Changing Workforce Demographics Transform Manufacturing

Dec. 11, 2007
“Baby Boomers”—those born after the Second World War and into the boom years of the 1960s—are starting to reach retirement.

This is launching a wave of retirements that will see the number of people aged 65 and over in the United States alone reach more than 70 million by the time the last boomer retires in 2030. The age of workers in the manufacturing industry in the developed countries is already over 50 on average. Companies have downsized, right sized and re-engineered their workforces without apparent thought for the consequences of this upcoming retirement tidal wave.

The potential resource pool is diminishing too, as today’s youth has little to no interest in studying traditional engineering subjects and following a manufacturing career. Additionally, there are currently no U.S. universities offering process automation as a major. Younger people are interested in computers, but want careers in “Internet” and computer gaming-related areas. Manufacturing industry has failed to show young people that most plants are computer controlled today, and that computer skills are as necessary in a modern manufacturing facility as any other skill. In fact, many plants could not run safely without process automation.

Seller’s market

 Many of the technical and operations employees now heading for retirement will have worked for their companies for more than 25 years, and many for much longer than that. However, things have changed in the marketplace due to the changing demographics. It has gone from being a buyer’s market in which manufacturers could select the best and discard those that did not make the grade, to a seller’s market in which manufacturers really have to sell themselves to prospective workers.

Younger workers no longer feel loyalty to a company, as many companies have not returned that loyalty in recent times. These younger workers will gain the needed experience and then start looking for a better opportunity in a five-year timeframe, and based on the statistics above, the opportunities will be there. The onus will therefore be on manufacturers to return to older traditions of treating employees with fairness and respect, giving them good and adequate training, and a challenging working environment.

In recent research by ARC Advisory Group, several manufacturers told us that tomorrow’s operators will be much more than “valve turners”; they will be challenged with continuously improving the plants they operate, and provided with the skills and training needed. Our research has shown that manufacturers are trying to raise the standards for qualifications when hiring new operators. The reality is that many of them are accepting lower qualifications than they would like, but are providing in-house training followed by a testing and certification process.

The leaders are responding, though, by putting programs and standards in place to ensure that skills are retained and employees are given the training to do their jobs. Some of these leading manufacturers are trying to address the issue by working closely with local educational establishments to put together good technical curricula and providing pilot plant equipment and control systems.

Manufacturers will be forced to increase automation to compensate for a diminishing workforce. This actually has a silver lining, because it will remove humans from manual processes that should have been automated in the first place. It also opens the door for empowering the workforce with operating information, which leads to the next level of human performance as a result of collaboration among “knowledge workers.” ARC recommends that manufacturers establish a technology platform to capture the undocumented organizational knowledge and experience of their workforces, as well as put training and certification programs in place for all job functions in their organizations.

Maurice J. Wilkins, [email protected], is Vice President, Consulting, at ARC Advisory Group Inc., in Dedham, Mass.