With one of every four factory workers retiring in the next decade, Tennessee manufacturers say their biggest worry is getting enough qualified workers for the future for increasingly technology-based factories, even with an average manufacturing wage in the state of $66,000.
Despite the labor challenge, however, manufacturers are more optimistic since Donald Trump was elected president and the state revamped its tax system this year.
Among major manufacturers in the Volunteer state surveyed by the Tennessee Manufacturers Association earlier this year, workforce challenges were identified as their biggest concern, ahead of concerns over regulations, taxes and roads. Denise Rice, director of the Tennessee Manufacturers Association (TMA) division of the Tennessee Chamber of Commerce and Industry, told Chattanooga business leaders last week that factory operators are generally optimistic about Tennessee's economy but increasingly worried about filling jobs as the labor market tightens and skill demand for manufacturers increase.
"As I travel across the state, different regions have different needs," Rice said. "But the one thing that I hear that is consistent everywhere is the concern over the skills gap and the challenge of getting a qualified workforce. I think this problem is at an all-time high and this is not a short-term problem. We're going to be looking at workforce problems probably for the next five to 10 years at least as Baby Boomers retire from manufacturing and our state continues to grow its manufacturing output."
Rice estimates 75,000 workers at manufacturing plants in Tennessee will retire between 2015 and 2025, or nearly one quarter of the entire manufacturing workforce. At the same time as the most experienced workers are leaving the labor market, the skill demands for manufacturing will become greater, requiring certifications or advanced training for most jobs.
Robert Gagliano, site director for BASF in Chattanooga and vice chairman of the Tennessee Manufacturers Association, said BASF and other manufacturers in the state are focusing on making young people aware of career and technical education opportunities and urging the government to strengthen partnerships between schools and manufacturers.
"With a shortage of 2 million workers and a lack of qualified applicants in manufacturing across the nation, BASF's workforce development strategy includes direct involvement in all stages of workforce preparation while building continuous and meaningful relationships with people and organizations," Gagliano said.
Fall and rise of manufacturing
Manufacturers avoided labor shortages through the late 20th century and early 21st century as employment shrank.
Manufacturing employment in Tennessee declined by nearly 45 percent from its peak of 533,400 jobs in March 1995 to its depth of the Great Recession in February 2010 when only 294,700 Tennesseans worked in manufacturing. The loss of those 238,700 jobs reflected both the increased automation and productivity gains on the factory floor, which have replaced human labor with robots and computer, and the economic shift of many jobs offshore to countries where labor rates are much lower than in the United States.
But after decades of decline, manufacturing employment has risen fairly steadily over the past seven years as the economy has regained its footing and Tennessee has attracted record levels of direct foreign investment back into the United States, including billions of dollars of investments from Nissan, Volkswagen, Wacker Chemical, Denso and others.
In two of the past three years, Tennessee has led the nation in foreign direct investment, much of it in manufacturing, according to the IBM Global Location Trends report on foreign investment in the United States.
As a result, manufacturing employment grew by 56,000 jobs, or nearly 23.5 percent, from early 2010 through June, the most recent month for which figures have been tallied by the U.S. Bureau of Labor Statistics.
"Since the recession, the number of jobs in manufacturing has been growing and when you see all of the new announcements about new facilities relocating or building plants in our state, I think we'll continue to see the number of jobs in manufacturing grow in Tennessee," Rice said.
The pace of that growth will be tempered, however, by automation and technology that boosts labor productivity and limits the amount of labor required to produce most goods.
Rice said Tennessee manufacturers have generally benefited by the North American Free Trade Agreement (NAFTA) that President Trump has vowed to renegotiate with Mexico and Canada. But Rice said most manufacturers would like to see NAFTA revised and brought up to date.
NAFTA became effective in 1994 before e-commerce was popular and before many of today's goods and services were even on the market, Rice said.
Strength of manufacturing
The growth in manufacturing in Tennessee led the Tennessee Chamber of Commerce and Industry to hire Rice, a former plant manager for Cormetech's manufacturing facility in Cleveland, to lead the Tennessee Manufacturers Association as a division of the state Chamber. Rice updated local Chamber of Commerce and manufacturers in a series of meetings across the state over the past month.
Statewide, manufacturers generate more than $51 billion of output in Tennessee every year, most of which is shipped outside of the state. Each manufacturing job is estimated to create or support 3.4 other jobs in the state, Rice said.
The Tennessee Manufacturers Association, which was formed in 1912, grew out of statewide legislative concerns of those in the Chattanooga Manufacturers Association, which was created in 1902 as the nation's very first manufacturers group of its kind.
TMA today is trying to encourage more young people to pursue careers in manufacturing by hosting plant tours, talking to students in schools and conducting events where students can see how what they are learning in the classroom relates to how products are built and improved. The Tennessee Promise, which offers two years of free community college, and Reconnect Tennessee, which helps retrain those in the workforce wanting to change jobs, also are opportunities to bring more workers into manufacturing, Rice said.
"Unfortunately, too many people think of manufacturing jobs as dirty, hot and not very exciting," she said.
But 21st century manufacturing requires more brain than braun and the factories of today are generally high-tech, clean and interesting places to work, Rice said.
Contact Dave Flessner at email@example.com or 423-757-6340.
By the numbers
348,100 Number of Tennesseans employed in manufacturing
$51.1 billion Value of manufacturing output in Tennessee last year
25.4 percent Growth in manufactured goods from 2010 to 2016
3.4 Number of jobs estimated to result from each direct jobs in manufacturing
Source: U.S. Bureau of Labor Statistics, Tennessee Manufacturers Association