Commissioned by Katz, Sapper & Miller, authored by faculty from Indiana University’s Kelley School of Business at IUPUI, and promoted by the Indiana Manufacturers Association, the annual survey shows that a record number of respondents expect their product markets to grow rapidly in the near future, but many are finding it difficult to attract younger generations of skilled and unskilled workers who are able to replace the wave of retiring baby boomers.
Companies indicate they are substituting capital investments in technology for labor to partially satisfy the demand for skilled workers and to remain competitive. Even with this investment, 48% of employers say the number of jobs continues to increase at their organizations, and nearly two-thirds expect the number of skilled jobs to increase as a result of implementing new technologies and automation. Respondents say current shortage areas include skilled production (machinists, craft workers, operators, etc.), unskilled production and supporting roles (engineers and planners).
“The general sentiment for a solution may surprise some. Manufacturers overwhelmingly feel that employers should be responsible for their own workforce development,” said Mark Frohlich, associate professor of operations management at the Kelley School of Business at IUPUI. “They recognize that an adequate STEM education and employable life skills are necessary for the manufacturing jobs available and suggest enlisting public secondary schools to help address the shortage.”
The findings in this survey reflect national trends that the manufacturing industry is seeing across the country. For example, the September 2019 national Institute for Supply Management report indicates the manufacturing index has dropped to 47.8, meaning activity has slowed to its lowest in 10 years. Economists point to several factors causing slowdown and uncertainty about the industry’s future, including the U.S.-China trade war, healthcare regulations and a potential recession. However, Indiana manufacturers have an optimistic outlook on future growth of their industry.
“Over the past decade, survey responses reflect that manufacturing growth has been impeded by regulations, an increasing skills gap, and now uncertainties with trade tariffs and economic stability,” said Jason Patch, partner-in-charge of KSM’s Manufacturing and Distribution Services Group. “But, on a positive note, the vast majority of respondents in this year’s survey agree that corporate tax reform has helped increase capital investment and wages. That’s a bright spot not many would have predicted.”
Overall, the survey suggests that the Hoosier manufacturing sector continues to see strong demand for their products. The obstacle of hiring skilled workers means there is a dependency, now more than ever, to improve operational efficiencies.
“The findings from this survey help take the temperature of Indiana’s manufacturing industry and provide insights into future trends,” said Brian Burton, president of the Indiana Manufacturers Association. “This year’s survey shows that manufacturers expect future growth rates in sales revenues, profit margins and capital investment and are focused on solving the issue of a skilled worker shortage.”
The 2019 Indiana Manufacturing Survey includes other valuable manufacturing industry data for service providers, economic officials and potential investors. A full copy of the report can be found here.