Hiring Difficulties for Manufacturers

In just the last couple years, manufacturing employers in Minnesota have seen the labor market suddenly tighten for workers so much that they are shifting from "buying" talent to "making" talent. This is the key conclusion of a new report by the Minnesota Department of Employment & Economic Development. My counterpart there in Minnesota, Alessia Leibert, has put together a series of fascinating and insightful reports about the labor market and the behavior of employers. These reports are often based on anecdotal comments by business leaders and their survey responses to labor market conditions. That's not the hardest of data but it is eye opening. Leibert points out that two-thirds of manufacturing job vacancies in Minnesota are classified as "hard to fill." Minnesota manufacturers seem to be getting proactive and creative in their search for workers, particularly by increasing their internal training efforts. "Hiring difficulties are not synonymous with skills gaps. When employers were asked to identify the causes of their hiring difficulties, only 14% of cases were attributed exclusively to the lack of skilled applicants for current vacancies,” Leibert wrote in her report titled: “Hiring Difficulties in the Manufacturing Sector.” Based on the survey responses that Leibert and her co-workers in the labor market information department at the Minnesota labor department, the majority of hiring difficulties were caused by a mix of skills mismatches in the available workforce, general hiring difficulties, an job candidates’ “lack of work ethic or interest in a manufacturing career.” The toughest jobs to fill are 1) Machinists/CNC Machinists 2) Machine Tool Operators 3) Welders 4) Production Supervisors. Specific comments by hiring managers (unnamed) also spice up this report. “The job is not that specialized. It’s more about the work ethic, the willingness to work from 10 to 14 hours a day, the willingness to live in a small town and the low pay,” said one hiring manager. And those are critical points: Many of the employers are struggling the most to fill jobs are in more rural areas while the more trained, experienced or available workers are residing in the urban areas. Similarly, those rural manufacturers are often paying less than similar jobs in the big cities, so convincing an out-of-work manufacturing worker to move from the Twin Cities to rural Minnesota to take a job that pays less than he was expecting (in a community with a lower cost of living) is not an easy sell. “Failing to account for these factors may lead employers and policymakers to misdiagnose the problem of hiring difficulties as a lack of qualifications along – skills gap – and to prescribe policy responses that address the symptoms rather than the real causes of hiring difficulties,” Leibert wrote. The job applicants who do apply for manufacturing job openings seem to have either inadequate hands-on training or inadequate experience. These gaps may be best filled through employer-provided training, she wrote. “We are looking for a mixed skill set: good mechanical aptitude, physical energy, and the ability to set up and operate a multi-axis lathe,” one hiring manage said. “You can’t come out of school and be able to run these machines. It’s a skill usually built through mentorship programs in companies that stay current with technology. Some people can pick it up after 3 to 5 years, others after a decade.” This leads to the great questions: How do we encourage employers to be patient with worker learning? How do we encourage employers to think long term in a business climate that is short-term focused? Also, education requirements are a self-induced constraint. “Expecting high-school educated external candidates to bring a mid-level skill set clearly presents a challenge for employers, especially after the disappearance of machine shop classes from K-12,” Leibert wrote. She cites a few examples of unnamed employers who are acknowledging the education issues in unique ways. One employer has created an “internship” program where a student worker can spend the summer working at the firm, which in turn pays half the tuition of that student at a local community college. With community college tuitions relatively inexpensive, the employer makes job offers to the best summer workers who graduate and negotiate pay and further training from there. Another company acknowledges that new production line managers cannot be expected to have superior people skills or management skills just because they were great line workers and is trying to get management training for these new managers to become skilled coaches. And another employer openly states that it is one of several manufacturers that has lowered its hiring requirements, particularly work experience requirements, while also increasing training and even incorporating an apprentice program with the local community college and university. As Leibert points out: “As the labor market tightens and competition among firms for qualified workers increases, employers are clearly more willing to hire inexperienced candidates and address their skills gap through training, indicating a shift from ‘buying’ to a ‘making’ approach to skill.”