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As General Electric upgrades factories closing the 'skills gap' is a top concern

In Grove City, Pennsylvania, factory workers at the General Electric remanufacturing plant scan barcodes on locomotive engines, pulling up detailed histories of the machines to diagnose for repairs. A few years ago, each would have been torn down, piece by piece, assessed using instruction manuals, and the servicing recorded in paper tomes. Now the focus is on big data, stored in the cloud, and with the help of algorithms, those workers target specific parts.

It's one example of the tectonic shift sweeping across factory floors — boosting productivity and uprooting the image of this kind of labor as "dark, dirty and dangerous."

As President Donald Trump pushes for a Made-in-America manufacturing rebirth, technology is simultaneously reshaping the sector. The adoption of automation, digitization, and robotics is fundamentally transforming the supply chain — and with it, job descriptions.

GE has been on the trend's forefront, which analysts say is still too nascent to have a meaningful impact on earnings. But the company has been investing billions of dollars to develop this, coining the clunky term "Industrial Internet of Things" and creating catchy commercials in an attempt to reimagine itself.

The crux is the "brilliant factory," a multi-tiered format that harnesses sensors, big data, software, robotics and additive manufacturing (basically, metal-based 3D printing).

So far, of 500 plants worldwide, GE has converted seven into "brilliant factory" showcases, including the one in Grove City. The plan: Grow that to 17 by year's end, and have wide-scale implementation in place by late 2020.

Philippe Cochet, GE's chief productivity officer, said the change will improve GE's ability to return cash to shareholders, since it reduces the space required to produce something, lead times, and inventory; but none of it, he stresses, is possible without the company's workforce – present and future — getting on board.

"The main challenge is… to get people who can cope with digital, also be able to use an iPad, be able to look at data on a screen," explained Cochet. "The second one is about teaming – the ability for people to work together… because without a team, this isn't going to work."

In 2015, Deloitte and the Manufacturing Institute concluded that of the 3.5 million new manufacturing jobs forecast to be created by 2025, as many as 2 million could go unfilled due to a widening skills gap.

The National Skills Coalition has estimated that middle-skill jobs in computer technology, health care, construction, high-skill manufacturing and other fields, account for 54 percent of the labor market, but only 44 percent of workers are sufficiently trained.

"The key is learning. Individuals as well as employers have to be in an environment where learning and constant upgrading of skills is valued and motivated," said Ken Louie, an associate professor of economics at Penn State Behrend's Black School of Business and director of the Economic Institute of Erie.

General Electric Co. (GE) Evolution Series Tier 4 diesel locomotives stand on the final assembly line at the GE Manufacturing Solutions facility in Fort Worth, Texas.
Luke Sharrett | Bloomberg | Getty Images
General Electric Co. (GE) Evolution Series Tier 4 diesel locomotives stand on the final assembly line at the GE Manufacturing Solutions facility in Fort Worth, Texas.

GE recently announced plans to retrain 150,000 employees to work in these more tech-centric environments, training that will help transition longtime employees from paper to the cloud, from manual applications to automated and digitized ones.

It isn't alone either. On a recent visit to the White House, Siemens pledged to provide more than $2 billion of its industry software to institutions to train U.S. students in "nextgen" manufacturing, and to expand its own apprenticeship program in the U.S.

Lockheed Martin, John Deere, AT&T, and others have also been putting money and resources toward their workforces – both to retrain long-time employees and to develop the future labor pool, which tends to be comfortable with tech already.

Jamie Miller, GE Transportation's CEO and GE's former chief information officer, is an architect of this new model. She said the changes are creating big demand for skills that may seem least associated with technology.

"I'd say traditionally, where it may have been how people can do the actual work, that's really been supplemented by a deeper look at the 'soft skills', a deeper look into how they work in a bigger environment," Miller said.

As productivity increases and the manual labor part of the job decreases, factory workers must become more predictive and interactive. At GE for example, longtime machinists and technicians are now being teamed with data analytics experts.

Such manufacturing jobs tend to pay better than other kinds of work. The average manufacturing salary in Pennsylvania pays $59,000, according to Eileen Cipriani, the state's deputy secretary of labor and industry. The average salary in the state is about $52,000.

Yet while the jobs may be desirable, finding those with the right skills may be a challenge. In Grove City, of 100 recent applicants, "well under" 10 passed the new screening to make the hiring cut on the repair shop floor.

"These structural changes will be very painful in the short run," said Louie. "Many individuals will feel the adverse consequences from job loss, from income loss but in the long run advances like this really ultimately help to improve the standard of living for the aggregate of society. The challenge is for us to balance those long-term benefits with the short-term adaptations that hopefully design public policies that will help workers more intelligently to make that transition."