Tuesday, October 17th, 2017

Embracing a new model to cut costs, upskill the workforce

Posted: Thursday, May 19, 2011

By Steve Dwyer, president & CEO, Conexus Indiana

It's often said that the definition of insanity is doing the same thing over and over and expecting different results.

The manufacturing sector has changed rapidly over the last several decades. Successful companies have invested significantly in new technologies – like robotic automation, computerized equipment and supply chain management systems – to make their operations more efficient, productive, and globally competitive.

Yet when it comes to their biggest cost and largest source of productivity (their employees), many companies are using the same training methods they did a generation ago…and expecting better results. That's crazy – or at the very least, bad business.

With more and more Baby Boomers retiring from the workforce, manufacturers are confronting the need for a whole new generation of employees with high-tech skills. But they are still clinging to an insular training model that makes this goal more difficult and more expensive.

Conexus Indiana recently conducted a statewide survey of manufacturing and logistics companies that illustrates this outdated philosophy. Nearly 70 percent of employers indicated that they do not require education beyond a high school diploma or GED for hiring. These companies shoulder the burden for training their own employees in-house or through third-party programs – an inefficient and costly proposition for individual firms.

As training costs rise, the survey shows that more and more firms (53 percent) recognize the need for focused training for their employees, both prior to and after hiring. It would be natural for these employers to embrace an industry-wide system of certifications, delivered through community colleges and other institutions. This would spread the costs of employee training, ensure some consistency in the skills acquired, and create a more robust pipeline of skilled applicants for available jobs.

Such manufacturing certifications exist – through groups like the Association for Operations Management, the Society of Manufacturing Engineers, the American Welding Society – and are well-regarded in many circles. But in the Conexus survey, half of employers indicate that they don't often use them for hiring purposes, saying that they don't know enough about the programs, that they don't reflect the skills needed for the jobs available, and that not enough applicants have these credentials to start with – a dismal trifecta.

There's a movement underway to address this issue, and create a national system of credentials that earns the approval of the private sector. The Manufacturing Institute, the educational arm of the National Association of Manufacturers, has launched a broad new effort to make sure that such a system exists, and is relevant to and well-regarded by employers.

This starts by gathering feedback from companies themselves, understanding the specific skills that are in-demand in the workplace. The Institute is working with state-level partners to collect this input and begin the process of creating, revamping or refining credentials to meet the needs of industry. (As the most manufacturing-intensive state in the union, Indiana was among the first to sign on to this important project. Conexus Indiana and Ivy Tech Community College are working together to collect input from employers in the state and offer our ideas on the most critical 'skill gaps' confronting industry.)

On the public policy front, Congressman Joe Donnelly has introduced legislation that would target workforce funding for manufacturing to certifications that receive the approval of The Manufacturing Institute. Just as his House colleague, Congressman Todd Rokita, is focusing on job creation by eliminating burdensome regulations, Congressman Donnelly's bill would help spur new jobs by directing training funds to the programs that are favored by those doing the hiring.

By creating a system of industry-endorsed certifications, we can turn competitive disadvantages (the need for duplicative internal training programs, growing training budgets, and lost productivity for under-skilled workers) into a competitive advantage – a better-prepared labor pool, with more trained applicants ready to step on the job and make a positive impact from day one. This will allow companies to divert funds earmarked for training into capital investment and expansion.

It's time to stop doing the same thing and expecting different results – embracing a 20th century model of workforce development for a 21st century economy. It's time for an approach that engages industry, community colleges and other educational institutions, and the public sector to create a system that allows employers to hire with greater confidence while spending less on training – and create more manufacturing jobs for Hoosiers in the process.

Steve Dwyer is president & CEO of Conexus Indiana, an initiative focused on the workforce and other needs of the state's manufacturing and logistics industries.