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The Critical Economics of Manufacturing Workforce

On April 17, 2012, Roger Kilmer, Executive Director of the NIST Manufacturing Extension Partnership testified, along with colleagues at the U.S. Departments of Labor and Education, about the critical work MEP is doing in support of American manufacturing and its resurgent positive impact on the U.S. economy. His testimony to the Senate Subcommittee on Competitiveness, Innovation and Export Promotion described how important MEP programs are in expanding manufacturing growth by focusing on innovation, exporting and workforce development.

Kilmer described how advanced manufacturing – and the jobs it creates - are critical to American economic competitiveness. After the loss of so many manufacturing jobs prior to and during the recession, American manufacturing has since added 458,000 jobs, with 120,000 created in the first three months of this year¹.

As his colleagues at Labor and Education (Assistant Secretary Jane Oates and Undersecretary Martha Kantor) described how education and training institutions are increasingly reaching out to employers such as small manufacturers and aligning resources for training, Kilmer focused on the acceleration of manufacturing innovation and how integral a well-trained workforce is to maintaining manufacturing's momentum.

Over the last several years, MEP has focused extensively on developing an integrated set of strategies and tools that manufacturers can use to strengthen their competitiveness. Since workers are a critical part of manufacturing's success, workforce development and training must be an integral component of these strategies. The changes wrought by technology, globalization and demographics have and will continue to radically change what manufacturing employees need to know and what manufacturers demand of them in order to innovate and maintain a competitive position. MEP addresses workforce development and training in multiple ways, hosting Innovation Engineering Leadership Institutes which actively teach the concepts that lead firms to implement an innovation system, providing combined federal agency support and funding for sustainability initiatives (E3: Economy, Energy and the Environment), and working with community colleges and workforce investment boards to train workers and avert layoffs.

MEP is also creating a workforce development model that encompasses both technology and a culture of learning within manufacturing operations. The MEP model is being developed with the small manufacturer in mind and will address resource limitations and position workforce in a strategic framework for business. It is MEP's intent to use the model, SMARTalent, to help companies think about workforce investments in exactly the same way one thinks about investments in new production technologies or markets, and to gather data on workforce investments using analytics, just as manufacturers do for lean, quality and other investment calculations. This analysis will help define the true value of human capital by evaluating both tangible and intangible results such as reduced turnover, improved customer service, new product ideation, patents, shorter cycle times in problem-solving, and reduced liability costs, just to name a few, and to do so as an integrated part of an overall strategy for business growth.

Bob Kill, President and CEO of Enterprise Minnesota, also testified before the subcommittee and described how important partnerships with the Labor and Education are in ensuring a pipeline of manufacturing workers. His goal as CEO is to help the Minnesota's manufacturers compete profitably, and a skilled manufacturing workforce is critical to sector growth.

Among MEP's workforce resources, SMARTalent is in its pilot stages now, but is expected to be complete in 2013. Once finished, it should prove to be a robust system for managing workforce investments and outcomes, minimizing risk and optimizing outcomes in corporate workforce development. As the manufacturing sector becomes increasingly critical to U.S. economic growth, so too will the growth of the skilled manufacturing worker be critical to advanced manufacturing.

The Subcommittee welcomed the messages from all who testified before it and it seems likely that more help for small and medium-sized manufacturers will be a part of the public agenda in the future.

Click here for more information on the U.S. Senate Subcommittee hearing.

¹Bureau of Labor Statistics, calculated from Employment, Hours, and Earnings database, April 6, 2012
Released April 19, 2012, Updated April 16, 2014