American manufacturing is at a crossroads that has nothing to do with outsourcing jobs to cheaper labor markets. The challenge of today is the lack of a quality workforce. The availability of a reliable, high quality workforce was a given for many companies when deciding whether to grow and where to expand. Those days are gone. 600,000—that is the total number of jobs in the manufacturing sector waiting for skilled workers. Manufacturing jobs are coming back to the United States but the world’s global manufacturing leader is not ready to fill all the positions.
The retirement of the Baby Boom generation, low performance of America’s schools, a welfare system not creating workers and a lack of alignment between industry and higher education is creating widespread qualified workforce shortages even in times of high-unemployment. Regions successful with the retention of a high-quality workforce start with a strategy of targeting good jobs using initial upfront training and job-matching services and create support for workers such as child care and transportation networks plus financial incentives for companies to take such an approach.
Germany offers lessons for regions, states and America as a whole related to strengthening manufacturing through its workforce. According to a recent Brookings Institute report, German manufacturing accounts for 20% of the jobs (double the US total), 22% of the GDP and 82% of the exports—all of which creates a $425B trade surplus for the Germans compared to America’s $667B trade deficit. Germany is not a cheap production center—a recent Boston Consulting report ranked Germany’s manufacturing costs of production far above the U.S..
Germany’s workforce development program offers critical lessons for developing a strong workforce. First, Germany tracks the performance of its students from an early age and guides them into one of three tracks for their professional careers. By the age of 12, German students, parents and educators decide on one of three common schools that set the student on the pathway of the dual system spending time in the classroom and workplace (45%), vocational education (15%) or the university route (30%). Students entering the dual system route enter into direct apprenticeships in over 300 occupations with local employers—over one million German students participated in apprenticeships with employers in 2011 according again to Brookings. The German government plays the role of funding much of the training and providing overall occupational certification.
Many American states are learning the lessons from Germany to create a strong manufacturing based workforce. The Michigan Economic Development Corporation working at the direction of Governor Rick Snyder built a partnership with community colleges to enroll students in a capital-intensive mechatronics program to meet a growing need for workers in this field. Ohio’s other neighbor to the south, Kentucky, offers another workforce lesson built on German innovations. Kentucky’s Bluegrass Community and Technical College created the Advanced Manufacturing Technician program focused on electricity, fluid power, mechanics, and fabrication to develop the workers needed for the state’s auto industry. Kentucky’s program resembles the German approach to dual-track training with participating companies recruiting from a pool of high school students that must meet a stringent set of requirements.
Companies, regions and states looking to address workforce challenges develop and implement regional apprentice training programs to create workers in high-demand occupations through the development of a public-private-partnership following these critical steps:
- Identify regional industry clusters and the labor shed pool of available workers to create the list of occupations;
- Create a regional industry workforce committee that includes local company and educational (K-12, community college and university) leaders;
- Development of student aptitude measures to identify suitable students for particular occupations;
- Development of curriculum for the vocational training from high school through college;
- Recruitment of companies who are willing to commit time and energy to the apprenticeship program; and
- Identify and gain funding for the regional apprentice training program from business, local, state and federal funding sources.
Private companies, local governments, state community colleges, state K-12 education programs and federal agency funds such as the Department of Labor, Education and Health & Human Services all can provide the funding for these regional industry-based training programs. As an example, The Department of Labor is making $100M in existing H-1B funds available for American Apprenticeship Grants to reward partnerships that help more workers participate in apprenticeships. This competition will help more Americans access this proven path to employment and the middle class: 87 percent of apprentices are employed after completing their programs and the average starting wage for apprenticeship graduates is over $50,000. The new American Apprenticeship Grants competition – which will be launched in the fall – will focus on partnerships between employers, labor organizations, training providers, community colleges, local and state governments, the workforce system, non-profits and faith-based organizations that: launch apprenticeship models in new, high-growth fields, align apprenticeships to pathways for further learning and career advancement, and scale apprenticeship models that work. 25 grant awards are expected for the American Apprenticeship program with application due to the Department of Labor by April 30, 2015.
Ohio’s Straight A Fund offers another source of start-up funding. Straight A Fund is an idea of the Governor John Kasich to promote innovation and shared services among the state’s education systems. Projects that promote innovative, workable ideas that could advance student learning, achieve significant funding reductions, or reduce administrative overhead are eligible for funding and local governments, school districts, educational service centers, charter, STEM, higher ed or private companies are eligible. Two rounds of Straight A Funds have been awarded and 570 applications representing approximately 720 organizations made grant requests totaling $760M million in Round One– of these, 24 grant applicants received a total of $88.6M to more than 150 school districts and partnering organizations. In Round Two, 339 applications representing 662 organizations made grant requests totaling more than $233M with 37 grant applicants received a total of $144.6M for more than 200 school districts and partnering organizations and will affect more than 400,000 students.