KSM/Kelley School of Business survey: 'Skills gap' continues to take toll on Indiana economy

Angst among Hoosier manufacturers is on the rise, with corporate taxes, environmental regulations and a shortage of skilled workers leading their collective list. Such were the findings of Katz, Sapper & Miller’s annual manufacturing survey released earlier this week, which was conducted in collaboration with IU’s Kelley School of Business.

Once more, Indiana’s “skills gap” — the growing demand for technically skilled workers met with a shortage of such workers produced by Indiana schools, colleges and universities — figured prominently as one of the state’s most critical economic challenges:

• The biggest reported shortages were in skilled production workers, production support, scientists and design engineers; 70 percent of respondents identified a moderate or severe shortage of skilled production workers.
• All of these were ranked more serious than in 2014. Despite widespread consensus on the issue’s importance and promising partnerships among state government, post-secondary and vocational education and industry groups, the workforce pipeline isn’t yet meeting the demands of manufacturers today.
• To compensate for workforce shortages, most employers are resorting to overtime for existing workers (75 percent of respondents) and relying on internal training programs to prepare new employees (79 percent).

Efforts such as “E2E Convergence,” an event hosted by Innovate Indiana and TechPoint, brought together education, technology, economic and workforce officials to discuss the issue back in June. Yet the “skills gap” continues to affect Indiana’s economy.

For example, the number of survey participants planning to open a new Indiana facility in the next year dropped nearly in half from 2014 — from 20 percent to just 11 percent.

“Just like the manufacturers in our survey, Indiana can’t just be the lowest-cost state. We have to deliver higher value in terms of workers, supply-chain capabilities and more. If we don’t, others will be quick to fill the gap.”

— Jason Patch, chairman of Katz, Sapper & Miller’s Manufacturing & Distribution Services Group

Each year, Katz, Sapper & Miller and the Kelley School partner with the Indiana Manufacturers Association and Conexus Indiana to reach hundreds of employers for the statewide survey.  Respondents range from small machine shops to global conglomerates representing automotive, aerospace, industrial equipment and other sectors, including high-tech and medical products.

Read more about the survey here. To download a copy of the full report, click here.