NAM CEO Jay Timmons on addressing the manufacturing labor shortage

Jay Timmons, president and CEO of the National Association of Manufacturers, joined Yahoo Finance Live to discuss the labor shortage in the sector and his outlook for the rest of the year.

Video transcript

SEANA SMITH: Manufacturing output rising in April by more than expected. It's the second month in a row that we've seen an increase there. We want to talk more about this with Jay Timmons. He's the CEO of the National Association of Manufacturers.

And Jay, looking at the data, it looks like it's improving. I know you gave a speech earlier this afternoon on the state of manufacturing. Give us a sense of where the industry stands today.

JAY TIMMONS: Well, the industry is really optimistic right now. We've had some very strong numbers coming in. I think if you looked back a year ago, Seana, and you wondered where we would be at this point, I think we would all be surprised that the sector is so strong, and frankly that the economy is so strong. So we're very grateful that we're in this position. And we realize a lot of that is because manufacturers, quite frankly, are very adaptable, and we were able to overcome a lot of strange conditions during a pandemic. And we had those tailwinds of very strong tax policy changes that were made in 2017 as tailwinds that allowed us to invest and hire and raise wages and benefits.

ADAM SHAPIRO: Jay, I'm curious, because it's a testament to the resiliency of the women and men who work in manufacturing. We learned from the Federal Reserve today that output increased 4/10 of a percent in April, and they revised the jump in March to 3.1%. So given all the headwinds that manufacturing faces-- and we know that manufacturers are having trouble recruiting people-- my question would be, do manufacturers need to recruit people? Their output is greater with fewer people and with those deficiencies in hiring.

JAY TIMMONS: Boy, we sure do need to recruit, Adam. We've got 700,000 jobs open in manufacturing today. That is a record number in all the time we've been keeping this data. And so what that really translates to is there's a tremendous amount of demand right now, especially coming out of the pandemic. And we're trying to keep up with it. And if we can't keep up with that, it's a simple supply and demand equation. Prices are going to rise. We need to be able to produce more to be able to meet that demand. We need people in order to produce more products.

We need people with the right skills. And that has been a problem not just today. This is a pre-pandemic problem too. You'll recall that we talked about it before the pandemic when we had 500,000 jobs open at that time. So this is not a new issue for manufacturers, but it's becoming more and more concerning to us as we see those numbers increase.

SEANA SMITH: Jay, it certainly is. And we've talked to a number of guests here on Yahoo Finance recently who have echoed pretty much the same sentiment, saying that it is hard to find jobs right now. When it comes to manufacturing, though, are there certain steps that the government can take, federal programs that you think that could potentially be instituted in order to address the shortage that we're seeing?

JAY TIMMONS: Well, there are some programs that the federal government has traditionally put forth to the states. But really, we need to see some of those streamlined and made adaptable to each state's situation. And we'd like to see more focus, frankly, and more prioritization of education and community colleges and technical schools.

There was a myth for so long-- I certainly grew up with it-- that you had to have a four-year degree or higher in order to succeed in this country. That is a fallacy. There's nothing wrong with those degrees, obviously. And some jobs in manufacturing actually do require them. But most jobs in manufacturing can-- most folks can start a new job in manufacturing with either a high-school degree or a couple of years of community college or a technical school diploma and some additional training.

Businesses also have an obligation. And I'm very proud to say that manufacturers are stepping up and doing their job to upskill and reskill the workers that are in their workforce in order to future-proof jobs, and providing training opportunities and apprenticeships to those that we want to attract to our sector. We also are in the process of changing the perception of manufacturing and getting more people attracted to our industry.

ADAM SHAPIRO: Jay there's the Manufacturing Institute's report, "Creating Pathways for Tomorrow's Workforce Today Beyond Reskilling in Manufacturing." And it talks about the effort as well to recruit more women into manufacturing, as well as underrepresented minorities. Would one of the solutions be even greater pay? I mean, most people in manufacturing are making more than this issue right now of sitting home and receiving unemployment benefits. So it's already attractive. But do the manufacturers need to raise wages?

JAY TIMMONS: So you actually just gave the data point, Adam. We actually pay more than any other sector of the economy. So that's not an issue for manufacturing. What is an issue is what I referred to previously, which is the perception of manufacturing, recruiting more people to understand that manufacturing is a great career choice. It's a pathway to success. It's also a lifelong career choice if the person desires for it to be so.

You pointed out, the Manufacturing Institute and Deloitte report, which indicated that we really do need to do a much better job of recruiting women into manufacturing. Only about 29% of the manufacturing workforce is female. We need to do a far better job of going into disadvantaged communities and recruiting people of color, frankly, into manufacturing.

So our creators wanted campaign that we launched last year but quickly had to put aside, because it was an in-person road show. We've done that digitally throughout the pandemic. We're going to get on the road as soon as it's completely safe to do so. And we're now targeting that campaign into these disadvantaged communities.

The report was actually a wake-up call, I think, for manufacturers. We've seen issues of social justice and racial inequalities really rise to the top over the course of the last year. And manufacturers want to be a part of the solution to ease a lot of those cultural stresses that we're seeing today. And we know that our industry offers some tremendous opportunities.