With three generations currently occupying the workforce, successful companies must draw on the strengths of each. By Scott Renner

Manufacturing in the digital age has changed. The business dynamics and the skills that are required to succeed were not present a mere decade ago. It’s a certainty that today’s tenured business leaders are challenged with the rate of change to their establishments and developing the next generation of leaders. The new leaders will have different backgrounds, work differently, and must have additional skills to succeed.

It’s official. Having been born after 1980, millennials are now the largest group in the labor force, according to the U.S. Census Bureau. Recently pushing out Generation X as the workforce majority, the U.S. fountain of youth continues to spring as baby boomers retire. And the incoming contingent is very different from the outgoing. Baby boomers ushered technology into business, fought through the energy crisis, and navigated global expansion. Their millennial children think a tech bubble is a fun party favor, a phone book is an environmental crime, and everything is funneled through the smartphone.

Gen X’ers have a median age of 46 and are inheriting the reigns of leadership positions. As a group, they have experiences on both sides of the digital divide. Participating in the last industrial revolution, the computerization of business, this part of the workforce has become very adept at re-engineering business processes and making continuous improvements to existing paradigms by applying new technologies and techniques. Now they are filling key leadership roles and managing the industry 4.0 revolution. Where the baby boomers were all in on company loyalty and the work-to-live attitude, the Gen X’ers are the optimizers. They strive to optimize career, work-life balance, and previously established business practices.

Acting as the analog to digital converter, Gen X is the bridge from the baby boomers to the millennials. But the brand new workforce only operates digitally. Raised on smart phones and social networks, they have little understanding or patience for an unconnected, unautomated business world. The older generations may find some naiveté in this youthful disposition, but the future is digital and success belongs to those that can continue to lead manufacturing through this digital transformation.

A Different Set of Values

Millennials will comprise more than one in three adult Americans by 2020 and 75 percent of the workforce by 2025, according to The Brookings Institution. This kind of workforce turnover will profoundly change manufacturing in ways that migrate toward the characteristics of the group. Many millennials, experiencing screen time before they could read, have developed an always connected way of life. This abstract and extended socialization beyond their physical spaces causes them to deeply care about the environment, value diversity and teamwork, all with an acute awareness of their role in the world at large. They will demand that companies share these same values.
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“Leadership skills in managing vendors and partnerships to augment staffing and capabilities will be more critical than ever.”

Given that they are always connected, they are comfortable with work-life integration, and are pre-dispositioned to continuous learning and adoption of new technology. Psychologically, this group of the workforce is supremely equipped for the dynamic, always changing business climate. Through the prism of the digital glass, they are eager to re-invent the world and challenge old paradigms with the next big idea.

While millennials may be mentally equipped to reinvent their world, they are also lacking in some key areas that are desperately needed in manufacturing. Approximately 2.4 million manufacturing jobs may go unfilled by 2028, reducing production output by an estimated $454 billion in the U.S., according to Deloitte. This is not so much the result of an inadequate workforce size, but more accurately the result of the lack of workforce skill and will. Millennials consistently rank manufacturing as the industry for which they are least interested in working. Raised in a world of high-tech intrigue, a ubiquitous college degree, and a mutually exclusive notion of environmental awareness vs. industry, they are very unlike the exiting boomers. There has been a major cultural shift in the desirability of working for a company that manufactures vs. other business sectors such as services, finance, and high tech.

Manufacturing executives, surveyed by Deloitte, indicate that 60% of current open positions are unfilled due to lack of skilled workers. With the trend line of qualified candidates going down, this represents a major threat to a manufacturer’s long-term success. In the coming decade, U.S. manufacturing will need to fill about 3.4 million jobs. This is comprised of 2.7 million projected retirements and an increased demand of 700,000 for a growing economy. These labor statistics foreshadow business constraints to come that will profoundly affect manufacturing operations. With such a huge workforce requirement, it is likely that the industry is going to face difficulties in finding qualified talent.

A Growing Skills Gap

The technological evolution of manufacturing has also created a skills gap in these projected jobs, further exacerbating the workforce challenge. The skill set required for the coming age will an add-on to required traditional skills. Repetitive motion and assembly line tasks are being diminished by automation with employee duties shifting to tasks that are more custodial. These new jobs will require workers closest to the material conversion processes to think more in terms of the bigger picture. While still in a shop floor environment, labor must be able to apply critical thinking in areas of mechanical troubleshooting, machine programming, and production optimization.
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The new manufacturing jobs will require a high level of training and/or experience, but the most experienced workers are retiring at a rate of 10,000 per day. While books have been written about the business and social impact of the retiring boomers, this labor dynamic has created a workforce and a leadership gap. This leadership gap comes at a time of great challenge in the manufacturing world, as business is more challenging than it has been in decades. The leadership challenges for the next generation require deep industry experience and a steady hand, combined with a new way of thinking about products, services, and even society at large. The future manufacturing workforce will require deep technical skills, and the digital generation is showing little interest.

The three mega factors to manufacturing success in the coming decade are digital transformation, globalization, and talent management. This triad of challenges is interconnected, enabled and constrained by each other. The next generation of leaders must have the ability to recognize and manage these threats and opportunities.

At the Dawn of Digital Transformation

Digital transformation in manufacturing has only just begun. The foundational elements of cloud computing, big data, IoT, and 5G are not digital transformation alone, but only the infrastructure to enable data communication. The frontier for the next generation of leaders is to harness this data for competitive advantage. This requires a new leadership skill set, one that can break out of the discrete systems of established business operations from prior generations. This requires both the technical know-how to understand the interconnectedness of a larger ecosystem, and perhaps more importantly the creativity to see channels for growing business – through new market opportunities, optimization for extended supply chains, and ability to build and deploy intelligence into business operations.

In this converged model, technology becomes a much more important enabler to business. The future leaders must be equally converged. A hybrid skill set combining business and technology expertise becomes mandatory as the physicality of products and operations are intertwined with technology. Technology managers must become more business savvy, and business managers must become more technology savvy.

“The next generation of leaders must be able to combine the internal operational excellence of the past with an external focus on technological development and new market opportunities.”

The baby boomers gave us enterprise computing, and the Gen X’ers continually optimized the computer state with iterative precision. The next generation promises the next revolution. Managing the transition to hyper-automation with artificial intelligence and machine-to-machine communication will be a tremendous challenge. Replete with technical and social issues rivaling the Manhattan project, this revolution must be managed with both technical competence and societal tact.

The New Rules of Global

Globalization has traditionally been characterized by massive import/export and investment in foreign assets. There has always been a remoteness about globalization that only involved the trade of goods from faraway lands. The coming of business digitalization amplifies the opportunities of broader markets. As products and process become more digitalized and the interoperability of business operations rise, competitors and partners will pop up anywhere. The next generation of leadership must master the potential of global ideas, the management and protection of intellectual property, the collaboration of more business partners, and the extreme localization of manufacturing that will be enabled by advanced technologies.

While the baby boomers opened new markets and established low-cost manufacturing solutions, the next generation of leaders will blow this model up, bypassing supply chain rigidity and lead times for oversea shipments. Instead, they will lead their industries in AR, VR and any variant of translocation, teleportation, etc. They will lead their industries in decentralized manufacturing by utilizing contract partners or mini-factories and digital material conversion processes like additive manufacturing. The playing field expands for the next generation and success favors those that can leverage the world as a resource to fill demand simultaneously, near and far.

Talent – The Most Important Asset

Managing the talent needs of manufacturing in the coming decade may be the most important dynamic. Arguably, it’s never been a more exciting time to be in manufacturing. Every aspect of manufacturing has become more technical. The digitization of products, automation of process, and the extension of supply chain management adds complexity that requires more employee knowledge, skill, and larger domain influence. The higher demands of business will require a workforce with higher capabilities.

In the face of a workforce shortage and the heightened demands of business, automation of manufacturing is an obvious response. The dearth of labor is the gasoline on the already raging fire of automation, thereby driving businesses into even more production investment. However, this defines the proverbial Catch-22. How does a manufacturer streamline and automate to become more effective in the face of labor constraints, and also acquire more skill sets and staffing to support the complexities of automation? Even the largest of manufacturers can’t reasonably expect to master every technology that will contribute to their transformation. Leadership skills in managing vendors and partnerships to augment staffing and capabilities will be more critical than ever.

More Strategic Relationships Needed

This nuisance between managing partnerships from the last generation to the new is important. Heretofore, partnerships largely were formed based on a build vs. buy mentality. But labor shortages and the assured rarity of certain skill sets will remove that luxury for future managers. The ability to build will simply not be realistic, thereby creating the need for a higher level of strategic relationships with business partners. This, of course, implies that leaders must have the skills to form and manage a network of disparate business partners that contribute horizontally and vertically to their industries.

Technology is rapidly changing business models and traditional operations, and it will continue to do so. While the trajectory of business is quite obvious, the future details of any singular environment are not particularly predictable. Stagnant business models that have life spans measured in decades are no longer safe. This moving target means that future leaders must create businesses that are agile. The next generation of leaders must promote and manage a state of constant innovation. This means that they must be able to foster a digital culture where every employee becomes a sentry for new ideas and improvements to product and process.

Correspondingly, your competitors are doing the same. So, in this opportunistic dystopia, the next generation of leaders must be quick to react to market threats. The next generation of leaders must be able to combine the internal operational excellence of the past with an external focus on technological development and new market opportunities. They must develop an organization that evaluates new technologies quickly, adopts new business models quickly, incubates winners and eschews losers.

Manufacturing is changing at the same time that the workforce is changing, creating a perfect storm for the next generation of leaders. The combined assets from the entire workforce will be required to thrive. The next generation of leaders will need to manifest the experience of the exiting boomers, the operational excellence from Generation X, and the digital innovation from the millennials. M