U.S. manufacturing, including aerospace, is feeling the impact of the shortage of skilled manufacturing workers, such as precision machinists and tool and die makers. The problem is most severe for the smaller shops, which cannot afford the higher compensation made possible by the brand premium of established OEMs. As the smaller companies weaken, the OEMs will find that their domestic outsourcing opportunities decline and the "farm teams" that provide many of their future workers are no longer effective.
The statistics are overwhelming. The National Association of Manufacturers (NAM) 2005 Skills Gap study found that about 40% of manufacturers had their ability to serve customers impacted by the shortage of valuable skills. Only 35% of Scientists and Engineers that responded expect shortages over the next three years, compared to 80% of Skilled Production respondents. Membership surveys by the National Tooling & Machining Association (NTMA) and Agie Charmilles Corporation in 2005 and 2006 showed that the number of job openings for skilled manufacturing workers equals between 5% and 10% of current employment of such workers. The shortage is primarily in the high skill categories. A March 2006 study by economists Richard Deitz and James Orr of the Federal Reserve Bank of New York showed that from 1983 to 2002, the high-skilled manufacturing workforce grew by 37% (1.2 million), while the low- and mid-skilled manufacturing workforce shrank by 22% (3.3 million). Aerospace needs the highskilled group to keep growing, but we are not providing enough recruits and training.
I spoke with a Senior Procurement Manager at a booming manufacturer of jet planes. He mentioned that it is very hard to find 5-axis aerospace machining capability in the U.S. Any increase in capability requires machines, money and skilled labor. The machines are clearly available, (anyone seeking one can email me!).
The world is awash in liquidity, as evidenced by massive private equity deals. The shortage is in the skilled manufacturing workforce.
A lot of the components for Boeing's Dreamliner are being machined offshore. I believe that at least part of this off-shoring is due to the lack of available skills and machining capacity in the U.S. In the short run, offshore work undoubtedly makes sense for Boeing and other manufacturers. In the long run, as the machine shops and the OEMs hollow out, the industry and our country lose critical capability and the capacity to respond to surges, for example to a longer-term massive military commitment.
The shortage of precision machinists has many causes. I believe that "it takes a village to make a precision machinist." In the 1700's, the youth in a village would see a billet converted by the blacksmith into a plow or a tool. Today, the design of parts, production of tools, machining or molding of components and assembly of final products take place in very large specialized facilities around the world. Today's youth don't enter the facilities, and even if they did or had a relative that worked at one, a good knowledge of that facility would represent only a small part of the intricate manufacturing process by which one product is made. In contrast, our society is exposed to service providers in real life, daily and on television, continuously. No wonder parents and guidance counselors guide students towards four-year degrees, typically in liberal arts, and away from manufacturing.
Some of the societal bias against manufacturing stems from a belief that manufacturing will continue to be off-shored and that services represent a safer career choice. My analyses show that services that can be off-shored—for example accounting, law, radiology, architecture, etc.—are more at risk than manufacturing. Manufactured products have the advantage that the costs of capital, machine tools and material are roughly the same worldwide, the pipeline is long, and the products are subject to duty and freight charges. In contrast, service is almost 100% labor and the service is transmitted back and forth, almost for free, instantaneously over the internet. I conclude that off-shored services produce about 1.5x as much savings as do off-shored products.
A 2006 survey by Pew Research Center shows that 81% of Americans 18 to 25 years old (Gen Next) believe that their generation puts a high priority on becoming rich, far above any other priorities. The skilled manufacturing trades offer a significantly above-average income and the opportunity to own your own company. The majority of NTMA member shops were founded or purchased by owners who started as apprentices or with similar manufacturing training. Shops can still be founded and grow rapidly. An excellent example is Advanced Engineering Technologies Inc. in Croydon, PA, founded in 1996. This shop responded to the demand for airframe components, including major assemblies from Eclipse Aviation, which required highquality 5-axis aerospace components at pricing that might have required offshore manufacturing. AET was able to compete by purchasing four high-end, 5-axis, high-speed Mikron milling machines and assembling a small, but highly talented, team of CNC machinists and programmers. Implementing the latest in machine tools and CAM Software, AET is able to provide products at or below off-shore pricing. AET benefits from reduced setup time by using 5-axis machine tools instead of the standard 3-axis machines. This produces much more accurate components, less scrap and a time savings of 50%. Besides the addition of high-tech machine tools (which cost the same in the U.S. as in all other locations in the world), AET continually works at educating its team to the world of hightech manufacturing. Working in a clean 5-axis aerospace shop is as glamorous as any other profession, and probably more psychologically rewarding than the professions portrayed on television. As a result, the company is booming, with volume up about 400% in the last 12 months and a steady stream of young people wanting to enter the high-tech manufacturing profession.
There are known Best Practices and promotional tools to aid in the necessary recruiting effort. Several of these tools are outlined below.
In Eau Claire, WI, Hutchinson Technology and Chippewa Valley Technical College place a joint ad in the local newspaper. Hutchinson seeks toolmakers starting at $20/hour. The College seeks students to learn tool-making and machining.
Mark Tyler, President of OEM Fabricators, Inc. in Woodville, WI, uses a chart showing the Manufacturing Career Plans by which workers can progress in his company, starting at the lowest levels and rising to senior management. Pictures of four employees, including Mark, and their individual career paths are shown.
NIMS (National Institute for Manufacturing Skills) provides skill standards that colleges and companies can use to develop accredited training programs by which individuals can obtain nationally recognized certificates. By the end of 2006, 13,383 NIMS credentials had been awarded.
In addition to EDM and high-speed milling machine tools, my company, Agie Charmilles Corp., provides a broad range of recruiting tools for manufacturing companies and schools/colleges. These tools include handouts, CDs and live presentations on the advantages of manufacturing careers, special prices for machines for schools, articles on the return on investment in training from the viewpoint of the worker and society, for tool and die makers versus English majors. At www.charmillesus.com/company/careers. cfm you will find 16 promotional aids from five trade associations and Agie Charmilles. I encourage you to obtain some of the material listed at the website or email me at info@agiecharmilles. us. I will help you find the material that best suits your needs.
If the current trends in workforce availability continue, the U.S. industrial base will hollow out and the standard of living for all Americans will decline as the dollar falls drastically to try to balance the trade deficit. Please join the effort to change the image of manufacturing in the U.S. and to recruit a world-class manufacturing workforce!