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  • Writer's pictureOlivia Liu

Interview : Workforce Development From the Perspective of a Federal Government Agency

An Interview with Nico Thomas, Economist at NIST (National Institute of Standards and Technology)

July 29th, 2022


How has manufacturing changed over the last few decades?


Manufacturing is starting to have a smaller presence in terms of the number of individuals they employ, as well as manufacturing establishments. It transformed from a sprawling industry to a still significant industry to one with a smaller footprint. And that was before the great recession hit – once it hit, that actually escalated the establishment and employment loss that manufacturing was already experiencing. But coming out on the other side, there has been some positive growth. Not to pre-recession levels, but they were starting to build their way. And then COVID hit and caused another contraction in the manufacturing industry. We’ve seen an uptick in the number of jobs that were shed and the number of businesses closing due to the constraints that COVID placed on their ability to operate and stay open, or just general supply chain issues.


Now that we are coming out of COVID, we are seeing jobs starting to increase again. GDP has remained relatively stable, though the share of GDP that manufacturing is responsible has been shrinking over time (11-12% currently). That has a lot to do with the overarching and sort of over-decade long decrease in the number of manufacturing staff and establishments in which individuals were employed. The US economy has really shifted to more a services economy.

I think we are entering a time of potential growth where manufacturers can learn from the challenges that they’re faced with and turn those into opportunities. Up-skilling the workforce, implementing more technologies in manufacturers, allowing them to adopt state-of-the-art practices, and then using both of those opportunities in workforce and technology to overcome supply chain issues. While manufacturing has had its ups and downs, US manufacturing is very resilient.


Could you elaborate a bit on the US government’s efforts to reshore manufacturing?


Just today, the government passed the CHIPS Act, which is focused on revitalizing the US’s semiconductor industry. I’ve recently done a lot of research into semiconductors, and it’s really tied to national security and economic prosperity. I know that we’ll talk about the Rust Belt in a little bit, but as you think about how manufacturing in that area has changed, you can just look at the automotive sector. Without semiconductors, we’re not able to manufacture the equipment and cars they need. Prior to the last decade, semiconductors weren’t as necessary.

Getting back to your question on reshoring. Reshoring has become a bigger issue since COVID hit, where we really learned the vulnerabilities and threats to the US supply chain, when there are not resources available, either domestically or near domestic. During COVID, people needed to rely on closer suppliers. Because of that, there was an increase in the number of factories being built in the United States. People assumed that once we were on the other side of COVID, people would go back to outsourcing their production, that low-cost production with low wage-individual. That hasn’t been the case. We’ve actually seen factories built at even higher rates in the most recent years compared to coming out of COVID. It’s just sound business to be able to identify your suppliers, have greater visibility of your supply chain. If you’re having a challenge and you’re not sure what’s going on with the potential suppliers. If they’re around you, you can physically go and look at the operations. We’re hoping that the reshoring opportunity will help states in the Rust Belt rebuild business that was lost due to outsourcing.


What is the status of manufacturing in the Rust belt?


As companies are coming back, they are looking for regions to relocate and the Rust Belt is one of them. For instance, Ohio is in the process of building a huge new chip factory, and that is a departure from the usual manufacturing base. That is another opportunity to look at attracting not only manufacturers that have been historically located there. They are really looking at the unique regional advantages that the community can offer. I like to look at it as: tapping into the regional manufacturing ecosystem, looking at all the entities that support your businesses in the local community, thinking about how to tie all those resources together to attract and attain manufacturers in specific communities. I look at a lot of cluster analyses, and try to understand where clusters of manufacturers are located, and where the competencies are that would be beneficial to housing certain manufacturers. I think that will be very beneficial for the Rust Belt moving forward, because they do not want to put all their baskets in production factories or in automotive, even though automotive is emerging as an industry that will benefit advances in technology.


I don’t think the Rust Belt will lose its automotive presence. I was looking at the top industries in their state, and automotive industries are still some of the top ones you see. Motor vehicles parts manufacturing, you see a lot of vehicle manufacturing, plastic product manufacturing, machine shops, a lot of that is not going to change, but their annual growth, if you look at that over the next few years, is going to be in a decline. The industries that are going to grow are going to be a bit different. I think that’s just reflective of the entire country as a whole—industries are transforming, industries with staying power are transforming, and I think the Rust Belt can potentially adapt to that.


One industry that I think can have significant importance to the Rust Belt that was not immediately clear, was the food manufacturing industry. That is an industry that has not been susceptible to the economic up and downturns that we see other industries affected by. The heartland, the Midwest, that includes the Rust Belt, they have a lot of the land and economic infrastructure to fully get into the food manufacturing sector. We’re not likely going to see many factory production lines anymore, much of that kind of work is going to be automated, but there is potential for different types of jobs to pop up, that go along with the automated technologies. Co-bots, they need human interaction to work effectively. There are smart factories, and different ways in which manufacturers are going to have to manage those factories and jobs and positions. There’s going to be shifts in the way we thought about manufacturing, but that doesn’t mean that all those jobs are going away. It lends itself to job creation, actually, which is an exciting opportunity.


If Rust Belt residents were to attain high-leveled skill sets, would they have to look very far to apply those skills?


I don’t believe so. Skill shortage and workforce shortage in manufacturing is staggering. I always go back to this Deloitte Report that there’s going to be, if stay on the path we’re going, there’s going to be 2.1 million unfilled jobs in manufacturing by 2030. 2.1 million. There’s going to be a big chunk of that in the Rust Belt.


Manufacturers there are looking for employees, they’re badly looking for employees. They need anyone they can find. And it’s not even that the employees will have to go out of their way to get that specific training. It’s at the point where a lot of manufacturers are doing training themselves and are going push you to apprenticeship, and they’ll actually give you those themselves. If you’re a potential employee, you’re in the labor force and you’re looking for a job in manufacturing, maybe it’s not so much that you go and start to build those skills first, maybe you identify a manufacturer that you would want to work with, and they can help you develop the skills. But also, this is where the challenge is: the workforce is so slim that companies get a little hesitant to devote a lot of time to the training, because they fear employee poaching.

We do a survey of our manufacturing clients, and they tell us what the foreseeable challenges are in the next three to five years. The ones that have grown the most over the past decade are workforce (employee recruitment/retention), supply chain, managing partners/global suppliers, technology (implementing technology), but the one that has grown the most is workforce. It is by far the most significant challenge that our manufacturers put toward us. Just to highlight that we’re really trying to change the perception of manufacturing, because that’s also a lingering challenge.


I went to Automate Show, and people talked about on-the-job training. What are your thoughts on that?


On-the-job training is playing a significant role right now, in trying to get manufacturers through workforce challenges. Up-skilling is a great thing. One of the approaches that we’re trying to take in terms of battling this workforce issue is trying to raise the job quality of manufacturing jobs, and job quality is not just the work-life balance and things like that, it also comes with upward mobility. What are the opportunities for upward mobility for the manufacturing workforce? In the past it wasn’t that apparent. We’re working with manufacturers so that when they hire people, they’re working with to show them what the upward mobility is, to help them with retention of the workforce.


Why do rural manufacturers have a particularly hard time with the recruitment and retention process?


That’s a good question. There’s a few reasons for that. When many of the factories closed during the big outsourcing period, which is what brought a lot of turmoil to the region, that forced rural economies into poverty. When that happened, a lot of the people in those places who were educated, that had opportunity elsewhere, they left. These rural areas are now facing dwindling populations, as well as dwindling skill sets. That’s why rural manufacturers are having a problem attracting the workforce, because there’s not a lot of bodies. A lot of people in those areas are aging, they’re more on the elderly side, and not as interest in getting into the workforce. A lot of the younger generation, if they’re old enough, they leave, especially if they go to college, they never go back to that rural area. One, it’s harder to get in tune with the younger generation – the workforce is just not there, they’ve left, and the workforce that if there, you have to spend a lot of time up-skilling and training.


What are some advantages that rural manufacturing has compared to urban manufacturers?


We do know that rural manufacturers, although, you would think because of factories closing, they don’t have staying power, but when you compare them to urban manufacturers, a lot of rural manufacturers actually last longer.


They’re pillars of the community, they have a sense of responsibility to the community, and they stick around a little longer. But also, rural manufacturers have a lot more opportunities to expand, so you see those businesses expand in their communities more, with more space, land, and resources. Just to allow for that occur. You can get more intense manufacturing processes complete in rural areas than what you can do in dense, urban areas.


Rural manufacturers do have a lot of advantages when it comes to resources. It’s less densely populated, there’s less competition. One thing that we found is they don’t look a lot different (not a ton of different needs) from urban manufacturers based on data sets, and when you look at size of rural manufacturers, they are a little bit bigger, and they are not as diverse, you don’t see a lot of diversity in ownership when it comes to ethnicity or when it comes to gender. But they’re pillars for their community. There are 17% of counties that are rural dependent, and of that 70% are in rural areas. There’s more space for having warehouses next to your actual facility, so you can more closely monitor your supply chain. You can have main manufacturing plant, but you can also have a shipping plant. You’re more fragmented in urban areas, but in rural areas you can combine many facets of your business into one facility space to make operations a bit more efficient.


What are some of the currently dominant sectors in rural areas, and what skill sets do those require?


The highest concentration of occupations in the Rust Belt region are production occupations. They’re the highest when you compare to all other regional areas in the US. There are three skill sets that can feed into that—one is coming straight out of high school, and the manufacturers themselves are willing to do on-the-job training, whether that’s on machining, welding, they’ll help bring you up to speed. Then there’s some post-secondary education, whether it’s associates degrees, that will feed into those production jobs. Then there’s bachelors degrees. Bachelors have grown a bit, but the skill set on the pathway to manufacturing that’s grown the most is in that middle section that technical college, advanced degrees, but not really a four-year bachelor degree, that’s really skyrocketed. And, what’s really shrunk are the jobs available to people coming straight out of high school that have no post-secondary education. That’s because a lot of those jobs, they were low skill—those jobs were susceptible to becoming automated. Trying to get more of those individuals out of high school into certification programs, apprenticeships and internships to get them interested in manufacturing, to lead them to get a two-year degree within the industry, can get them the high-paying jobs. In rural areas, manufacturing was so attractive because it was a stable, high-paying, high-quality jobs, that allows you to support your family.


What is automation’s role in the push and pull between labor and technology advances?


In my opinion, it’s a bit of both. One of the reasons manufacturers haven’t been able to implement much technology, is that you have to have the workforce to leverage that technology and to use it effectively. One way you can help change the perception of manufacturing is to educated the future workforce on these cool and innovative technologies that they’ll be working with on these manufacturing jobs. On the flip side, getting the workforce more shaped up for industry 4.0 technologies, it’ll be easier for manufacturers to adopt those technologies and use them. I believe these technologies go hand-in-hand, and they don’t necessarily offset each other. I know automation is going to offset some of the low-skilled jobs, but those can be transitioned into some of the new jobs that’ll be springing up. I’d like to go back to cobots—cobots can’t work without human interactions, and they help make the human’s jobs easier, but human roles are still significant in being able to produce whatever’s being manufactured at that establishment. I believe that automation is a potential is a solution to larger workforce issues, but I believe the larger challenge that the automation is trying to fix is the productivity issue.

According to BLS, manufacturing productivity growth fell over the recent decade, and this is the first time in American history. What that means is more workers are needed to produce the same amount of output. Higher prices, lower wage growth, US global manufacturing competitiveness. Manufacturers haven’t been able to automate much, we are lagging behind in the implementation of technology. It goes hand-in-hand with the workforce, because manufacturers just aren’t ready to implement that technology. They have to spend extra money to educate the workforce, so the return-on-investment is stretched for a long time. That gap is really big when looking at small-size manufacturers and rural manufacturers.


There’s sometimes an opportunity for workers to grow with the technology they operate. Do you have any insights on that?


I think that’s a big opportunity. That’s a big opportunity with on-the-job training, and I think that’s a great way to frame it. If you’re bringing in new technology, and you’re really changing a staff to work/implement the technology, they’re going to grow with the technology. The more you can grow the technology, but then you can grow with the buy-in of the employees in using that technology, the more effective it’s going to be and the more productivity you’ll get into. As you implement the technology, you expand the skill set of your manufacturing workforce, and that’ll get them more intrigued in the work. What you’re doing is getting over the notion that technology is going to displace you as an employee. You’re dispelling their notions or hesitancy to implement that technology. We found success in that in our network as well, working with small manufacturers, introducing cobots, but also tying the employee to that cobot.


What skills do the so-called “high-skilled” jobs within manufacturing require?


What we’ll see over the next few decades, like advanced robotics and artificial intelligence, it’s going widen the range of tasks and jobs that machines can perform, and it does have the potential for worker displacement and some more inequality than older and more ancient generations of what we think of as automation. While some of these robots have replaced workers on the assembly lines, they have created new opportunities or jobs. Machinists, advanced welders, different types of technicians to maintain those machines and perform new tasks. I think that as we switch to using more machines, the manufacturing workforce is going to have to understand coding. Instead of going out and doing what the robots are doing, you’re programming/telling the robot what to do. You’re taking some of the danger away from it, and moving towards the software and programming. It becomes less of a laborer and more of a technician. There’s going to be other questions or opportunities that pop up, like robot teaming coordinators, smart factory managers, digital twins with engineers. There are a lot of jobs that haven’t even been thought of, and nobody is prepared to lead in these roles, to hire for these positions, that’s where upskilling is important. The more quickly manufacturers can identify those roles and skill sets in their staff, the easier it’s going to be. That’s where job creation comes from.


How can workers and manufacturers be prepared for shifts in the required skill sets?

The community colleges and the workforce development system, so everyone is more in tune to the ecosystem. We also have what we call manufacturing institutes around the United States. They’re in charge of fostering the development of new technologies and dispersing that information around to businesses who can then adopt it. A big piece is the workforce component. Trying to better estimate and predict what those skills are needed to use those technologies, and that needs to be connected to the community college and workforce development ecosystem and manufacturers. All those entities need to talk together. As of now, the workforce development ecosystem is training the manufacturing workforce for outdated skill sets in a few years, so to stay on target, all entities need to be in tune with each other so they know what’s going on. Manufacturers need to tell colleges what skills they’re looking for. Community colleges need to talk to manufacturers to train students on right skills. Both of those institutions need to talk to the entities like NIST OEMs to understand what technologies are being used. As of now, it is a bit disjointed. Not everybody is working together. We need to overcome the idea that blue collar work is not valuable anymore. If we have a lot of retiring people with 15-20 years experience, you can’t just replace them with someone out of college. Then, you need to find people with digital programming. Then, you have soft skills. It’s about understanding the manufacturing base in the region, understanding the technologies that influence who works in the base, and honing in on skills and certifications, the tools and tricks necessary to get workforce where it needs to be.


How well are workforce development institutions developing and adapting?


They’re facing a daunting job. Regionally, there are different pockets in the nation with different models that are working effectively towards training the workforce, but there is no cohesive national plan so we can provide same level services. I think an ecosystem approach is extremely useful, we’re looking at how we can optimize how federal investments are being made to the manufacturing communities. Even at the federal level, there are so many programs that we aren’t all in lockstep on how we want to combat this issue. First, you have to identify all the players in that workforce ecosystem, then you have to figure out what is that common thread/language everyone can talk on. What we’re trying to do now is use data as the common language to base decisions on. A lot of ecosystems are fractured, entities are going off different insights. Having an ecosystem allows you to pull resources, and the more focused your resources are, the more effective they are. The more effectively we tie the manufacturers to the workforce developers, to the state and local governments, to the entities creating technology, the greater impact we can have. It’s a great way to cultivate and grow the unique aspect of a region’s manufacturing base, and use that to development the training and curriculum. For instance, we would like to see a Rust Belt ecosystem focusing on automotive or metals, because those industries are still evolving.


What do you think about the Launch Manistee Network (LMN)?


That’s awesome. That’s a great example. And I think a strategic plan is great. I work for MEP, and we have a center in every state. However, each one is its own entity, and they go out to help manufacturers. Prior to 2017, we were acting as a 51 center union, each as an entity of our own. We created an impact, but starting with a strategic plan, we became known as MEP national network, where we became more cohesive as a network of 51 centers. We were able to pool resources and serve manufacturers previously. Bringing in more partners, field staff, and we were just much more connected. If a manufacturer in Florida had a challenge that the Florida MEP center wasn’t ready to address, they could go to their buddies in Texas who had a solution that would address that need. We could pull people from Texas and solve more issues than previously.


I think what we can do with workforce challenges in general is create interregional networks, we can look at all the resources available to these manufacturers and pool them together to manage these more effectively.


We discussed how communities can tap into the region’s economic ecosystem to pool resources and attract manufacturers. For the Rust Belt, specifically, what factors would attract a certain type of manufacturer (could a community try to tailor its business resources and network to attract and build a specific industry?)


In my opinion, communities should analyze and understand the strengths and gaps of their regional manufacturing ecosystem and build upon those strengths and gaps, tying together resources available in the regional ecosystem to support this effort. Understand which manufacturing industries have the highest location quotient, understand which manufacturing industries the region is purchasing from and focus on how to attract companies in those regions to the state, and map how the characteristics of the region support different manufacturing industries. This cannot be done by one organization alone, and requires participation and cooperation from all parties in the manufacturing ecosystem within a region

This will require steps such as securing the education and training needed to support current and future manufacturing workforce needs. Including getting the regional manufacturing workforce ready for the implementation of advanced technologies (automation, robots, etc.). It is not robots vs. workers, but robots working with workers.


We talked about how businesses are desperate for human capital, so they’ve started offering on-the-job training. Now, workers looking to enter the manufacturing industry can pick their employer and then get training. However, you mentioned that some employers are hesitant to establish OJT for a slim workforce. Is there a division in the decisions different manufacturers make about whether to invest time and resources in OJT? What circumstances would cause one employer to invest and one employer to not?


One issue manufacturers consider before offering on the job training (OJT) are costs. Off the job training typically occurs outside of the workplace and does not cost the manufacturer a penny. Whereas OJT can be costly for manufacturers. However, there has been a rise of grants and other funding opportunities to go directly to manufacturers who would like to train their own workforce. For instance, the Maryland MEP has an Incumbent Worker Training Program that offers training funds to offset the cost of training which will allow manufacturers to invest in the training necessary to compete in today’s economy.


Competition for the workforce is another factor. Manufacturers have had issues where they train their workforce only for a competitor to swoop in and pay the employee a hire wage to leave.


We touched on the need for new workers to see upward mobility in their manufacturing careers. What does upward mobility look like, starting from an entry-level position?


Upward mobility looks at the rates and ability for employees to move upward within the organization in which they work. In manufacturing, this represents a shift from looking for specific credentials that certify certain skills, to looking for individuals that have a learning mindset. And then the manufacturer needs to reward that learning mindset of the employee with opportunities to advance within the business. This could be through on the job training, incumbent worker training, or stronger relationships between the business and local universities/colleges.


Upward mobility also means upward mobility for all workers. If manufacturing wants to overcome its workforce issues, then the industry workforce must become more diverse. A Brookings report found that Manufacturing has the largest racial mobility gaps, with Black workers seeing 14 percentage points fewer upward transitions than their white colleagues, and Hispanic workers 18 percentage points fewer. There need to be more women represented in the manufacturing workforce as well.


I know there are tactics that workforce development networks across the country have been deploying to retain youth talent in their home communities—especially in rural areas. Have there also been efforts to re-attract community members who had moved away for job opportunities? Especially to seek those with post-secondary degrees, how can talent be brought back?


This is a very interesting question. I think there are a few approaches to this. I will talk in the context of a recent conversation I had with an emerging manufacturer in Anchorage, Alaska. What was unique is that they tapped into why people loved living in the state in the first place. People wanted to live in Alaska for the outdoors and peacefulness, but there was just not much opportunity. This emerging manufacturer created opportunity, and one unlike any other in the region. A good paying and fun job with flexibility to work from home (or anywhere across the country), flexibility to be deadline driven, which allowed employees to choose their own schedules, and flexibility to take time off. The manufacturer fostered a fun and engaging work environment. And this has helped them overcome their workforce issue.


What I took away from this is that I think companies have to be innovative and flexible. They have to rethink the 9-5 and understand their target workforce. What motivates the workforce? If it is flexibility and being rewarded, how do you build this into your workplace? It is about not bending the worker to fit the mold of your job, but molding your job so that the workers you need fit in the workplace.


We discussed the hand-in-hand relationship that lower workforce skill level and lagging technology implementation have. Just to clarify, do manufacturers currently have lot of advanced technology already prepared, just not the labor? Or have they been letting the slim workforce hold them back from developing complex technologies?


It is a mix of both. Manufacturers are naturally risk averse, and advanced technologies require investments that do not often have a quick ROI. The bigger manufacturers can absorb this risk more easily, thus they adopt technology at faster rates. Smaller manufacturers usually cannot absorb the risk, so they are more likely to implement technology only when they have to (lagging vs. leading). MEP’s role is to get advanced technologies into SMMs hands faster, thus helping make them more competitive globally.


The labor is also needed to help make the transition smoother. MEPs and other organizations can help upskill current manufacturing employees to adapt to newer technologies. But there are many companies we cannot get to. This is where greater communication and coordination between SMMs and workforce institutions (colleges, universities, state govt, etc.) is needed. Training the manufacturing workforce of the future sooner rather than later on these advanced technologies can help make it easier for U.S. manufacturers to adopt technology because having a ready workforce takes away some of the risk. At the same time, this earlier intervention around training on advanced technologies will help show the younger generation what the future of manufacturing looks like.


Regarding the shift from “laborer” to “technician” occupation in manufacturing, the skill sets required are a lot more of a moving target. I talked to the CEO of a technical college, and he explained that the college has contracts with some employers requiring that their employees be sent to the school every 5 years, for example, to learn new skills in a certain field. Do you have any further insight into that kind of system?


This is good to hear. The more community and technical colleges are tied to employers, the more accurate training they can provide. There have been situations where colleges and universities are training future workers on outdated methodologies and skills. This creates and furthers the current skills mismatch in the manufacturing workforce.


There are also examples I have heard where colleges and universities will tour and meet with industry/manufacturers prior to setting their curriculum for the year. This ensures that what is being taught matches the skills needed in industry. These connections also allow the colleges and universities to leverage industry in their teachings. Establishing internships, tours, and learning experiences to further the connection between the worker and industry


Since my fellowship project also investigated southern Virginia, I will be traveling to Martinsville, Virginia, next week, to explore some of the manufacturing history. I actually found an agency called GENEDGE located in Martinsville that is part of the manufacturing extension partnership (MEP), which I remember you mentioning in the interview. I would love to contact someone there—do you have any recommendations on what I can ask them about?


GENEDGE is the Virginia MEP Center! We have a Center in every state and GENEDGE is the representative for VA. They are a very strong Center. I know I am late since you have already went to Martinsville, but would you like me to create a connection for you?


GENEDGE does a lot of great work with manufacturers, with a lot of expertise in defense, medical devices, and sustainability.


I also saw this article about a grant to GENEDGE to advance Virginia manufacturing:

Do you have any more information about NIST’s involvement in this project? I find it very interesting that Martinsville happens to have so many connections to NIST!


The headquarters of our GENEDGE MEP Center is actually located in Martinsville, so they have very strong connections into the local community.


I will need to dig into this award a bit more. This looks like the annual award that MEP gives to GENEDGE ($2,040,321.00). I will check with our Resource Manager to make sure the award is the same, but we (NIST MEP) are very involved in this project. Will get back to you on this one.

I’m also thinking about contacting the Martinsville Chamber of Commerce, since their legislative agenda has a whole section about workforce development. For a small manufacturing town like Martinsville, do you think there is anything that would be particularly useful to ask them about?


I think it would be useful to ask the Chamber of Commerce about how they view manufacturing.


Does the town view manufacturing as critical to the economic prosperity of their town and people? And do they have a comprehensive plan to support manufacturing in the state?

What are the challenges they face and what innovative steps are they taking to overcome those challenges?


Are there things we (broader America) can learn from the growth of their town? And how have they tackled the workforce issue?


This would be particular useful for rust belt cities to learn from.


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