Mitch Free  CEO  MFG.com  Atlanta, Ga.Mitch Free CEO MFG.com Atlanta, Ga.As CEO of MFG.com, I speak with owners of job shops every day about their businesses. The good news is that they are busy and most say they have plenty of work. In fact, many report they are turning away customers — customers who would like to bring offshore manufacturing work back to the U.S. Why are they turning away potential business and not creating jobs that the U.S. badly needs? Because they cannot find enough skilled machinists, toolmakers, and fabricators.

 

This will not come as a surprise to anyone in the manufacturing industry, but we have an across-the-board shortage of skilled manufacturing talent in the U.S. When manufacturing started leaving the U.S. to chase cheap labor, many people lost their jobs and thought those positions would never return. We told those people America had transitioned to a service economy, and they needed to retrain for the service industry. We told our children to go to college, not trade school, and to stay clear of manufacturing because it was a sunset industry. So it is no surprise that we find ourselves in the midst of a manufacturing talent crisis and yet have millions of unemployed college graduates with degrees in business and liberal arts.

Market forces work. It is no secret that there are openings for good-paying jobs. In many cases trade-school grads will be more competitive than four-year business majors. American manufacturers are desperate for skilled workers and they’re offering $50,000, sometimes $60,000, in starting salaries. Earning potential is huge, especially as industry expands due to the reshoring trend.

People are rushing to get the training they need to transition from a service job to a skilled manufacturing job. As such, trade-school enrollment is up dramatically and trade schools are trying to find ways to accommodate the influx of students after years of shrinking their capacity.

As I mentioned, market forces work and we all know the theories of supply and demand. There is a shortage of job-shop capacity in the U.S. right now because much of China’s cost advantage has eroded and companies want to move production closer to home. As such, the job shops have more business and customer inquiries than they can handle, so they do what any for-profit business would do: They take advantage of that leverage and raise prices, increasing their profits. In the short term, this is good for the owners and for the in-demand workers who are receiving wage increases and overtime.

My concern is for the longer term. We have to be careful not to raise prices so much that we drive customers back offshore, just as many eager students are graduating from trade school and gaining valuable hands-on manufacturing experience. It would be a shame to have to tell them again to retrain for a service-industry job.

Edited by Kenneth Korane.

MFG.com is an online marketplace that matches buyers of industrial goods to suppliers with suitable equipment, expertise, and capacity.

© 2012 Penton Media, Inc.