Pennsylvania’s 24-member Governor-appointed Manufacturing Advisory Council (GMAC) sent its report today to Governor Tom Corbett and the state Legislature, offering a list of 15 key recommendations it believes will strengthen and improve Pennsylvania’s economy.
“The council tackled the issues manufacturers know hinder their ability to grow and which pose the biggest threat to a strong manufacturing sector, which is the foundation to Pennsylvania’s economy,” said GMAC private sector co-chair Carlos Cardoso, Chairman, President & CEO, Kennametal Inc. “The group employed a common-sense approach, asking ourselves, ‘what are the issues that keep us up at night and what can we do to address manufacturing challenges in a fair and practical way’.”
The report focuses on the building blocks of a strong manufacturing sector: a highly skilled and educated workforce; new sets of tools to drive innovation and product development; better access to domestic and international markets; strategic public/private collaboration; and improved access to capital.
The council says a growing scarcity of skilled employees is the industry’s top concern.
“Many people never consider a career in manufacturing because their perception of the industry is not in line with the reality of modern-day manufacturing,” Cardoso said. “Modern manufacturing is, in fact, an industry that affords workers a highly technological and safe work environment and excellent, family-sustaining wages and benefits.”
The GMAC report also notes the most pressing problem now and for the future of the industry is finding people with the education and skills to fill the growing number of advanced manufacturing positions available.
GMAC public sector co-chair C. Alan Walker, Secretary, Department of Community and Economic Development, said a 2011 study by Deloitte and The Manufacturing Institute found 82 percent of manufacturers throughout the United States reported a serious or moderate skills gap in their employees and 74 percent of manufacturers said the skills gap has negatively impacted their company’s ability to expand.
“There is a great disconnect between the number of available jobs and the number of people who are unemployed or underemployed,” Walker said. “Government and industry must work together to find ways to better connect job seekers with job openings in the manufacturing sector. This report provides the Corbett administration with a solid roadmap for us to work together to achieve that goal.”
“Getting Pennsylvanians back to work is one of the top priorities of Governor Corbett, and the administration continues to work diligently to bridge the gap between job-seekers and employers,” Walker said. “A skilled and talented workforce positions Pennsylvania to be even more competitive in a global economy.”
Looking to grow the $75 billion in revenue manufacturing adds annually to the state’s economy, Gov. Corbett created the council last January to “identify and prioritize top issues that can help influence, sustain and advance that sector in the commonwealth.”
Gov. Corbett charged the commonwealth’s non-profit Team Pennsylvania Foundation to lead the council’s work. The council gathered information about challenges facing the industry from a variety of industry experts and manufacturers and compiled its findings over a six-month period beginning in January.
“As the state’s private sector partner, Team PA is proud to have led the council and believes these recommendations will lead to substantive changes that will positively impact manufacturing for many years to come,” Team Pennsylvania Foundation President and CEO Matt Zieger said. “We look forward to working with our investors, other stakeholders and the Corbett administration in making these recommendations a reality.”
Concerning the expansion of market capacity, Secretary Walker said opening doors to new opportunities would help expand the $31.2 billion manufacturers contribute in exported goods annually to Pennsylvania’s economy.
“Many small- and medium-sized manufacturers face such barriers as a lack of capacity, internal market expertise or limited market access due to poor infrastructure or lack of technology,” Walker said. “We need to seek and seize new market opportunties as well as continue to leverage the natural gas boom to our advantage as a way to expand market capacity.”
The council recommends increasing the use of existing state services in export and technical assistance, and investment in infrastructure improvements to ensure cost-effective market access for manufacturers.
Cardoso said manufacturers believe government and industry should work more closely together to increase manufacturing’s contributions to Pennsylvania’s Gross State Product, which currently stands at 12.1 percent, as well as a way to employ more Pennsylvanians. Ten percent of all Pennsylvanians are employed in the manufacturing industry.
“Recognizing the extraordinary economic value that a thriving manufacturing sector brings to the commonwealth, the council believes the industry deserves a fair, streamlined, predictableand supportive relationship with state government,” Cardoso said. “This will help grow our economy and provide new opportunities for Pennsylvanians.”
Cardoso said innovation is key to a profitable and growing manufacturing sector. A three-year Georgia Tech study noted a stark contrast in sales growth (84 versus 4 percent), profit margins (96 versus 13 percent), and employment growth (63 percent versus 1 percent) for innovative companies over reactive companies.
“To remain profitable in a constantly changing marketplace, Pennsylvania manufacturers must continuously leverage and improve their unique capabilities and demonstrate their advantages over competitors,” Cardoso said. “Innovation is not just about developing the new; it is fundamental to ensure success in both new and existing processes and products within current and expanding markets.”
The council recommends the development of a Pennsylvania Innovation Marketplace and improved collaboration between business, government and trade organizations focused on innovation and growth.
Cardoso said manufacturers need access to capital across all stages of the business lifecycle to achieve and sustain a healthy financial position and the consistent ability to grow to meet new opportunities. This is especially true with small manufacturers, Cardoso added.
“Manufacturers need greater access to information, tools and training on the various types of available capital, how to access it and the way to use it to address their unique needs,” Cardoso said.