Closing the skills gap

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Germany, Europe’s top manufacturing exporter, that is known for its engineering prowess, has a model skills training framework that experts say matured and emerging economies ought to follow to close the skills gap, according to Angelica Buan in this report.

The manufacturing sector is the lifeline of the world’s developing and matured economies, while emerging economies in Asia find that well-performing manufacturing sectors are assets. However, these economies are also faced with a skills crisis.

Germany, which has an exporting economy, is one of the pillars of the global economy. According to a 2013 paper authored by Bob Hancké and Dr Steve Coulter of the London School of Economics and Political Science on the German manufacturing sector, German manufacturers dominate several high-value segments, including automobile and machinery. The sector, comprising SMEs, has a significant requirement for highly skilled workers who have either gained ample training from working long-term in a company or on apprenticeship trainings.

Germany’s dual training system serves the nation’s qualitycompetitive manufacturing structure. The training, which usually lasts three years, is held in the company premises (on-site), and in a training centre. Upon completion of the programme, the trainee gains professional accreditation as a skilled employee, affording him/her the opportunities for advanced training as well as further certifications.

“The holistic German approach is already established in the country’s education system for a century now,” said Tobias Bolle, Project Director, Dual Training Department of the German-Philippine Chamber of Commerce and Industry (GPCCI), in an email interview with PRA.

“The dual training combines schooling with on-the-job training. A dual training apprenticeship takes from two to three and a half years, depending on the occupation. All stakeholders involved in the venture (company, school, state) create a public private partnership (PPP), where a lot of benefits are generated,” Bolle stated.

Acquiring skills, however, requires investments, which may be costly; and incidences such as firm restructuring or even ensuring the worker’s loyalty are important considerations.

Bolle reiterated, “What might seem to be a heavy investment will eventually pay-off in the long term. Nowadays, many companies place dual training or the talent development in general under the rubric Corporate Social Responsibility, which might give a false impression, since this is not only a matter of showing social responsibilities, but surely serves the company advancing its competitiveness.”

Uninterested parties

Despite the availability of training opportunities, the manufacturing sector is seeing fewer apprenticeships as more school leavers choose to enter universities for degrees rather than vocational trainings.

According to an analysis by Dr Thorsten Schmidt, Head of the Advisory Board of VDW-Nachwuchsstiftung, an education foundation for the youth, founded by the German Machine Tool Builders Association, technical professions (specifically in the machine tool industry in Germany) remain unpopular amongst school graduates. This consequently stifles supply of qualified labourers for manufacturing companies. The foundation is, thus, seeking to encourage more youths to take up technical trainings, particularly in the machine tools segment.

Furthermore, with the persisting shortage of highskilled workers, together with a sizeable number of ageing of workforce, is resulting in talent shortage for global manufacturing companies, according to Deloitte Research’s 2013 Managing the Talent Crisis in Global Manufacturing report.

A rising perception that manufacturing careers are laborious and low-paying are discouraging potential workers.

Asian dilemma

In Asia, a similar low turnout of apprenticeships are likely to be the case, said Anston Tan, Principal at the German Training Centre for Injection Moulding, which was founded in 1989 and is currently headquartered in Singapore.

“While a well-trained workforce is always a plus for foreign investors, the main challenge faced by many companies in the region now is a shortage of trained technicians and difficulties in attracting younger generations.”

Meanwhile, an article written by Karina Veal, Senior Social Sector Specialist of the Asian Development Bank (ADB), suggests that Asia, despite it gaining “substantial economic and job growth, and sharp improvements in standards of education”, is still inundated by skills shortages, gaps, and mismatches.

GPCCI has spearheaded German-driven educational programmes that will help workers of member-firms in the Philippines to advance their skills through technical and on-site learning.

Certification from the Technical Education Skills Development Authority (TESDA), a Philippine agency that oversees vocational training in the country, in addition to a German DIHK/IHK certificate, which is internationally recognised, will be awarded upon completion of training. Moreover, trainees could level-up for a “master course” or supervisory training, after their apprenticeship. “These are all HR development tools and possibilities. The master course could be enabled in Germany,” Bolle said.

Commenting on how the initiative came about, he said, “GPCCI, together with other German institutions, embarks on supporting the needs of its member firms in manufacturing, logistics, and electronics.”

The project, he said, is backed by the Germany headquartered Association of German Chambers of Commerce and Industry (DIHK) and over 80 chambers of commerce (IHK), also located in Germany.

Boosting competence

The German Training Centre for Injection Moulding provides solutions to close skills gap in the industry. In 2011, it launched the Injection Moulding Driver Licence course in Europe. Since its launch, the centre has issued more than 1,500 certificates in Europe.

Tan said that the company’s five-level systematic and comprehensive industry training programme has been offered to Asia this year.

“In the region, there are a few efficient moulders whose technical levels are comparable to world-class moulders. Most companies in this region face a shortage of skilled labour, which challenges their ability to automate their production processes,” shared Tan, when asked about the state of the injection moulding process skills in Asia.

“Globally, most training programmes focus on material science and the moulding process. We believe a qualified moulder must understand material, mould, machine, peripherals, moulding process and special technologies to be able to effectively operate an injection moulding machine,“ Tan told PRA.

“A globally standardised curriculum will help equip Asian moulders with a competent workforce to compete better in the world market. And being standardised, means that the training is for both males and females. With the programme, students are required to perform practical tests using their own machines and moulds. An examination is administered at the end of each course to ensure the trainees understand the learning objectives,” he clarified briefly on how the programme works.

The centre encourages companies to invest in training their workers to avoid production errors and waste of resources. Tan pointed out that the “trial and error” approach is a fairly common practice among workers who may be skilled by experience but are clueless about technicalities.

“We have many people in Asia that started as operators in plants and got promoted after years of good performance. They have learnt mostly through a master-disciple system; and gained their experiences through various trials and errors.”

To mitigate this, corresponding trainings are needed. “We educate our trainees to understand that injection moulding is a science, which they can use to help review or reinforce their current practices. We teach important theory concepts to help enhance their practical experience,” Tan explained.

“We create a standard for companies to achieve a stable production between shifts. The trainees can apply what they have learnt to improve cycle time and to produce better quality products, thus minimising the use of the trial and error method,” he added.

Tan cited that the course duration at each level is two days, during which, very intensive training is provided, focusing on giving “as many practical tips to the trainees as possible.” Each workshop class has a maximum of 12 participants. The cost for a two-day workshop is about US$900 per trainee.

“We work with local government and plastics associations to get grants and subsidies for this training,” he said.

Currently, Tan’s group has training locations in different Asian cities: six in China, three in Malaysia, two in Indonesia, and one in Singapore.

End of cheap labour?

Asia, being a manufacturing hub for many foreign firms, is favoured for having lower labour cost and professionalising the skills level of Asian workers to become at par with German counterparts could follow hikes in the cost of labour. The question is: will that do more harm than good?

Tan stressed that a trained employee, while commanding a higher pay, will also be more productive. “The wages in any developing country will always increase over time. The challenge is to ensure that productivity can keep up with the higher wage,” he said.

Efficiency in output can also compensate whatever labour cost increases that will ensue. “With qualified technicians, companies can increase moulding output and improve the quality of the moulded parts. A stable process will allow standardised parts to be produced for downstream automated assembly,” Tan said.

Bolle of GPCCI suggests that it may be “high time” for low labour costs countries to finally promote technicallycapable manpower.

“For countries like the Philippines, Vietnam and Indonesia, trainings translate to having very capable human resources. This, especially since a number of production sites in China and India are now being relocated to ASEAN countries, and with the increasing shift to automated production. Generally, we must not only bet on the low labour cost card, but also work towards a vision to transforming nations like the Philippines into a hub for innovation. While low labour costs attract a lot of companies, we still need highly-skilled workers to provide leeway to innovation, and it can be done through dual training.”

Even with the emerging automation in assembly and production, professionally-trained workers are still relevant. Tan adds, “In years to come, there will be more automation used in the industry in Asia as what we are seeing in Europe today.”

He says that more labour intensive assembly work will be replaced by automation whenever it justifies the investment. “More trained workers will be required to run the moulding machines to get a stable process to support the downstream automation to work smoothly,” Tan said, further disclosing that his group plans to offer training in automation and 3D printing in the future.


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