BUILDING THE MANUFACTURING PIPELINE

THE CHALLENGE IN MANUFACTURING

- SHRINKING WORKFORCE/LACK OF INTEREST - INDUSTRY CHANGES/DEMANDS - REGIONAL INFO – WHY MANUFACTURING IS IMPORTANT IN YOUR AREA - SOLUTIONS

WORKFORCE PIPELINE CHALLENGES

•Shrinking number of high school graduates •Retiring workers •Global competition •Smaller, more mobile world

ATTITUDES

• • • • •

Recent survey indicates that Americans:

Value a strong manufacturing sector Want stronger policies to support manufacturing Are looking for better leadership to support U.S. competitiveness View manufacturing sector as fragile & unstable Want manufacturing jobs – for someone else

“Unwavering commitment, The Public’s View of the Manufacturing Industry Today”, Deloitte and the Manufacturing Institute 2011,

3 OUT OF 10 WANT CHILDREN TO PURSUE MANUFACTURING CAREER

I would encourage my child to pur sue a career in manufacturing Public viewpoint on manufacturing © 2009 Deloitte Development LLC. All rights reserved

EDUCATION BARRIERS

88 M Adults have at least one education barrier

H.S. Diploma, No college No H.S. Diploma Speak English “Less Than Very Well” 26.4 M 8.2 M 5.0 M 56.3 M 5.2 M

Source: Report on the National Commission on Adult Literacy, June, 2008 / U.S. Census Bureau

CHALLENGES

• By 2020, high pay/high skill jobs will rise to 74% of U.S. labor market, 123M needed, 50M likely to be qualified • • Low pay/low skills jobs will shrink to 26%, 44M needed, 150M workers available Large companies will poach talent from smaller companies

Edward E. Gordon, 2009

WORKFORCE DEMANDS

• • • 63% of all jobs will require some college education or better by 2018 Employers will seek cognitive skills such as communication and analytics from job applicants rather than physical skills STEM, Healthcare Professions, Healthcare Support and Community Services will be the fastest growing occupations

Help Wanted: Projection of Jobs and Education Requirements Through 2018, (2010) Georgetown Public Policy Institute, Georgetown University Center on Education and the Workforce, Washington, DC

MANUFACTURING IS A MAJOR ECONOMIC DRIVER IN THE REGION

 Insert local data about your service area  # of companies  # of workers (% of all jobs)  Average wage of _______  Manufacturing jobs are good, family-wage jobs 9

TOP 3 DRIVERS OF FUTURE SUCCESS:

 High-skilled, flexible workforce – 68% (Talent)  New product innovation – 48% (Innovation)  Increased market share – 38% (Productivity) “Boiling point? The Skills Gap in U.S. Manufacturing,” Deloitte & Manufacturing Institute, 2011

GLOBAL MANUFACTURING COMPETITIVENESS INDEX

CHALLENGES

 Changing demands of manufacturing  Young adults often are not adequately prepared or skilled for advanced manufacturing jobs  Difficult to recruit and select young adults into manufacturing jobs  Jobs require higher skills in STEM (Science, Technology, Engineering, & Math) as well as communications, problem solving, teamwork, and creativity

CHALLENGES

 Employers are unable to fill vacancies  Jobseeker skills are not aligned to employer needs  Employer needs are not always clearly articulated  Jobseekers often unable to clearly articulate skills  There is a shrinking number of young people who will be available to fill future vacancies in the workforce

IMPACT OF THE SKILLS GAP

 The lack of skilled employees to fill available jobs is creating significant costs for companies:  55% of companies report a >5% increase in production down time  60% of companies report a >5% increase in production cycle time  70% of companies report a >5% increase in overtime

CHANGES IN THE REQUIRED SKILLS AND TRAITS FOR MANUFACTURING PERSONNEL *Pearson Education Inc. 2008

MANUFACTURING WORKFORCE: IMPLICATIONS OF CHANGE Production Occupations 2010-2012 16

COMPANY TRAINING

 Companies spend an average of $3,200 on training per new employee  Companies spend an average of $1,500 on training per existing employee.

 Only 35% of companies fill more than half their skilled positions internally.

SOLUTIONS

 Develop a highly skilled and educated workforce with skills measured and validated by industry standards:  Reduces risk  Drives innovation and  Supports competitive advantage  Nationally portable, industry -recognized credentials  Allow individuals to learn and earn and “stop out” when needed  Strengthen career pathways and encourage participation in postsecondary education

SOLUTIONS

 Short term training focused on identified employer needs:  Clearly defined enrollment criteria  Industry certifications imbedded in training  Work based learning component  National Program Models:  Right Skills Now  Get Skills to Work

WHAT IS A CERTIFICATION SYSTEM?

-OVERVIEW -DESCRIPTION OF COMMON CERTIFICATIONS -HOW IT WORKS

Providing competency-based, customized education and training for the manufacturing workforce…today and tomorrow

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TENETS OF THE NAM-ENDORSED SKILLS CERTIFICATION SYSTEM

• • • • The nation needs an immediate renaissance of manufacturing education, including: Skillfully integrated academic and technical learning paths; A heightened focus on Science, Technology, Engineering and Math skills; More available alternatives for learning, with more “on” and “off” ramps to higher education and lifelong learning systems to acquire new skills as technology advances; and, The integration of nationally portable, industry -recognized credentials with educational pathways, leading to postsecondary credentials with real value in the workplace.

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NAM -ENDORSED SKILLS CERTIFICATION SYSTEM

• Designed to demonstrate value and use of certifications in growing manufacturing workforce • Provides a system of stackable credentials applicable to all sectors in manufacturing industry • Certification partners include: ACT WorkKeys NCRC; Manufacturing Skills Standards Council (MSSC) , CPT; American Welding Society (AWS); National Institute for Metalworking Skills (NIMS); American Society for Quality (ASQ) and Society of Manufacturing Engineers (SME)

SKILLS CERTIFICATION SYSTEM

 Certificates are “stackable” and can be part of a career pathway.

 Create certificate pathways in credit based degree programs  Provides options for “on” and “off” ramps so individuals can “stop out” and work in their career

Providing competency-based, customized education and training for the manufacturing workforce…today and tomorrow.

WHAT EMPLOYERS WANT

• Skilled workers now • A good return on their investments • To run their business profitably and efficiently

SKILLS CERTIFICATION SYSTEM

A Certification System with skills measured and validated by industry standards:



Reduces risk



Supports competitive advantage.

EMPLOYEE PATHWAY

Talent Pipeline Employee Development General Laborer •$9-12/hour •NCRC Plus •High School CNC Operator $11-16/hour •NIMS Level 1 •1-4 Certifications •12-18 Weeks Training CNC Machinist •$14-22/hour •1-2 Year Training and Experience •Additional NIMS Skilled Technician •$18-28+/hour •2-year +; Journeyman & experience

ADVANCED MANUFACTURING COMPETENCY MODEL

High Quality Middle Class Jobs

Occupation-Specific Certifications Entry-Level Industry Certifications Ready for Work, Ready for Post Secondary Education 29

AWS SME’S TECHNOLOGIST AND ENGINEER NIMS

VALUE OF A CERTIFICATION SYSTEM

• Raise the level of the workforce expertise in a region or industry • Improve the quality of the workforce • Produce a sense of accomplishment and merit for workers • Substantiate for manufacturers that the person has the skills to succeed in the workplace.

NATIONAL CAREER READINESS CERTIFICATE (NCRC)

 Based on ACT's WorkKeys job skill assessments  Includes essential foundational skills needed for workplace success  Verifies that an individual has essential core employability skills in Reading, Applied Math, and Locating Information  Includes research data linked to job requirements

MANUFACTURING SKILL STANDARDS COUNCIL (MSSC)

 Industry-led training, assessment and certification  Focused on core skills and knowledge needed by production workers  Based on national standards (National Skill Standards Board)  Four test areas: Process & Production, Quality, Practices & Measurement, Safety, Maintenance Awareness

NATIONAL INSTITUTE FOR METALWORKING SKILLS (NIMS)

 Precision manufacturing skill standards and competency assessments  Certifies individual skills against standards and accredits programs that meet its quality requirements  Developed skills standards in 24 operational areas covering the breadth of metalworking operations from entry to master levels   52 individual NIMS certifications Performance and Knowledge

AMERICAN WELDING SOCIETY (AWS)

  Includes numerous certification programs Identifies qualified welding personnel  Provides opportunities for welding professionals to demonstrate their qualifications to the welding industry

Core Workplace Skills Innovation / Creativity Critical Thinking / Problem Solving Communications Information Technology Application Teamwork/ Collaboration High Performance/Lean Sustainability 4/30/2020 Applied Academics/ Personal Management Cross Cutting Technical Skills Applied math Reading for Information and Locating Information Applied Science Ability to learn Agility Comfortable with ideas Self direction/organization Entrepreneurship Process Design and Development Production Maintenance, Installation and Repair Supply Chain Logistics Quality Assurance and Continuous Improvement Health, Safety and the Environment Sustainability and Green Manufacturing

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CERTIFICATION BENEFICIARIES

 Individual student/worker  Individual Company  Industry  Regional Economic Development

1.

Provide job descriptions for positions to be reviewed Schedule meeting with subject matter experts, supervisor, trainers, other HR personnel

2.

Review job descriptions and identify most appropriate certifications.

WHY CERTIFICATION MAKES SENSE

– OVERALL VALUE/IMPACT – COMPANY SUCCESSES (CASE STUDIES) – INDUSTRY DATA/RESULTS

Out of Inventory

Skills Shortage Threatens Growth for US Manufacturing

The skills gap is real.

And it’s costing manufacturers.

COSTING US 11% OF POTENTIAL EARNINGS

12% increase in overtime + 8% increase in cycletime + 10% increase in downtime

Manufacturers spend an average of $3,000 per new employee training and only $1,000 per current employee.

The Training Gap

MANUFACTURERS NEED NEW WORKFORCE STRATEGIES

Top sources for new employees Word of mouth Staffing agencies Online Job Boards Newspaper Ads Company recruiting function External search firms Company Websites Tech schools Community colleges Other 6% 8% The Manufacturing Institute & Deloitte - October 2011 15% 18% 14% 26% 32% 40% 40% 52%

BUSINESS CASE FOR CERTIFICATION •A highly skilled and educated workforce with skills measured and validated by industry standards o

reduces risk

o

drives innovation and

o

supports competitive advantage

• Nationally portable, industry -recognized credentials allow individuals to learn and earn and “stop out” when needed

BENEFICIARIES OF CERTIFICATION •Individual student/worker •Individual Company •Industry •Regional Economy

COMPANY TRAINING

 Companies spend an average of $3,200 on training per new employee  Companies spend an average of $1,500 on training per existing employee.

 Only 35% of companies fill more than half their skilled positions internally.

VALUE OF CREDENTIALS

 Over 90% of companies that use industry -recognized certifications believe they make a difference in validating the skills of their employees;  Companies see positive impacts on:  Training costs  Employee retention  Employee engagement  Workplace safety  Personnel decision-making  Community colleges are the most used partner by companies looking to incorporate certifications.

THE BIG PICTURE

Global Economy Competitive Advantage Innovation Knowledge Workers Verifiable Skills Industry-based Certifications 50

A MILLION-DOLLAR INVESTMENT

“I advise each of my staff that every worker hired is a million-dollar investment for this company. I’m calculating that most hires are under 45 years old; we intend to keep them for at least 20 years, and our average annual salary/benefits package is $55,000. In other words, we can’t afford to make a mistake —to hire someone without the right skills. Verifiable skills certification programs can make the difference between a good investment and a high-risk.”

Dennis Rohrs, Human Resource Manager Fort Wayne Metals, Inc.

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THE BUSINESS CASE

The business case and return on investment perspective is simply this: •

A highly skilled and educated workforce with skills measured and validated by industry standards

o

reduces risk

o

drives innovation and

o

supports competitive advantage

52

Providing competency-based, customized education and training for the manufacturing workforce…today and tomorrow

53

TENETS OF THE NAM-ENDORSED SKILLS CERTIFICATION SYSTEM

• • • • The nation needs an immediate renaissance of manufacturing education, including: Skillfully integrated academic and technical learning paths; A heightened focus on Science, Technology, Engineering and Math skills; More available alternatives for learning, with more “on” and “off” ramps to higher education and lifelong learning systems to acquire new skills as technology advances; and, The integration of nationally portable, industry -recognized credentials with educational pathways, leading to postsecondary credentials with real value in the workplace.

54

MAXIMIZING FLEXIBILITY

Electronic Instrument Manufacturing Machinery Manufacturing Motor Vehicle Parts Manufacturing Aerospace Product & Parts Manufacturing Steel Product Manufacturing Plastics Product Manufacturing Foundational Skills + Cross-Cutting Technical Skills (and the industry-based credentials that support them) 55

EXPANDING THE MODEL

Priority Sectors Include: • Aerospace/Defense • Automation • Life Science: Biotechnology, Pharmaceutical & Medical Device • Construction • Energy • Plastics and Composites • Transportation, Distribution, and Logistics 56

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ALIGNMENT WITH INDUSTRY REQUIREMENTS

Industry Certifications Offered:  National Career Readiness Certificate (NCRC) (Reading for Information, Applied Math, Locating Information)  Manufacturing Skills Standards Council (MSSC)  American Welding Society (AWS)  National Institute for Metalworking Skills (NIMS) 58

EMPLOYER ENGAGEMENT

GOALS  Introduce certifications & benefits to employers, individuals, region  Solicit employer input on certification pathways  Solicit participants to pilot certifications with incumbent workers and/or new hires 59

EMPLOYER ENGAGEMENT

STRATEGIES  Convene initial meetings to introduce certifications  Focus on regional employer needs and challenges  Engage college partners 60

COMPANIES IN ACTION

Talent Pipeline Employee Development CNC Machinist •$14-22/hour •1-2 Year Training and Experience •Additional NIMS Skilled Technician •$18-28+/hour •2-year +; Journeyman & experience General Laborer •$9-12/hour •NCRC Plus •High School CNC Operator $11-16/hour •NIMS Level 1 •1-4 Certifications •12-18 Weeks Training Public – Private Partnership High School, Out-of-School, Low Skill Youth, Low Skill Adults, Transitioning Veterans Skilled Adults

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MAXIMIZING ECONOMIC RETURNS

 Talent development is a key pillar of any regional economy’s competitiveness agenda.

 Developing the high performance manufacturing workforce will help stabilize and grow manufacturing industries currently located in the region AND be “an attraction” asset for new manufacturers and job creators.

 Integration of these manufacturing credentials into the education system is an opportunity to develop the pipeline of manufacturing talent, rebuild the region’s technical workforce, and attract new jobs to a region.

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A “WIN-WIN” SCENARIO

Educators Workers High Quality Jobs Employers Regional Development 64

INDUSTRY DATA/RESULTS: MEASURING THE IMPACT

Success matters because credentials matter, above and beyond time spent in postsecondary and credits earned.

Certificates, diplomas, and degrees can all have economic value— payoff varies a lot by field of study, gender, age Occupational programs generally pay off more than general education ones at sub-baccalaureate level Need at least a semester for economic gains; one year certificates may pay off more than shorter ones, but need more data on this Rising cost of college, structural shifts in labor market make college riskier—from1980-2010, costs rose more than benefits Certificate of one year or more are consistently linked to increased earnings

Center for Postsecondary Success CLASP Center for Law and Social Policy

IMPACT OF CERTIFICATIONS STATEWIDE & REGIONAL PILOTS  An employer-led organization in Ohio managed four regional training programs based on employer need  Included assessments: WorkKeys and MSSC  Certifications: NCRC, MSSC CPT  Partners: Career Centers, Community Colleges  Employers reported improved productivity, retention, reduction in OJT time  Certifications make a difference

FINDINGS

     Companies can measure the R.O.I or Economic Impact of a quality workforce development program with certifications A workforce preparation process that includes certifications has value to a company Workforce training that begins with employer input and engagement will be more successful Economic Impact data can benefit the employer and demonstrate value of the educational partner Considering R.O.I can provide additional opportunities for educational partners & greater possibilities for employers

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CONCLUSION

• Assessments and certifications have value for all stakeholders • All partners must clearly understand the process for using certifications and benefit • Workforce training that begins with employer input and engagement is more successful • Access to certifications through schools and One-Stop Centers should be available for job seekers, incumbent workers, and transitioning workers

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EMPLOYER REPORT

• • • • • • Measurable Increased Productivity Reduction in rejects & rework Higher quality and product performance Supervisor is able to spend more time Coaching and Mentoring rather than training the basic skill-sets needed.

Faster progression to Top Rate $ Setting record “Shipment Months”

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EMPLOYER QUOTE

“ We had open positions which needed to be filled by skilled workers. We got trainees who were ready to fill open machine shop positions. This allowed us to train current employees to prepare them for higher skilled jobs in machining. Final outcome was that we were able to increase our production capacity, keep and gain new business and keep production lead times below the industry standard.” This material is copyrighted by MAGNET. Reproduction of this material is by permission only.

HIRING COSTS

An American Management Association 200% of annual compensation.

Trendwatcher

(7/13/2010) article suggested that the cost of hiring and training a new employee ranges from 30% – Total Hiring Cost Considerations:  Costs incurred during hiring process (typical 14 hours)  Examples advertising, interviews, internal meetings  Costs incurred within the first 3 months after hiring  On the job training (typical OJT 142 hours)     Training by supervisory employees (typical support 88 hours) New hire retention rate Temporary premium pay vs. lower direct pay (est. $2 per hour) Costs incurred during separation – severance, admin., legal

COST SAVINGS

By hiring a certified employee who requires less supervision and training and can more quickly contribute and produce, savings can be realized in the following total Hiring Cost Considerations:  Reduction in the hiring process (typical 14 hours)  Examples advertising, interviews, internal meetings   Costs incurred within the first 3 months after hiring  Reduced on the job training (from 142 hours potentially to 70)    Reduced Training by supervisor employees (Reduced from 88 hours to 44) Improved new hire retention rate (Better prepared improves selection) Elimination of temporary premium pay vs. lower direct pay (est. $2 per hour) Reduction in separation costs & additional recruitment activities

COST SAVINGS

Typical Total Hiring Costs:  $8,736 total cost for a $14 per hour worker $14.00/hour x 2080 hours/year= $29,120 annual comp. cost x30% (Low estimate for replacement)=  $8,736 (Hiring Cost per employee Estimated

Reduction Hiring Costs

: ) $8,736 x 50% (est. reduction) =  $4,368 (Savings per new hire)

BENEFITS OF CERTIFICATIONS

Retained Sales Estimate the sales that may have been lost if the skilled employees were not hired in time: • $600,000 backorder and late shipments • Estimated 25% of backordered would have been cancelled by customer • Retained sales = $600,000 x 25% = $150,000 Workforce Practice or Employee Skills • Reduction in internal resources, HR time, monitoring & oversight • Wage premiums for enhanced skills of workers hired • Reduction in training & development costs This material is copyrighted by MAGNET. Reproduction of this material is by permission only.

EMPLOYER QUOTES

“…we had open positions which needed to be filled by skilled workers. Our partnership resulted in trainees who were ready to fill open machine shop positions. The positions this group filled allowed us to train current employees to prepare them for higher skilled jobs in machining. The final outcome was that we were able to increase our production capacity. These improvements helped us to keep and gain new business because we were able to keep production lead times below the industry standard.”

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EMPLOYER QUOTES

“ We were one of the early advocates of the MSSC PT certification because these candidates are familiar with key manufacturing concepts like safety and quality before they walk through our door. That allows them to be more productive sooner than individuals who do not have the CPT. Our confidence in the CPT certification is such that we offer a premium starting wage for new employees who have that certification. I encourage all manufacturers to learn about the MSSC CPT and consider how it might reduce your recruiting and turnover costs.”

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CONCLUSION

.

• Companies can measure the R.O.I. of a quality workforce development program with certifications • A workforce preparation process that includes certifications has value to a company • Workforce training that begins with employer input and engagement may be more successful than models that don’t • Community colleges are able to help: • Identify manufacturers’ workforce and talent development challenges • Quantify their contributions to solving employer workforce challenges • Help employers understand the value of talent development & certifications on their company This material is copyrighted by MAGNET. Reproduction of this material is by permission only.

HOW TO IMPLEMENT CERTIFICATION

I M P L EM ENT ING C ERT I F I CAT IO N WI T H I N YO U R C O M PANY

What is Certification and is it right for us?

Each company must answer the basic question, Is certification right for us? before they are ready to begin the process outlined here. Marketplace demands & technology changes alter the nature of the work and what is required so regularly revisit what has been put in place in order to sustain and improve it.

Institutionalize (Deploy) Certification Analyze Company Skill Needs Improve and Sustain

This step turns a successful pilot into an ongoing process that is sustainable over time or expands the pilot program to the next level.

Develop Pilot Plan (Beta)

By this point, the employer is deeply invested. NOW, work out the details to implement certification. As with any new process, employers often want to "test" or PILOT the approach in a limited environment.

Workforce certification starts with a clear understanding of the skills needed to perform a job or family of jobs.

Confirm Certification Match & Required LEVELS

Having clarified (and updated) the exact skills they require for their job the company now needs to agree on a good certification match and in some cases determine the exact skill levels they require for their job.

GETTING STARTED

 Review your current situation  Identify your workforce challenges  Does your operation currently use one of these certifications in recruiting or training?

 Assess effectiveness to the company  Analyze the most critical factors for you and your company

GETTING STARTED

 Consider - Annual turnover for hourly skilled workers - Most critical skills/positions needed - New skills required for current workers - Growth plans or retirements that will affect workforce needs  Is the challenge/need with new hires or current workers?

SUCCESS STORIES

 ThyssenKrupp Bilstein – CPT    Reduced turnover from 50% to 7% Increased overall equipment effectiveness Sun Hydraulics – CPT    Higher levels of engagement in audits & CQI Improved efficiency Permac Industries – NIMS   Accelerated learning Stronger applicant pipeline 83

NEW HIRES

 Identify position(s) to target  Review job description confirm it reflects needed skills  Select a workforce education partner and develop a strategy for initial implementation  Match certification(s) to needed skills  Determine required or preferred  Identify available training resources  Recruit potential candidates through WIB and/or education partners