Manufacturing a new industryHow manufacturing will continue to evolve for future growth and productivity.

Building the nextmanufacturing age

The story of America’s growth as a leading force in the global economy can only be told in tandem with the development of the manufacturing sector.

The American economy’s origins are steeped in the innovation, productivity and effi ciency of our manufacturing industry — an industry that still employs over 10 million working Americans today and produces some of the world’s most important products and goods. While history tells an iconic story of a global manufacturing empire, the present looks very different.

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The later part of the 20th century signifi ed a paradigm shift from an economy weighted towards goods-producing organizations and talent, to rampant growth in the services sector and development of the “knowledge-based economy.” With this new focus, the landscape of the American workforce changed drastically, yielding signifi cant challenges for the manufacturing industry.

Despite this shift in the labor market and the U.S. economic crisis of the past few years, manufacturing continues to play a critical role in our economy, and therefore our future. The president of the U.S.-based Manufacturing Institute, Emily Stover DeRocco, has observed that manu-facturing has the highest rate of productivity growth compared to other industries and produces more than $1.5 trillion in goods every year.

In fact, the U.S. manufacturing sector is the eighth largest economy in the world, though its impact on the U.S. economy is much larger considering the number of sectors that rely heavily on a strong manufacturing base — including fi nance, accounting, telecommunications and wholesale and retail trade. In addition to its size, the sector is also amazingly resilient. Despite being one of the hardest hit industries over the past couple of years, suffering signifi cant layoffs and business challenges,

productivity is rising again, and the sector remains committed to innovation. Companies in newer branches of manufacturing, such as green manufacturing and solar energy, are especially optimistic about their prospects, even though economists remain cautious.

As the manufacturing sector looks ahead towards recovery (and leads the global economy in doing so), companies must determine how they can continuously practice strategic cost improvements and effi ciencies to meet shifting consumer demands. In doing so, they will be well-positioned and prepared as the infl ux of requests continue to shift upward. Taking full advantage of the economic recovery and sector rebound will require manufacturers to employ the right workforce strategy, which starts by fi nding the right mix of skilled talent and a strategic balance of temporary and permanent labor. With this insight, organizations will be better prepared to make wise investments in labor and will be better positioned to be profi table in the long term. Additionally, organizations will also make every effort to not repeat recent history, and instead, turn the page toward a future which draws on the innovation, productivity and effi ciency upon which it was founded.

Manufacturing a new industry

1 “The Facts About Modern Manufacturing.” 8th edition. The Manufacturing Institute. October 2009. www.nam.org/~/media/0F91A0FBEA1847D087E719EAAB4D4AD8.ashx

2 “Manufacturing Outlook 2010: Cross Your Fingers: 2010 Will Be Better,” Industry Week. December 6, 2009.

Over the past several years, the manufacturing sector has faced a number of industry challenges that have contributed to — and continue to impact — its evolution and growth. Many of these challenges have also impacted hiring and talent decisions as the traditional roles and desired skill sets of manufacturing employees have evolved.

Perhaps one of the more significant hurdles to faster recovery in the manufacturing sector is that, in tandem with the economic downtown, there have been vast changes in the industry at large.

From metalworking and textiles to consumer packaged goods and technology, manufacturing is far different from the industry it was even a few years ago, resulting in very different industry expectations today than there have been historically.

Industry challenges go beyond economic instability

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Manufacturing a new industry

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As the popular saying notes, “the future is now,” and the manufacturing industry is keenly aware it must adapt to new trends and consumer demands to keep pace with global competition.

So, what exactly has changed?

Examples of the changes in the manufacturing sector include the “green revolution,” which has moved organizations to replace older products with more sustainable ones, work on alternative energy solutions, and the creation of new building materials and designs.

Similarly, the rapid growth and increasing popularity of eCommerce has resulted in the evolution of a number of manufacturers who now find themselves forced to play a dual role of manufacturer-distributor — changing not only the dynamics of the supply chain but also business strategy and workforce models. This customer-facing role of distribution brings with it different business challenges and requires many different skill sets in terms of successful talent. Successful manufacturers today are learning how to deliver both products and services — very different from the historical role of the industry.

While there have been pockets of growth within traditional manufacturing roles, many of these positions have dramatically evolved and as a result, so have the skill sets required. Today, manufacturing companies are in need of a specialized level of versatile talent. Successful candidates must have broad-based expertise and nimbleness with many manufacturers falling short in finding this kind of talent, irrespective of the labor numbers.

Although the number of unemployed Americans today means there is a huge pool from which to draw, manufacturers have not been able to find the skilled employees they need; a problem which has serious implications for the future. Another factor for consideration is that from 2007 to 2009, although companies cut payrolls, they still managed to produce more with fewer workers. Economists report that as a result, employees have been stretched, calling on leaders to look carefully at labor costs, find new markets and develop new ways of operating if they are to remain competitive.

Additionally, manufacturers must now deal with two vital issues on a day-to-day basis: the cost of safety and workforce eligibility. As most manufacturing takes place in an industrial setting, it is particularly important that a structured safety program is in place and employers truly understand the costs that can result from not maintaining a safe workplace. They must also recognize the need to have a structured program to ensure compliance.

In addition, workforce eligibility has become a larger issue to contend with – ensuring that all employees are legally able to work in an organization is now a necessity for employers. The discovery of ineligible workers is an enormous liability for a business.

3 “Productivity Rebounds While Labor Costs Decline,” Manufacturing.net. November 4, 2010. www.manufacturing.net/News/2010/11/Labor-Relations-Productivity-Rebounds-While-Labor-Costs-Decline/?menuid=724

4 Ibid.

Responding to changing customer demands through new innovations.From an industry-wide perspective, two key customer service changes have emerged. First, buyers were asking for customized solutions rather than mass-produced products—a move towards agility-based manufacturing. Second, customers want their products in hand sooner. With increased competition in the marketplace, manufacturers face greater pressure to expedite delivery. Innovations such as flexible assembly lines allow companies the option to produce multiple products on a single line or facility. This model has proven very effective throughout the recession and most likely will be the model on the road to recovery and beyond.

Going green. According to the National Institute of Standards and Technology, if we are to achieve a time “where manufacturing has a zero net impact on the environment…[manufacturing] will require key resources and methods that will enable it to measure sustainability along several dimensions, allowing accurate assessment of status and progress.” Since green manufacturing is a relatively new sub-sector, there are questions still to be answered. For example, is doing away with landfills an admirable goal if instead we use water and energy to clean disposable products? When a manufacturer (or architect or business owner) talks about reducing his or her carbon footprint, is a 75 percent reduction enough, or does it have to be 90 percent to be considered laudable? Defining standards, effective measure- ments and best practices clearly remain a work in progress.

Despite these uncertainties, green manufacturing continues to be a priority and the need for skilled talent able to do these jobs will only increase.

For example, carbon dioxide is the most harmful greenhouse gas we produce, but CO2 emissions from U.S. factories have declined, even as industrial production has increased. The same is not true for other industry sectors. For example, “up to 30 percent of the energy used in a typical industrial or commercial building today is wasted, but new, incremental improvements in green building design and other eco-principles are fixing this fast.” Those candidates who possess the training and skill sets to handle these complex issues and new green technologies will be well poised for opportunity as more businesses make investments in clean energy.

Flexible workforce arrangements. Companies are also employing various workforce arrangements in the drive to remain competitive. Outsourcing entire functions is still critical in some manufacturing operations. In fact, many predict that customer relationship management and warranty programs will continue to be outsourced. However, manufac-turers’ core competencies — and the attributes that truly differentiate them — will remain in-house.

An Industry Week article recently reported that, “manufacturers must…have the flexibility to meet changing markets by having the ability to quickly ramp up production at facilities in growing markets or suffer the costs of shipping.” As a result, contingent and blended workforces have become not only more popular, but also a business necessity and advantage in this industry. The ideal ratio is 20-30 percent temporary workers, and the remainder permanent staff. According to experts, this allows companies to react more quickly to economic shifts — to ramp up or scale back based on business needs — and to limit the negative

Critical emerging trends in the manufacturing industry

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5 Jim Carroll. Ibid.

6 “Sustainable and Lifecycle Information-based Manufacturing Program,” National Institute of Standards and Technology. www.nist.gov/el/msid/dpg/slim.cfm

7 The Facts about Modern Manufacturing. National Association of Manufacturers. www.nam.org/~/media/0F91A0FBEA1847D087E719EAAB4D4AD8.ashx

8 Jim Carroll. Ibid.

9 Ibid.

10 “Manufacturing Trends to Watch in 2007,” Ibid.

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Manufacturing a new industry

consequences of an economic downturn. Today, staffing companies are able to place a more sophisticated level of contingent workforce by having a greater sensibility about what’s working and where there is need within an organization.

Staffing companies are, in fact, uniquely positioned to provide strategic management over a process — sensitive to the need for continuous cost improvements and armed with the ability to identify improvements along the way for greater efficiencies and savings. They can partner with an organization to ensure that lean manufacturing is taking place and efficiencies are met. Additionally, some staffing providers are also offering a new solution: driving increased productivity by moving clients from an hourly cost model to a productivity-based model. In this model, companies are not billed by the hour, but instead, by unit.

By holding the staffing provider accountable for meeting production levels versus headcount needs, measuring productivity is more transparent and easier to attain — increasing output and also enabling significant cost savings.

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The manufacturing industry is clearly in a state of flux, requiring a workforce of the future that looks very different than it does today. Attributes of the ideal manufacturing worker of the future will undoubtedly include: highly skilled, flexible, technical, adaptable and open to ongoing professional and skill growth.

Training is one of the most pressing issues in manufacturing today. Today’s workplace requires people “who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math proficiency than was previously required of the typical assembly line worker.” Look at any innovative manufacturing industry segment, such as advanced medical devices or wind turbines, and the background and demo-graphics of this worker will look very different from a typical line manager at a traditional manufacturing plant.

In response, the federal, local and state governments, and manufacturing associations are stepping up to provide programs that educate new workers for advanced STEM (science, technology, engineering, and mathematics) education. In Michigan, for example, an educational program sponsored by the Michigan Manufacturers Association has the goal of teaching high school students about the manufacturing field and provides them with information about career oppor-tunities in the industry.

Colleges and industry associations are taking responsibility for training as well. Purdue University, for example, has an online certificate program in Lean Six Sigma Green Belt for manufacturing workers. The Connecticut College of Technology has a Regional Center for Next Generation Manufacturing that provides resources to teachers and students interested in learning new technologies, and some

community colleges are offering hands-on courses in renewable energy. Another group, the National Center for Manufacturing Education, has professional development opportunities, support services, and resources for educators.

Additionally, staffing companies, which employ a large portion of the manufacturing industry, have also answered the call for increased training and development. Today’s top recruiting firms offer their candidates a variety of learning opportunities to ensure that their workers can offer companies the most sophisticated skills needed in today’s evolving manufacturing job market.

Training this next generation of workers ensures all will be better prepared for the manufacturing jobs of the future. Similarly, today’s worker benefits from additional training in new, niche areas such as green technologies — and those rewards tend to pay off quickly. Those candidates who possess a higher pedigree of skill sets will be more attractive to potential employers as the economy continues to recover.

Manufacturing a new industry

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Building the next manufacturing workforce

11 “Factory Jobs Return but Employers Find Skills Shortage.” The New York Times. July 1, 2010. www.nytimes.com/2010/07/02/business/economy/02manufacturing.html

12 Manufacturing & Engineering Technologies Education Clearinghouse.

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The future of manufacturing

Manufacturing may be at a crossroads, but it has weathered tough times before. As the president of The Manufacturing Institute reminds us, “America’s global market share of manufacturing has held steady at around 22 percent for 30 years.” And if we are to rely on history, that success will continue.

As companies look to ramp up hiring in the months and years ahead, the smartest manufacturing organizations will consider and act upon how the changes that have taken place across the industry impact their talent pool and workforce planning. This sort of forward thinking and preparation will keep the manufacturing industry’s place as the cornerstone of the American job market — not only when discussed as part of history, but long into the future.

Manufacturing a new industry

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About the Adecco GroupThe Adecco Group, based in Zurich, Switzerland, is the world’s leading provider of HR solutions. With over 29,000 full-time employees and more than 5,800 offices, in over 60 countries and territories around the world, Adecco Group offers a wide variety of services, connecting more than 500,000 colleagues with over 100,000 clients every day. The services offered fall into the broad categories of temporary staffing, permanent placement, outsourcing, consulting and outplacement. The Adecco Group is a Fortune Global 500 company.

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Adecco Group North AmericaEvery day, we provide our clients with the talent they need and help solve the business challenges they face today — and will encounter tomorrow. Our clients rely on us for a wide range of workforce solutions including:

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