Manufacturers in Great Lakes Region Convene to Address “Skills Gap”

by Foley & Lardner LLP

We hear it from manufacturers all the time—the U.S. labor pool lacks enough skilled laborers to support high-tech manufacturing. In Chicago, the topic was addressed May 20, 2014, at the annual Crain’s Manufacturers Summit. Foley co-sponsored the Summit, where manufacturers throughout the Great Lakes region gathered to identify solutions to shared challenges, like the so-called “skills gap.” Managers expressed concerns about balancing workers’ demands for higher wages with the company’s need to invest in training for computerized tooling and manufacturing processes.

On the one hand, manufacturers in the Great Lakes region face demands for higher wages from manufacturing talent. So limited budgets can thwart attempts to hire or retain top talent. Recent studies by Crain’s Business Chicago indicate that manufacturing wages in Illinois have grown by only 29% over the past decade. Other Illinois business sectors experienced increases twice as high during the same timeframe. As workers transition to other sectors, Great Lakes manufacturers have had to maintain productivity with fewer manufacturing employees. In one break-out session that I attended, one local manufacturer explained that its workforce was already stretched too thin but increasing compensation or the number of workers would render the company irrelevant in the global market.

On the other hand, Great Lakes manufacturers have had to make significant investments in high-tech manufacturing equipment and training employees on that equipment to maximize the output of its diminished workforce. At the Summit, participants spoke about the intense financial burden of investing in employees. Some employees may only use that training to obtain a higher-paying job at a competitor. One participant got a chuckle out of the crowd by reminding us that the risk of employees leaving obviously cannot justify using untrained employees. Manufacturers agreed that increased availability of online training, such as ToolingU offered by the Tooling and Manufacturing Association (TMA), has lessened the burden of training in recent years.

Economic leaders of the region’s states pointed out that the Great Lakes region is uniquely positioned to rise to these manufacturing challenges. The Great Lakes region sustains a robust population, providing a large talent pool to fill high-tech manufacturing jobs and a strong consumer base that may demand locally manufactured products. EVP and COO of the Michigan Economic Development Corporation Steven Hilfinger noted that the Great Lakes region benefits from a well-developed transportation infrastructure, including railways linking Chicago and Detroit with Canada and major international airports. Mr. Hilfinger reported,

“More than a billion dollars in trade flows daily between Canada and the U.S. through the border in Detroit, giving both the Midwest region and Canada ready access to the consumers, supply chains, and natural resources of each market, which is a huge mutual advantage.”

Attendees also touted the region’s proximity to the largest source of fresh water on the planet, the Great Lakes, as a key to the region’s ongoing success. The Great Lakes provide an abundant resource of fresh water, which is necessary for manufacturing. And the pristine waters attract people to the region and contribute to a high quality of life.

Manufacturing experience, human capital, and natural resources are among the many reasons why, in February 2014, the Obama Administration announced that two manufacturing innovation institutes would be established in the Great Lakes region. Specifically, efforts are underway to launch the Digital Manufacturing and Design Innovation Institute in Chicago and the Lightweight and Modern Metals Manufacturing Institute in Detroit. A strong consensus of manufacturers participating in the Summit seemed to agree that these innovation institutes would help to address the skills gap and other issues affecting the region.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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