Overcoming the Skills Gap: A Critical Challenge for Manufacturing Companies

What Is a Skills Gap in the Manufacturing Sector?

Skills Gap is a colossal challenge that haunts our modern-day manufacturing sector. The term “skills gap” is becoming a buzzword that professionals in the manufacturing sector hear more and more often.

Government agencies, research institutions, and industrial federations are constantly alarming us of the existing manufacturing skills gap, which is expected to get even worse in the future.

Yet, what is a skills gap? And is it as frightening as it seems? In this article, we will introduce you to the skills gap phenomenon, its impacts on the manufacturing sector, the basics of skills gap analysis, and applicable solutions for closing a skills gap within an organization.

Understanding Skills Gap in the Manufacturing Sector

What Is a Skills Gap?

Skills gap refers to the mismatch between the skills needed to perform a job in comparison with the skills that a worker has. On the macro level, this mismatch means that many job positions can’t be filled, as there are not enough available workers with the required skills for these job openings.

A skills gap virtually exists in all sectors of our modern economy. Technological disruption is the most significant cause of the ongoing skills gap issue. Many workers are simply not trained with enough skills that keep up with the rapid technological advancement.

The OECD estimates that 1.1 billion jobs worldwide will be “radically transformed” by technology within the next decade. According to a World Economic Forum report, 42% of all business-related tasks will be fully automated by 2027. The same report projects that 83 million jobs will be lost and 69 million new ones will be created by 2027 due to various disruptions.

Hence, many workers will find themselves obsolete, as their work will be automated in the future. At the same time, numerous new jobs will be created, with an insufficient number of qualified workers to fill these new jobs.

Skills Gap in the Manufacturing Sector

The manufacturing sector is hit particularly hard by the skills gap issue. Many factories are unable to find workers that fulfill their skills requirements. According to a Deloitte survey, around 2.1 million US manufacturing jobs will be unfilled in the 2020-2030 period due to the ongoing skills gap crisis.

Furthermore, according to a Eurofund research report, many EU countries’ manufacturing sectors are also experiencing similar labor market mismatches and employee shortages. Hence, the skills gap problem in the manufacturing sector is indeed severe.

Root Causes of the Skills Gap in the Manufacturing Sector

Multiple factors cause and worsen the skills gap problem in the manufacturing sector. Some of the common factors are:

An Aging Workforce

All employees, at some point, will eventually retire. When an employee retires, the employer must immediately find a replacement to keep their operations running smoothly. However, finding an equally skilled and experienced employee who fulfills the ideal criteria in the manufacturing sector is always challenging.

Citing the previously mentioned Deloitte survey, there will be around 4 million new job openings in the US manufacturing sector within the 2020-2030 period. 2.5 million of these openings alone are from retiring incumbent workers. At the current rate, only 1.9 million jobs out of these 4 million openings are likely to be sufficiently filled, the survey suggests.

Insufficient STEM Graduates

An inadequate number of STEM graduates is another factor that causes a tech skills gap in the manufacturing sector. In the US, there are insufficient workers with an education and training background in Science, Technology, Engineering, and Mathematics (STEM), as this Congressional Report informs. Europe is also experiencing a similar shortage of STEM graduates, according to a recent European Commission report.

Workers with a STEM background are highly sought after in the manufacturing sector. Occupations such as mechanical engineer, full-stack developer, automation specialist, and many others require a strong STEM background. This education and worker demand mismatch significantly contributes to the skills gap in the manufacturing sector.

Rapid Technological Advancements

Due to the ever-changing technological disruptions, our working world is constantly evolving. Many technologies and tools that were the norm in the past decades are already considered obsolete today. The fax machine is an excellent example of this technological obsolescence.

In addition to tools, skills can be obsolete as time progresses. For example, in the past, handling a company’s employees’ payroll had to be done manually. Human resources officers manually compile and keep track of all employees’ payroll data in a spreadsheet and manually transfer their salaries to each employee’s bank account.

Yet today, thanks to various software in the market, the task of organizing employees’ payroll can be fully automated. Prior to operating such time-saving software, human resource officers must be properly trained to close the tech skills gap.

Resource-Intensive Training

As technology continues to advance, new opportunities and challenges continuously emerge. Thus, organizations must constantly train employees to keep up with the latest developments. However, organizing training sessions costs precious time and money.

According to a recent survey by Training Magazine, companies in the US on average spent USD 1,207/employee in 2022 for training. These sets of training took, on average, 62.4 hours/year. Unfortunately, not all organizations can afford to spend so much funds and time to train their employees, especially among smaller companies.

Skills Management Difficulties

Besides external factors, paying attention to internal factors within an organization is equally important. Regularly keeping track of your employees’ skills is a challenging task.

Not every project manager and human resource officer has the ability, time, or willingness to create and manage a fully functional skills matrix. It might seem trivial, but not having a functional skills matrix is a big mistake.

As a result, it’s impossible to fully grasp an organization’s employees’ existing skills base. If we don’t know the full extent of our team’s skills, then it’s impossible to thoroughly asses the skills gap challenge that our organization has to address.

Skills Gap Analysis

It’s essential to investigate whether your organization has a skills gap. You can achieve this by doing a skills gap analysis. Just as the name suggests, it refers to the activity of assessing whether there’s a skills gap within your organization and pinpointing where it lies.

To accomplish a skills gap analysis, you will need to use a skills matrix. You can draft the matrix yourself using a spreadsheet tool such as Microsoft Excel or Google Sheets. Alternatively, you can download a skills gap analysis template online and edit it afterward.

Using a skills matrix software is an even better idea, as there is no need to design the matrix from scratch, saving your precious time. Simply input the matrix contents to the existing fields provided by the software.

A skills matrix software also has plenty of useful features, such as personalized employee reports, regular skills quizzes, programmable notifications, and many others.

To better understand skills matrices, check out our ultimate guide.

Strategies That Help to Close the Skills Gap

Now that we’ve covered the causes and effects of a skills gap, it’s time to discuss the measures that your organization can take to mitigate it. Here are several commonly taken strategies to tackle a skills gap:

Making a Skills Gap Analysis

The first step that needs to be done is undertaking a skills gap analysis in your organization. That way, you will know if there is indeed a skills gap issue and in which specific skills the gaps are located. The sooner they are detected, the better.

After a proper skills gap analysis is completed, you will have a clear overview of your organization’s skills composition and deficiency. With this knowledge, you can make data-driven decisions in planning skills retention measures, future training programs, and recruiting activities.

For a detailed explanation of how to assess your employees using a skills matrix, check out our blog on how to conduct an effective skills gap analysis.

Digitalizing and Inheriting Tribal Knowledge

The retirement of incumbent employees is one of the main drivers of the skills gap phenomenon in the manufacturing sector. Hence, before their retirement, it’s crucial that their tribal knowledge is digitalized and passed down to the next generation.

In the business world, tribal knowledge refers to the collective knowledge and experience of individuals within an organization. Check out our in-depth article on tribal knowledge to learn more about it.

Several useful policies that can be taken to preserve tribal knowledge are:

• Encouraging experienced employees to document their work (in the form of photos, videos, or in digital work instructions) and share them with other team members.
• Having a company-wide mentorship program, where an experienced employee is paired with several junior employees and shares their years-long experience and skills.
• Continuously keeping track of your employees’ skills development using a skills matrix.
• Promoting an open & progressive-minded work environment where each employee’s knowledge and concerns are always appreciated.

Upskilling Your Employees

If a skill gap has been identified, upskilling your employees is the next step. Upgrading your employees’ skills through training programs is a worthwhile investment. Not only will it close the skills gap and improve their productivity, but it will also help in employee retention.

Any employee who is continuously trained throughout their career will feel appreciated. According to an IBM study, 36% of respondents say “continuous learning opportunities” are the most important organizational attribute when engaging employees.

Attracting New Talents

Additionally, you can always recruit new talents to address your organization’s skills gap. Use insights from your skills gap analysis to ensure that you only recruit talents that will directly close your organization’s skills gap.

Since there is a shortage of talent with a STEM background in the manufacturing sector, there’s indeed intense competition in recruiting new talent. Always ensure that your organization offers a fair compensation package, sufficient flexibility, and, of course, room for future training and career progression.

Embracing Technology to Close the Skills Gap

In closing the skills gap, technology is your strongest ally. You can use various digital tools to detect and solve a skills gap within your organization. A skills matrix software is one fine example.

A skills matrix software is your primary tool when doing a skills gap analysis. It assesses the existing skills portfolio of your team members and analyzes its shortcomings.

A software-based skills matrix offers many features that conventional skills matrices can never match. Standard features include a pre-made skills matrix & gap analysis template, automatic notifications, and the ability to receive and share information with other devices.

With Azumuta’s Skills Matrix & Training module, you can go beyond executing a skills gap analysis. You can plan a long-term training schedule for your employees, organize routine skills checks, have detailed skills reports for each individual employee, and countless other handy features.

What’s more, it’s the only skills matrix in the market that can be linked with a Digital Work Instructions module. This addition lets you deliver visually intuitive work instructions to your shop floor workers.

Thanks to Azumuta’s software that links your industrial tools to computers, tablets, and smartphones, you can also monitor in real-time whether your training materials & work instructions have been complied with on the shop floor. Azumuta truly is your one-stop software for all of your manufacturing needs.

Explore how Azumuta’s Digital Work Instructions module has halved the time needed to manage work instructions and dipped human-error-related complaints by up to 60% in our customer testimonial. Be sure to explore our other customer success stories here.