With the economy gaining momentum, businesses are facing a different problem — developing a sustainable and skilled workforce.
“Generating over half a million job vacancies nationwide, the skills gap is responsible for a full percentage point of today’s unemployment rate. It’s causing delays in America’s resurgence, particularly in industries like manufacturing, health care and construction — the industries that make up the lifeblood of the Pittsburgh economy,” says Dave Schaich, president of Western Pennsylvania Middle Market at Chase Commercial Banking.
Applicants don’t have the skills for open positions, and the consequences are real. Labor shortages cause construction delays and hamper productivity for projects big and small.
Smart Business spoke with Schaich about accounting for labor — just as you would capital — when navigating potential risks of new business operations or expansions.
How did the skills gap emerge?
After decades of offshoring, manufacturing is experiencing a modest renaissance, but vocational education has deteriorated. Older workers who dominate the industry are preparing to retire, and the next generation isn’t ready to fill positions.
Add in the high-tech nature of advanced automation that dominates U.S. manufacturing and the skills mismatch intensifies. In fact, employers may find workers comfortable with computerized systems steer towards white-collar careers.
What has been the effect in Pittsburgh?
While parts of the U.S. are experiencing more severe labor shortages, Pittsburgh isn’t immune. According to the Allegheny Conference on Community Development, the area has nearly 30,000 open positions.
Western Pennsylvania’s resurgence is fueled by industries that heavily rely on skilled workers, such as the booming energy and petrochemical industry with its army of welders, pipefitters and drillers. More than 41,000 are employed in the core energy industry, generating over $19 billion in annual activity or 16 percent of the total regional economy. Further, Shell’s Monaca natural gas refinery is expected to require another 18,000 skilled construction workers.
High-tech manufacturing employs more than 96,000. In the past decade, advanced manufacturing added 23,000 new positions, and the industry appears to be accelerating, adding 5,000 workers in 2011. Plastic, glass and metal production depends on workers at ease in a highly automated environment.
Area businesses are finding it equally difficult to hire traditional white-collar workers, such as qualified management and sales personnel. They cite a lack of soft skills, affecting their ability to innovate, respond to market demands and operate efficiently.
How can businesses lessen labor shortages?
To maintain operations and mitigate effects on revenue, businesses should be exploring options to tackle the skills gap head on.
Seventeen Western Pennsylvania unions provide free apprenticeship training for new members. Combining classroom instruction with hands-on training, workers are prepared for skilled trades in ironworking, pipefitting, construction or boilermaking. Though aimed at developing a new generation, this isn’t an immediate solution — most programs require four to five years before apprentices can work independently.
Community colleges offer vocational programs geared towards filling specific industry needs. The Community College of Allegheny County, for example, has a one-year mechatronics program focused on precision machining and industrial maintenance, especially in working with high-tech equipment. It also has launched a one-year welding and pipefitting program for gas and oil field workers.
This year, the Department of Labor’s (DOL) Trade Adjustment Assistance Community College and Career Training program will award $450 million in grants to promote public-private vocational training partnerships. Thus, employers encourage workforce development by sponsoring apprenticeships and work-based learning.
Another DOL program, The American Apprenticeship Initiative, extends $100 million for apprenticeships in high-growth fields, including health care and advanced manufacturing. It rewards employers that integrate work-based training with instruction to cultivate a skilled workforce.
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