that employee readiness is considered a problem…
Not a problem, 32.6%
Somewhat a problem, 61.4%
Definitely a problem, 6.1%
Somewhat/Definitely a Problem: 68%
…as an outdated approach creates issues.
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Employers agree that a majority of their employees need more training
What percentage of your employees would benefit from targeted training for their job?
53% say half or most of their employees need additional training
Most About half About one-fourth Less than 10%0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
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Skill Needs are Across the Board
But employers show less confidence in industry certifications…
Job-specific skills (via on-the-job training) 25%Applied work skills (communication, problem-solving, leadership...) 23%Basic skills (math, reading, writing, language) 20%IT skills (computer basics, advanced applications, telecommunications) 14%Job-specific skills requiring verification/testing - certification 12%Other 6%
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Some Usage of Industry Certifications
Of the 56% of respondents who prefer some certification for certain jobs within their organizations, the AWS, MSSC, APICS and SME are most familiar.
Other 27%American Welding Society 22%Manufacturing Skills Standards Council 16%Association for Operations Management (APICS) 15%Society of Manufacturing Engineers 14%National Institute of Metalworking Skills 4%National Career Readiness Certificate 1%
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The most commonly-used certifications are thought to add significant value…
Manufacturing Skill Standards Council (Production Technician/Logistics Technician)
Society of Manufacturing Engineers
American Welding Society (Certified Welder)
National Career Readiness Certificate
National Institure of Metalworking Skills
Association for Operational Management (APICS)
0% 20% 40% 60% 80% 100%
Good/Outstanding Require Training/Lack Key Skills
Certified Worker Performance:
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But there are basic challenges to their adoption:
• If you have NOT used any of the certifications mentioned, why not (check all that apply)?
– I don’t know enough about these certifications – 36%
– These certifications don’t reflect the skills I need – 33%
– Not enough applicants have these certifications – 22%
• Awareness, availability and relevance all must be addressed
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A majority would value a more consistent, national system of industry certifications
Not Important
Neutral
Important/Very Important
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
How important would it be to you that certifications were part of a consistent national system with industry-recognized standards?
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Other Skills Seen as Important
Very Important/Important NeutralNot Important
Please rank the importance to your company of other skills/topics that could be covered as part of a national skills certification system:
Inventory/Production Control
Regulatory Compliance
Safety/Environmental
Six Sigma
Lean Manufacturing
Total Quality Management
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Indiana AML Companies are optimistic about the future
Decrease
Not sure
Stay about the same
Expand
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
In the next 12-24 months, do you believe the workforce in your organization will:Expand – 57%
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Summary of Findings• Employee readiness is a major issue • Companies still not engaged in industry-wide solutions – in-house training
still emphasized• Existing training programs/certifications not recognized as leading
indicators for hiring– Lack of awareness– Attitude that “certifications do not reflect the skills I need”
• However, industry beginning to see the need for a new approach – as skill demands and training costs rise, need a competitive solution
• A national system of relevant, consistent credentials would be well-received
• Certifications must be crafted with ongoing industry feedback and promoted to employers
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Breakout Discussions1. What are the best ways to engage employers in the credentialing
process, increasing meaningful input?
2. Can Human Resources procedures be reshaped to emphasize and create a preference for industry-approved credentials? How can this best be accomplished?
3. Has the time come for regional training centers? Should specialized high school courses be designed for technical/vocational training?