The United States, with GDP of $16 trillion in 2013, has had its share of ups and downs, but has become one of the leading countries in advanced technology. The Great Recession plunged the economy into a sliding curve with 8.7 million jobs shed and unemployment rates as high as 10%. So, the need for implementation of R&D and STEM had to be done to revitalize the U.S. economy.
Advanced manufacturing is comprised of using integrative and innovative technologies during the manufacturing process. The tech boom encompasses vast areas of the industries as it helps different industries improve productivity, lower costs, and develop smarter products. The large range of services provided by advanced industries is critical for economic gain. Advanced industries are required in just about every type of business. Whether it is the food packaging industry or cable network industry, products are being used which have been manufactured by advanced industries or a certain service is provided by those industries.
According to research from The Brookings Institution, Advanced Industries includes 50 industries constituting manufacturing, energy, and service, providing companies which covered 17 percent of the total GDP in 2013. America’s 50 Advanced Industries employed 12.3 million U.S. workers, which amounts to about 9 percent of total U.S. employment. The sector is known to employ 80 percent of the nation’s engineers, perform 90 percent of private-sector R&D, and generate approximately 85 percent of all U.S. patents. Advanced Industries also account for 60 percent of U.S. exports.
Advanced Industries is further categorized into three parts: manufacturing, energy, and service. The production of aerospace products and parts, foundries, and motor vehicle parts, among others, lie in manufacturing. Electric power generation and distribution, and oil and gas extraction lie in the energy sector, and companies which provide computer systems design, and architecture and engineering services are categorized in the service sector.
The manufacturing sector of Advanced Industries has been classified by the National Industry Classification System (NAICS) into five categories which are Chemical, Fabricated Metal and Product, Machinery, Computer, and Other manufacturing industries. The companies in the Other category include manufacturers ranging from Petroleum Refineries to Motor Vehicle Parts Manufacturing and Dental Laboratories.
Source: Conway Data
The figure above shows the pattern of growth in the five sectors of advanced manufacturing. The growth is a combination of new facilities being built and expansions taking place in the span of 5 years. According to the research by The Brookings Institution, advanced manufacturing industries are clustered in some metropolitan areas such as Grand Rapids, Michigan; Portland, Oregon; Wichita, Kansas; Ogden, Utah; and Toledo, Ohio which focuses heavily on advanced manufacturing pursuits. Grand Rapids, Ogden and Toledo specialize in motor vehicle-related manufacturing, whereas, Portland specializes in semiconductor manufacturing, and in Wichita, Kansas, the aerospace industry provides the bulk of the advanced manufacturing employment.
We can see the rise in chemical manufacturing in 2012 and a decline in 2013. The fabricated metal industry has also seen growth in the 5 years. The lowest growth of industries is in computer and electronic manufacturing. The reason behind this is the offshoring and relocation of production to other countries. The fabricated metal industry has also seen growth since 2009. The highest growth to-date is of industries in the Other category. Although the sector has seen limited growth in 2011, after 2011 there is rise in new facilities and expansions. The major factors contributing to growth are skilled workforce, rise in use of automation, and innovation.
Growth and expansion are consistent, but the United States is losing ground relative to other countries on measures of innovation performance and capacity. The major reason for this is the unavailability of skilled manpower. The skills gap is widening, according to an analysis done by Deloitte Services LP on data from U.S. Bureau of Labor Statistics and Gallup Survey, and over the next decade, 3.4 million manufacturing jobs will likely be needed. A study conducted by Deloitte and The Manufacturing Institute estimates 60 percent of these positions are likely to be unfilled due to the talent shortage. As a result, only 1.4 million out of 3.4 million positions are expected to be filled, implying that the U.S. manufacturing sector is likely to suffer a shortfall of 2 million workers over the next decade.
The progress in technology means workers need to update their knowledge and skills with change. This has strong implications on the need for improvement in the education system.
Adding more STEM workforce and new technology can improve efficiency and produce more in less time. Currently, outsized shares of workers working in advanced industries are in STEM occupations. Just over half, or 53 percent, of all advanced industry employees work in occupations that demand extraordinary STEM knowledge in one or more fields. Globalization and technological changes means that the education requirements of the advanced industries sector are rising, creating a significant skills challenge.
Many advanced industry employers report difficulties finding qualified workers. A study conducted by the Georgetown University Center on Education and the Workforce on Burning Glass online job ads data from 2013, Q2 showed that managerial and professional office and STEM occupations are the two most in demand within the online college labor market. Among the college educated, software developers are the most in demand. Among the 10 most in-demand occupations, there are four management occupations and three information technology (IT) occupations. The other three occupations are wholesale and manufacturing sales representative, registered nurse, and accountant or auditor.
The Brookings Institution’s 2015 report on advanced industries shows that, 60 percent of all job postings in advanced industries are for STEM workers, compared with 34 percent outside of advanced industries. The typical posting for an advanced industry STEM vacancy remains online for an average of 43 days compared with 32 days for a non–STEM advanced industry ad. In the economy, overall, ads are posted for an average of 35 days—a timespan driven up by continuously advertised positions in low-skilled and high-turnover jobs. Among advanced industry vacancies unfilled for at least 60 days, computer and mathematic positions are the hardest to fill. These jobs include software developers and computer systems analysts across the United States, 17,000 computer-related ads posted in the first quarter of 2013 lingered for at least 60 days on company websites, signaling, if not a structural shortfall in supply relative to demand, then a serious matching problem.
A number of other positions outside of computer occupations also go unfilled for long periods in advanced industries. These positions include architecture and engineering jobs, whose postings in advanced industries last for 47 days, on average. Advanced industry managerial positions are open for 43 days, on average. Job openings for installation, maintenance, and repair workers in advanced industries last 41 days, on average, and 47 days for ones that demand high levels of STEM knowledge.
The 2015 Manufacturing Institute and Deloitte Skills Gap Study, released in January, found that 84 percent of manufacturing executives surveyed agree that there is a talent shortage in advanced manufacturing in the U.S. Moreover, six-out-of-ten executives surveyed indicate that open skilled production positions go unfilled due to a talent shortage even when 80 percent of manufacturing companies are willing to pay more than the market wage rates for workforce positions reflecting this talent shortage. The U.S. education system does not graduate enough college students in STEM fields, nor does it adequately prepare children to attain fluency in mathematical and scientific concepts.
The path to growth needs a stable flow of skilled labor. Overall development can only be achieved when private, public and government sectors gather and devise plans and policies that can increase skilled labor for advanced manufacturing market. Training and skills development are crucial to deal with changes in technology.
A good example of private public partnership is a program launched by Pacific Gas & Electric (PG&E), called PowerPathway™, to ensure the training and development of the next generation of utility workers. PowerPathway™ is a collaboration among local colleges, the public workforce development system, and internal PG&E partners to enlarge the talent pool of qualified candidates for entry-level opportunities. PowerPathway™ utilizes PG&E training and educational resources and shares those resources with community colleges and community-based training partners. These partners develop industry-informed career pathways, training, and curriculum in response to growing energy industry and company workforce needs. Four to six courses are typically available in a calendar year and offer three primary educational outcomes which are soft skills training, test preparation, and industry informed technical training.
From 2008 to 2014, PowerPathway™ has trained 520 students through 21 training programs, including 311 military veterans. Of those trained through 2014, over 82% have been hired into industry-related positions, with half of those at PG&E.
Addressing skills gap should be a major focus of manufacturers to meet current and future advanced manufacturing requirements. They must also develop and engage their existing workforces. According to the Manufacturing Institute and Deloitte Skills Gap Study, seven out of ten executives reported shortages of workers with adequate technology, computer, and technical training skills. The executives see developing their workforces as the most effective way to remedy the problem, with 94 percent agreeing internal employee training and development programs are among the most effective skilled production workforce development strategies, and 72 percent agreeing involvement with local schools and community colleges is effective. This reflects an understanding of the multidimensional nature of the skills gap as manufacturers see the need to develop the talent pipeline both in their companies and communities.