Advanced Manufacturing: Train Your Workforce to Be Ready

Advanced manufacturing technologies (AMT) offer fantastic tools to middle market companies. Rather than being dismissed as part of clumsy, old-fashioned industries that cannot compete in global markets, new approaches to making products and running factories can increase profits and attract work back to the US. It's a great opportunity, but only if you train your workforce to be ready.

According to a report from the National Center for the Middle Market and the National Association of Manufacturers, there are 33,000 middle market manufacturing firms in the U.S. Almost half — 47 percent — use such advanced techniques as automation, process technologies, IT, control systems, custom manufacturing, high precision production, technologies, high performance computing, and advanced robotics.

The firms that already use advanced manufacturing reported a 20 percent increase in profitability over the last five years. The financial improvement helps explain why 78 percent of companies not currently using advanced techniques plan to implement some over the next three to five years.

But there is a problem: AMT doesn't work by itself. Employees must be versed in their application, and the necessary skills are usually significantly different from the ones they already have. About 57 percent of middle market companies in the study had to retrain workers to use the new techniques. Forty-two percent said new hires must come in with these skills.

Recognize that you have to train. Executives in general often resist implementing training programs because they see them as taking away from revenue-generating activities. But the reluctance is only self-defeating. To be more profitable going forward requires employees who can use the new technologies. Where do you find all the people to do the work if the technologies are relatively new? Almost three-quarters of advanced manufacturing users are trying to hire qualified personnel as they anticipate an average 4 percent growth by this year.

And yet, replacing an existing workforce is not only ethically questionable and bad for morale and reputation, it's virtually impossible to do. Training is the only way to move forward. That is why 51 percent of already existing users are creating or expanding internal training programs, compared to 31 percent of non-users.

Identify fully-loaded adoption costs, including training. As the report says, multiple studies over the years have shown that companies might expect to spend on training upwards of double what they spend on technology. Without the training, spending on the technology can be an elaborate way to flush money down the tubes. Advanced manufacturing users typically spent 7.4 percent of revenue on training and development.

Create a budget for training when developing the business case. Recognize that it will take time to bring employees up to speed. According to the study, advanced manufacturing users allocated an average 8.8 weeks for training. Unless you schedule training early on as part of adoption, there's too great a chance that it can get pushed to the side.

Consider multiple ways of training. There is no single right way of skill development, so consider alternatives. For example, you could use a "train the trainer" program in which some key employees are taught the ins and outs, possibly by the technology vendors, and then become the trainers for the rest of your employees. Forty-two percent of users collaborate with educational institutions on skills certification programs, versus 19 percent of non-users.

Also consider partnering more broadly in your region. For example, in Memphis, Tenn., two community colleges are working with local businesses to develop a combined advanced manufacturing training center, leveraging federal grants to help establish the facilities.

By planning training early in the technology adoption phase, budgeting appropriately, and developing a flexible approach to teaching employees, your company can adopt profit-improving manufacturing techniques.

Erik Sherman is an NCMM contributor and author whose work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, Newsweek, the Financial Times, Chief Executive, Inc., and Fortune. He also blogs for CBS MoneyWatch. Sherman has extensive experience in corporate communications consulting and is the author or co-author of 10 books. Follow him on Twitter.