The San Antonio Manufacturers Association (SAMA) Alamo Region Manufacturing Industry Workforce Assessment Report

The San Antonio Manufacturers Association (SAMA) Alamo Region Manufacturing Industry Workforce Assessment Report November 2015

The San Antonio Manufacturers Association (SAMA) Alamo Region Manufacturing Workforce Assessment Report was prepared for the San Antonio Manufacturers Association by John Dewey, SAMA Board Member and Chairman, SAMA Workforce & Economic Development Committee The Report is available on the SAMA website www.sama-tx.org or contact SAMA at 9607 Broadway, Suite C, San Antonio, TX 78217 2

Table of Contents Executive Summary 4 Background 6 The Workforce Assessment Study 7 Occupational Demands 10 Economic Impact 17 The Transportation Equipment Manufacturing Sector (NAICS 336) 17 Occupational Education/Skills Requirements 20 Projected Workforce Losses 23 Additional Occupational Demands 24 Conclusions & Recommendations 26 3

San Antonio Manufacturers Association (SAMA) Manufacturing Workforce Assessment Study - 2015 Executive Summary As a follow-up to the 2012 San Antonio Manufacturers Association (SAMA) report that drew attention to our manufacturing workforce needs, SAMA was tasked to provide an updated assessment of the Alamo Region s manufacturing industry workforce requirements, with a view toward future as well as current needs. The objective of the study was to identify and quantify the Alamo Region s skilled workforce demands to provide a basis for focusing workforce development and training resources to meet the regional manufacturing industry s needs. Companies were asked to identify their top 3 high-demand employment needs for current, 2-, 5- and 10-year projections. The assessment included responses from nearly all sectors of the manufacturing industry and represented over 25% of the region s manufacturing employment. The survey responses provided both confirmation of antidotal perspectives as well as significant new information regarding our regional manufacturing workforce needs. Many of the highdemand occupations identified in the 2012 SAMA report remain on the list in 2015, implying further attention needs to be paid to these critical positions. Review of the top demand occupations also indicates that the growth of automation and technological complexity within our manufacturing industry is having a significant impact for higher demand of related workforce skills. As a targeted growth industry sector, the SAMA study also included an assessment of the region s Transportation Equipment Manufacturing sector which includes the aerospace, motor vehicle, industrial/off-road vehicle and related parts manufacturers. The study indicated that the occupational needs of this manufacturing subsector closely mirror those of the rest of the Alamo Region s manufacturing industry. In addition to the cross-industry utilization of manufacturingrelated occupations, the study found significant commonality of high-demand occupational skills within various identified occupational groups. This commonality of industry needs, both within the occupational groupings as well as between various industry sub-sectors, indicates potential opportunities for the development of broader-based skills development programs that could provide deeper penetration into the number of positions impacted. The skilled manufacturing vacancies identified in the report represent a significant, although understated, economic impact upon the Alamo Region. The $1.3B annual economic benefit reflected in the report represents almost a 6% increase over the current economic impact of the manufacturing industry upon the Alamo Region. The economic impact is likely understated as it does not include other occupational vacancies not identified within the Top-3 demand designation of the survey, nor does it take into consideration the additional employment needs of new businesses that will join the Alamo Region during the surveyed period. The inability to fill these critical occupations represents a significant loss of economic opportunity not only to the individual manufacturing companies, but also to the region itself. 4

The following report s identification of high-demand manufacturing occupations should be used to assess regional technical education and workforce development programs to determine if the programs align with the industry s needs. The assessment of possible solutions to the industry s workforce requirements must be consistent with the premise that many of these needs are for replacement of senior skilled workers in addition to the development of entry level workforce program. Programs for up-skilling incumbent workers to meet those demands must also play a significant role in sustaining our current industry s economic well-being. As evidenced by the results of the Alamo Region s manufacturer survey depicted in this report, the industry s demand for skilled employees within critical occupations has not waned since the previous SAMA workforce assessment report issued in 2012. This current report provides a broader assessment of the regional industry s current and out-year occupational demands as well as a deeper review of the industry. Although progress continues to be made to address our regional workforce issues, the report provides a perspective that significant efforts are still needed to meet both critical current and projected vacancies within our manufacturing industry. To meet those needs will require the continued engagement and collaboration of industry, government, academia and civic leadership within the Alamo Region. 5

SAMA Manufacturing Workforce Assessment Study - 2015 Background: In any discussion related to economic development, growth of our industrial base or the current status of our manufacturing industry, the issue of the availability of a skilled workforce quickly reaches the forefront of the dialogue. Numerous studies and reports have been prepared on the subject, many at the national level with others offering international or local perspectives on the issue. Some project bleak futures, others offer suggested pathways to prosperity, while still others merely document how we attained the position in which we now find ourselves. Each of these perspectives provide insight into the core issue that will inhibit not only the growth of our manufacturing industry, but also has the potential to adversely impact our ability to sustain existing levels of productivity within the industry. That core issue is that currently there are insufficient quantities of people available with the proper skills necessary to meet the demands of today s manufacturing industry, nor are there projected to be in the near future. A recent report 1 prepared for The Manufacturing Institute by Deloitte LLP in 2015 forecast an estimated 3.4 million manufacturing job vacancies in the United States over the next decade, with 2.7 million of those vacancies occurring due to retirement of existing workers, and the 700,000 balance attributed to business growth needs. What s more, the report anticipates 2 million of those vacancies will likely go unfilled. Key to that projected national shortage of skilled workers is: Loss of embedded knowledge due to loss of experienced workers, Lack of STEM (science, technology, engineering & mathematics) skills among workers, A gradual decline of technical programs in public high schools, and A negative image of the manufacturing industry among younger generations. Trends in the Alamo Region 2 closely coincide with those at the national level. In 2012, the San Antonio Manufacturers Association (SAMA) published the results 3 of a town hall meeting held to gauge workforce needs of regional manufacturers. Although informal, the responses from that session indicated that the average number of skilled manufacturing vacancies open at the time of the meeting (December 2011) was approximately 1,530 positions, or approximately 3% the current level of regional manufacturing employment. Interestingly, in 2012 the National Association of Manufacturers (NAM) Manufacturing Institute reported that there were approximately 600,000 manufacturing vacancies nationally, which represented approximately 5% of the manufacturing employment in the U.S. at the time. Interviews with local manufacturers further support the premise that the Alamo Region is experiencing many of the same workforce issues and trends that are being reported nationally. Key among these is: Inability to fill key skilled direct manufacturing positions, Loss of experienced, journeyman-level employees due to baby-boomer retirements, Inability to support business growth due to a lack of skilled workers, Inability to find candidates with the hard technical skills required for manufacturing employment, 6

Inability to recruit candidates meeting essential or soft skills necessary for employment, Unanticipated demand for remedial training to meet minimum education performance requirements in core knowledge areas, Lack of knowledge of manufacturing career opportunities, and a Lack of a positive image related to careers in manufacturing. In addition to the above, the Alamo Region currently has the further complication of low regional unemployment (3.7% at the time of this report release 4 ), which presents an added difficulty for manufacturers searching for local candidates to fill needed vacancies. The Alamo Region possesses approximately 1,500 firms engaged in manufacturing within all 24 subsectors of manufacturing recognized by the federal government, providing a significant industrial diversity to the benefit of the region. 5 As is true for the nation, various segments of the regional manufacturing industry have waned over the past decade, while others have demonstrated growth. Regional economic development initiatives have targeted various industries as opportunities for regional growth. Within the targeted regional growth industries is the Transportation Equipment Manufacturing subsector (NAICS Code 336), which includes the aerospace, motor vehicle, heavy/off-road industrial vehicles and related parts manufacturers. Anchored by international companies such as Toyota, Boeing, Lockheed-Martin, Standard-Aero, Caterpillar, Alamo Industrial Group, Kalmar RT, and Continental, approximately 80 manufacturing companies are currently members of this targeted Alamo Region growth sector employing approximately 11,136 people, with a like number of additional regional manufacturers serving as suppliers to this industrial segment. Due to the significance of this particular sector, additional emphasis was placed upon this manufacturing group during the performance of the survey (See the Transportation Equipment Manufacturing section of this report for more information related to this manufacturing subsector.) The Workforce Assessment Study: With the release of SAMA s workforce assessment report³ in 2012, a positive response was received from local and state agencies engaged in the development and implementation of workforce and education policies, programs and practices. Presenting the first data-based analysis in support of the workforce needs of the regional manufacturing industry, the report also served as the basis of testimony provided by SAMA to the Texas Legislature, the Texas Workforce Commission, the Texas Higher Education Coordinating Board and the State Board of Education related to Career & Technical Education (CTE) and state workforce development programs. Substantiating regional town hall sessions conducted by State and local authorities, the SAMA report was a key contributor to the re-focusing of the Texas high school education curriculum under what is known as HB5 or Texas House Bill 5, which implemented a new (and unique to Texas) program that recognized the value of re-establishing Career and Technical Education (CTE) options in high school curriculum. The passage of the HB5 legislation in 2013 recognized the benefits of addressing industry s needs to have graduates educated in the occupational skills needed to support today s high-tech industries, while providing career path options to prepare students for gainful employment and post-secondary education. 7

In response to SAMA s 2012 successful efforts to draw attention to our manufacturing workforce needs, the Association was tasked in 2014 to provide an updated assessment of the Alamo Region s manufacturing industry workforce requirements, with a view toward future as well as current needs. With SAMA working in conjunction with The University of Texas at San Antonio s (UTSA s) Institute for Economic Development (IED), an initial survey was conducted of regional manufacturing firms as identified by various databases. Following the initial UTSA survey, joint review of the responses indicated that additional stratification of the industry survey was necessary to provide increased focus upon the regional manufacturing industry sector. SAMA identified 162 regional manufacturers representing local companies from the North American Industrial Classification System (NAICS) codes recognized as manufacturing by the federal classification system. A second UTSA/SAMA survey of these companies was concluded in 2015, with an overall response rate of 35 percent. 6 Perhaps more significantly, manufacturers responding to the survey represented approximately one-quarter (26%) of the total regional employment within the surveyed industrial sectors. 7 The surveyed companies also represented a cross section of business sizes, ranging from small to large manufacturing companies, with respondents employing between 15 to 2900 employees as depicted in Figure 1. The employee size of the companies responding to the survey closely coincides with the demographics of the Alamo Region s manufacturing industry, where over 85% of the region s manufacturing firms employ 50 or less employees. Figure 1 Responding Company Employment Size 8

Respondents to the second UTSA/SAMA workforce assessment survey were requested to identify the top three high-demand manufacturing occupations that they were currently having difficulty filling. Additionally, the surveyed companies were asked to identify the top three occupations that they anticipate having difficulty filling in the future (i.e., 2, 5 & 10 years). Candidate occupations were identified as those positions that are directly engaged in the manufacturing process 8, although surveyed companies could identify unique occupational descriptions not reflected in the federal Standard Occupational Classification (SOC) listing. The survey requested the identification of the top three high-demand occupations within each of the four time periods identified (current, 2-, 5-, and 10-year projections). Responding manufacturers identified 67 separate current and/or future direct manufacturing-related occupations as difficult vacancies to fill. Additionally, the surveyed companies were asked to identify the current and projected openings for each of the high-demand occupations for those periods. The following charts reflect those high-demand occupational needs for the Alamo regional manufacturing sector. It should be noted that the identification of out-year demands diminishes as the projections extend further into the future. This was anticipated and is indicative of the survey respondents uncertainty regarding their future business conditions as well as the potential impact of the integration of new technologies into both manufactured products and production processes. Of further note related to the Study results is that a) surveyed companies were only asked to identify their top 3 high-demand occupations and b) the survey results reflected in the enclosed charts reflect only those occupational demands reported by multiple company respondents. The first item is due to the fact that the survey did not attempt to identify the total vacancy demands of the Alamo region s manufacturing sector, focusing on only the top 3 high-demand occupations. As a result, the demand levels shown in the charts are most likely understated. The second item was a decision to exclude a single company s occupational demands from the projection to the entire manufacturing population. This was due to the possibility that the identified occupation may be unique to a particular company rather than applicable to the entire manufacturing sector. An example of this occurrence is the identification by one heavy equipment vehicle manufacturer for forty Mobile Heavy Equipment Mechanics (SOC 49-3042). Although used by 25% of the regional manufacturing sectors, only one company identified this as a high-demand occupation. Several instances of high-demand, single respondent occupations were identified by the survey and may be indicative of specialized workforce needs that also need skills development support, through more focused upon specific companies than an industry-wide application. These single company high-demand occupational need responses are reflected in Table 2-1 within this report. 9

Occupational Demands: The first chart (Figure 2-1) identifies the top 15 high-demand manufacturing vacancies projected over the entire 10-year survey period, ranked by the highest cumulative demand. This chart consolidates the identified demands into major occupational groupings as indicated by the SOC code and the summary occupational group description. These occupational groupings have common core skills for those occupations within the grouping, with individual occupations requiring additional special skills unique to that position. High demand within these occupational groupings would suggest that establishment of core competency skills development programs in support of an occupational grouping would provide foundation platforms with a broad potential for further specialized workforce development needs. For example, the grouping 51-401X CNC Computer Controlled Machine Programmers & Operators includes respondent requirements for CNC Computer Control Programmers & Operators (SOC 51-4010), CNC Computer Controlled Machine Tool Operators-Metal & Plastic (SOC 51-4011) and CNC Computer Controlled Machine Tool Programmers-Metal & Plastic (SOC 51-4012). Although there are significant additional skills demands associated with programming CNC (Computer Numeric Controlled) equipment than is required for the operation of the equipment, knowledge of the operation and use of the equipment is needed as a core skill by both operators and programmers. These same principals were applied to the selection of the occupational groupings identified in Figures 2-1 and 3-1. 10

FIGURE 2-1: Top 15 Current & Projected High-Demand Manufacturing Vacancies by Occupation Category 11

Further breakdown of workforce demands across all Alamo Region manufacturing sectors are identified by specific occupation in Figure 2-2. This chart depicts the top 15 individual highdemand occupational vacancies, by specific Standard Occupational Classification (SOC) code, over the entire 10-year survey period, ranked by the highest cumulative demand. As in Figure 2-1, survey responses have been projected for the Alamo region s entire manufacturing population, excluding those survey demand responses identified by only a single company. 12

FIGURE 2-2, Top 15 Current & Projected High-Demand Manufacturing Vacancies by Occupation 2015 13

The data contained in Table 1-1 depicts the top 10 current year demands/vacancies for specific manufacturing occupations identified by the UTSA/SAMA survey. The survey responses were projected over the Alamo Region s manufacturing population to reflect the total number of vacancies for the region. 9 As noted in the Figure 2-1 and Figure 2-2 discussion, the demand levels are likely understated due to the survey only seeking the top 3 demand occupations from the respondents, rather than identifying all occupational needs. This Table also identifies the extent of the usage of each occupation across all 24 manufacturing subsectors (see note 5) as well as the Alamo Region s employment level for the occupation. 10 Additionally, the Table identifies the mean annual wage (2080 working hours annually) for each occupation, excluding benefits. Concurrent with the performance of the survey, a detailed analysis of employment levels by occupation was also prepared for the various manufacturing industry sectors in the Alamo Region to determine both regional employment by occupation and the cross-utilization of occupations between the industry sub-sectors. A high Manufacturing Sector Commonality indicates that this occupation is used across a wide range of the 24 manufacturing industry subsectors, regardless of the products being produced. A high Commonality percentage also indicates the potential for any workforce development programs to have a wider impact upon the region s industries. A low Commonality percentage indicates that the occupation may have a more specific sector or individual company focus within the manufacturing industry, even if the indicated demand is high. Again, as noted in Figure 2-2, single company survey responses are excluded from these tables and are reflected in Table 2-1. 14

Table 1-1 reflects the Industry s Top 10 current year demand for skilled manufacturing positions. The total current year demand for just the Top 10 occupations (873 vacancies) identified by the survey is 19% of the current regional employment (4,643) for those Top 10 occupations. When the Current Year demands are tabulated for all occupations identified by the survey responses (1,433 projected current vacancies), it reflects 5% of the Alamo Region s employment (29,127) within just those specific occupations, and almost 3% of the total regional manufacturing employment (51,027) for all occupations. 11 Additional existing vacancies that were not identified as a top-3 high-demand position within the limits of the survey responses would further increase this vacancy rate. DEMAND RANK SOC SOC Description Top 10 Occupations-Current Year Demand Calculated Demand Qty Table 1-1, Top 10 Current Year Demand Occupations Table 1-2 below identifies the 10-year cumulative demand for the current and out-years. Specific out-year occupational needs projections (i.e., 2-, 5-, & 10-year) are identified in Figure 2-2. The data in these tables is derived from the specific survey responses and may reflect anticipated industry trends. For example, SOC code 15-1131, Computer Programmer/Software Engineer/Systems Analyst was identified as a demand by multiple companies within an industry segment that develops complex automated production systems, including robotic systems. Software programmers in this environment must possess extensive knowledge of productionoriented hardware, sensors, motion control systems, pneumatics, hydraulics, AC & DC drive systems, multiple computer platforms and software languages. The 10 year cumulative demand for this occupation is projected to exceed the current level of employment by approximately 150%. However, this demand growth is consistent with the increased automation and technology being integrated into current production systems and processes. An additional factor relative to identified cumulative demand exceeding current employment is based upon anticipated business growth of a particular industry segment. For example, survey responses relative to Industrial Truck & Tractor Operators, including fork lift operators (SOC 51-7051) depicts an almost doubling of positions over the next 10 years (189% increase), with the majority of the increase identified in the 5 to 10 year demand responses. The increases in the demand for 15 Regional Manufacturing Employment (All NAICS) Alamo Region Mean Annual Wage (2014) Manufacturing Sector Commonality 1 49-9040 Industrial Machinery Installation, Repair & Maintenance Workers 255 910 $45,802 83% 2 51-2099 Assemblers & Fabricators-All Other 176 480 $25,646 71% 3 51-4120 Welders, Cutters, Solderers & Brazers 114 1092 $38,854 83% 4 17-2141 Mechanical Engineer 70 471 $76,898 88% 5 51-4010 CNC Computer Control Programmers & Operators 47 457 $49,525 42% 5 51-4081 Multiple Machine Tool Tenders Setters, Operators & Tenders-Metal & Plastic 47 313 $30,160 46% 5 51-4111 Tool & Die Makers 47 280 $42,099 58% 5 15-1131 Computer Programmer/Software Engineer/Systems Analyst 47 70 $80,808 83% 9 17-2071 Electrical Engineer 39 352 $89,565 67% 10 49-9043 Machinery Maintenance Workers 31 218 $40,498 100% Totals: 873 4643

this occupation were linked to multiple companies within the region s motor vehicle manufacturing industry, which may be indicative of anticipated increased future production levels within that sector. The total 10-year cumulative demand for the Top 20 occupations (3,259 projected vacancies) identified by the survey is 32% of the current regional employment (10,320) for those Top 20 specific occupations. When the 10-year cumulative demands are tabulated for all occupations identified by the survey responses (4,789 projected cumulative vacancies), it reflects over 16% of the Alamo Region s employment (29,127) within those occupations identified by the survey responses and over 9% of the total regional manufacturing employment for all occupations. 12 This reflects a 3-fold increase in overall demand between the Top 10 and Top 20 occupations over the 10 year period addressed by the Study. As noted previously, additional vacancies not identified in the top 3 high-demand survey responses as well as single company survey responses would further increase this vacancy rate. DEMAND RANK SOC Top 20 Occupations-Cumulative Demand (Current to 10 Year Projection) Regional Calculated Alamo Region Manufacturing SOC Description Demand Mean Annual Employment (All Qty Wage (2014) NAICS) CNC Computer Control Programmers & Table 1-2, Top 20 Cumulative 10-Year Demand Occupations 16 Manufacturing Sector Commonality 1 51-4010 Operators 352 457 $49,525 42% Industrial Truck & Tractor Operators 2 53-7051 (includes fork lift operators) 333 176 $27,602 13% 3 51-2099 Assemblers & Fabricators-All Other 309 480 $25,646 71% 4 51-4120 Welders, Cutters, Solderers & Brazers 305 1,092 $38,854 83% Industrial Machinery Installation, Repair 5 49-9040 & Maintenance Workers 282 910 $40,498 83% 6 17-2141 Mechanical Engineer 255 471 $76,898 88% Computer Programmer/Software 7 15-1131 Engineer/Systems Analyst 172 70 $80,808 83% 8 51-4041 Machinist 164 1,043 $37,523 88% Multiple Machine Tool Setters, 9 51-4081 Operators & Tenders-Metal & Plastic 161 313 $30,160 46% 10 51-9190 Misc. Production Workers 149 379 $22,256 75% 11 51-2092 Team Assemblers 145 3,364 $27,643 92% 12 51-4111 Tool & Die Makers 117 280 $42,099 58% 13 51-9199 Production Workers, All Others 90 379 $22,256 75% 14 49-9041 Industrial Machinery Mechanics 86 906 $45,802 100% CNC Computer Controlled Machine Tool 15 51-4012 Programmers-Metal & Plastic 74 66 $49,525 58% Electrical, Electronic & 16 51-2020 Electromechanical Assemblers 70 425 $36,754 38% 17 17-2112 Industrial/Manufacturing Engineer 51 640 $87,381 100% Electrical & Electronic Equipment 18 49-2000 Mechanics, Installers & Repairers 43 528 $63,482 50% Electrical & Electronics Engineering 19 17-3023 Technician 39 194 $56,576 67% 20 49-9043 Machinery Maintenance Workers 31 218 $40,498 100% 20 49-9071 Maintenance & Repair Workers-General 31 613 $32,074 88% Totals: 3259 10,320

Economic Impact: The Alamo Region s manufacturing industry covers the full spectrum of U. S. manufacturing. Twenty-four distinct major manufacturing sectors are represented in our region, ranging from food & beverage manufacturing to aerospace, motor vehicles, machinery and everything in between. The economic impact of our regional manufacturing is substantial, contributing over $22.5 billion annually in economic benefits to the San Antonio metropolitan area (see Note 5) and over $30 billion annually when the multiplier effect associated with exported goods produced by regional manufacturers is included. The economic impact upon a community by manufacturing is one of the largest of any industry, ranging from $33.70 of economic impact for every $1.00 in wages paid within the Petroleum & Coal Products Manufacturing Industry (NAICS 324) to a low of $3.83 of economic benefit for every $1.00 in wages paid by the Furniture Manufacturing sector (NAICS 337). Utilizing the federal economic conversion factors from the most recent manufacturing economic impact report, the median economic conversion factor for all manufacturing sectors is $9.27 of economic impact for every $1.00 in wages paid 13. Based upon the above, the SAMA Study results indicate that filling just the top 10 current year vacancies identified in Table 1-1 above, would result in a potential additional annual economic impact benefit of $373.5M to the Alamo Region. Looking further, the top 20 manufacturing vacancies identified in Table 1-2 represent a potential increase of an additional $1.3B economic impact to the community annually within the next 10 years if just the top 20 demand occupations are filled with skilled manufacturing employees. In either instance, the addition of skilled manufacturing employees to meet the current and projected high-demand needs of the manufacturing industry presents the opportunity for significant economic growth within the Alamo Region. The Transportation Equipment Manufacturing Sector (NAICS 336): The Transportation Equipment Manufacturing sector (NAICS 336) has been identified as a targeted growth industry within the Alamo Region. This includes manufacturing in support of aerospace, motor vehicle and industrial vehicle sectors, including spare parts. As noted earlier, approximately 80 Alamo Region companies are members of this key manufacturing sector employing 11,136 people, with a similar number of additional manufacturers of parts and equipment for this industrial segment. The UTSA/SAMA survey was distributed to 59 manufacturers within this sector, with 21 companies responding, for a 36% response rate. This represented the largest response of any of the manufacturing subsectors. The same review of the survey responses was performed for the Transportation Equipment Manufacturing subsector as was done for the full industry assessment. It should be noted that the results from the industry-wide assessments (Figures 2-1 and 2-2) include the Transportation Equipment Manufacturing (NAICS 336) sector. The following reflects only the survey results for the NAICS 336 industry subsector and does include single company responses from within the subsector. As also noted in the industry-wide discussion, the demand levels are most likely understated due to the survey only seeking the top 3 demand occupations, rather than the identity of all occupational needs. Figure 3-1 identifies the top high-demand NAICS 336 manufacturing vacancies projected over the entire 10-year survey period, ranked by the highest cumulative 17

demand. This graphic consolidates the identified demands into major occupational SOC groupings. As noted earlier, with few exceptions, the occupational needs of the Transportation Equipment Manufacturing sector closely mirror the broader manufacturing industry at large, with all of the NAICS 336 top demands also reflected within the wider Alamo Region s manufacturing industry needs. Figure 3-1, Top Current & Projected High-Demand Transportation Equipment Manufacturing Vacancies by Occupation Category 18

Figure 3-2 identifies the specific occupations identified as High-Demand needs within the Transportation Equipment Manufacturing sector by specific SOC code over the entire 10-year survey period, ranked by the highest cumulative demand. The specific occupations should be viewed with a perspective toward the various types of regional manufacturers that support the aerospace, motor vehicle and heavy industrial vehicle markets which may dictate some unique occupational skills requirements. 19

Figure 3-2, Top Current & Projected High-Demand Transportation Equipment Manufacturing Vacancies by Occupation The SAMA occupational employment analysis indicated a high correlation between manufacturing-related occupations utilized in the targeted manufacturing growth industry (Transportation Equipment Manufacturing, NAICS 336) and the majority of the other 23 manufacturing subsector categories. This correlation indicates that workforce development efforts targeting key high-demand occupations within the NAICS 336 manufacturing sector would, with few exceptions, also serve to meet the high-demand job needs of the industry at large. Subsequent interviews with industry members confirm this assumption. Although individual job titles and descriptions may vary from sector to sector and even between individual companies, the core occupational skills requirements are common. Variances generally exist only in the level of execution of the job responsibilities and the application of the skills to the specific tasks within a specific company. As a result, workforce development and training programs can achieve greater depth of industry penetration by initially addressing those occupations with a broad-based industrial application. Occupational Education/Skills Requirements: The objective of this study was to identify and quantify the Alamo region s skilled workforce demands to provide a basis for focusing workforce development and training resources to meet the regional manufacturing industry s needs. As noted earlier, those workforce needs are significant and diverse, reflecting the regional manufacturing environment. The majority of the identified occupations require specialized knowledge and experience. Almost all require both specialized technical training in an instructional environment as well as practical work experience to acquire the skill levels necessary to meet the critical job requirements. 20

The acquisition of the skills necessary to meet the increasingly complex demands of today s manufacturing environment starts early. Many of the targeted occupations utilize the Science, Technology, Engineering & Mathematics (STEM) skills that are developed in high school, supplemented by the applicable Career and Technical Education (CTE) curriculum programs, for development of career pathways. A high school education is essential for a career in manufacturing, with a significant number of occupations requiring the acquisition of additional education and skills through targeted post-secondary programs, including skills certifications, Associate and Bachelor Degrees. In addition to the educational requirements, many of the jobs require prerequisite working knowledge of the equipment, materials and processes related to the specific occupation. As a result, internship and apprenticeship programs offer significant opportunity to acquire familiarity and critical knowledge applicable to the targeted occupation. Table 1-3 reflects the top demand occupations identified by SOC designation from the UTSA/SAMA survey. Included in Table 1-3 are the projected current and 10-year cumulative demand for each occupation. The Table also reflects the occupational knowledge requirements related to each occupation 14. Specific training and occupational requirements will vary by employer dependent upon their utilization, industry sector, product application and environment related to the specific occupation. Those occupations that indicate Moderate or High entry level knowledge requirements typically require experience in related fields as a prerequisite for employment. These occupations are generally mid-level, journeyman or senior employees with prior work experience leading to employment in these positions. Prerequisite experience may be gained by working in related fields, apprenticeships or comprehensive On-The-Job training programs to acquire the applicable skills and experience. These occupations also provide growth opportunities for incumbent workers and career pathways within the manufacturing industry. 21

SOC(s) 15-1131 Occupations Job Title Current Year Projected Demand Demand 10-Year Cumulative Projected Demand Occupation Knowledge Requirements Typical Work Entry-Level Experience Knowledge Required Required Typical Entry Level Education Required STEM Related Occupation Computer Programmer/Software Engineer/Systems Analyst 47 172 BD, Certs Intern Moderate X 15-1133 System Software Developers 8 63 BD Intern Moderate X 17-2071 Electrical Engineer 39 133 BD Intern Moderate X Industrial Engineer/Manufacturing 17-2112 Engineer 12 51 BD Intern Moderate X 17-2141 Mechanical Engineer 70 255 BD Intern Moderate X 17-3023 Electrical & Electronics Engineering Technician 16 39 AD; Certs Appr Moderate X 17-3024 Electro-Mechanical Technicans 8 27 AD; Certs Appr Moderate X 47-2211 Sheet Metal Workers 16 27 HS; Certs Appr Low X 49-2000 Electrical & Electronic Equipment Mechanics, Installers & Repairers 12 43 PS; AD; Certs Appr High X 49-3031 Bus & Truck Mechanics & Diesel Engine Specialists 35 110 HS; Certs Appr Low X 49-3042 Mobile Heavy Equipment Mechanics, except Engines 39 157 HS; PS; Certs Appr Moderate 49-9040 Industrial Machinery Installation, Repair & Maintenance Workers 255 282 PS; AD Appr High X 49-9041 Industrial Machinery Mechanics 8 86 PS; AD; Certs Appr Moderate X 49-9043 Machinery Maintenance Workers 31 31 HS; PS; Certs Appr Low 49-9071 Maintenance & Repair Workers-General 27 31 HS; PS; Certs Appr Moderate 49-9090 Misc. Installation, Maintenance & Repair Workers 20 20 HS; PS; Certs Appr Low 51-2000 Assemblers & Fabricators 4 31 HS; PS; Certs Appr Low 51-2020 Electrical, Electronics & Electromechanical Assemblers 8 70 HS; PS; Certs Appr Low X 51-2022 Electrical & Electronic Equipment Assemblers 4 16 HS; PS; Certs Appr Low X 51-2090 Misc. Assemblers & Fabricators 8 86 HS; PS; Certs Appr Low 51-2092 Team Assemblers 16 145 HS; PS; Certs Appr Low 51-2099 Assemblers & Fabricators-All Other 176 309 HS; PS; Certs Appr Low 51-3093 Food Cooking Machine Operators & Tenders 27 94 HS Intern Low 51-4010 CNC Computer Control Programmers & Operators 47 352 HS; PS; Certs Appr High X Table 1-3, Top Demand Occupation Knowledge Requirements 22

SOC(s) Occupations Demand Occupation Knowledge Requirements Job Title Current Year Projected Demand 10-Year Cumulative Projected Demand Typical Entry Level Education Required Work Experience Required Typical Entry-Level Knowledge Required STEM Related Occupation 51-4012 CNC Computer Controlled Machine Tool Programmers-Metal & Plastic Programmers & Operators 8 74 HS; PS; Certs Appr High X 51-4031 Cutting, Punching & Press Setters, Operators & Tenders-Metal & Plastic 39 39 HS; PS; Certs Appr High X 51-4041 Machinist 27 164 HS; PS; Certs Appr Low X 51-4072 Molding, Coremaking & Casting Machine Setters, Operators & Tenders-Metal & Plastic 4 31 HS; PS; Certs Appr Moderate 51-4081 Multiple Machine Tool Setters, Operators & Tenders-Metal & Plastic 47 161 HS; PS; Certs Appr Moderate 51-4111 Tool & Die Makers 47 117 HS; PS; Certs Appr Moderate X 51-4120 Welders, Cutters, Solderers & Brazers 114 305 HS; PS; Certs Appr Low X 51-4190 Misc. Metal & Plastic Workers 0 20 HS Intern Low 51-4193 Plating & Coating Machine Setters, Operators & Tenders-Metal & Plastic 12 262 HS; PS; Certs Appr Low X 51-6031 Sewing Machine Operators 0 39 HS None Low 51-6063 Textile Knitting & Weaving Machine Setters, Operators & Tenders 23 63 HS Appr Low 51-9061 Inspectors, Testers, Sorters, Samplers & Weighers 35 82 HS; PS; Certs Intern Low X 51-9190 Misc. Production Workers 43 149 HS; Certs Intern Low 51-9199 Production Workers, All Others 12 90 HS None None 53-7051 Industrial Truck & Tractor Operators (Includes fork lift operator?) 12 333 HS; Certs None None 53-7062 Laborers & Freight, Stock & Material Movers-Hand 0 39 HS None None 53-7064 Packers & Packagers-Hand 0 35 HS None None Coding: HS - High School diploma or equivalent required PS - Post-Secondary courses related to occupation required AD - Associates Degree required BD - Bachelor's Degree required Certs - Licenses or Nationally-recognized Certifications for specific occupational skills and/or applications required Intern - Prior internship experience in targeted occupation and application required at a minimum Appr - Formal Apprenticeship experience in targeted occupation and application preferred Low - Requires minimal working knowledge of applicable equipment, materials and/or processes related to occupation & application Moderate - Requires working knowledge of applicable equipment, software and/or processes related to occupation & application High - Requires extensive working knowledge of applicable equipment, materials, sofware and/or processes related to occupation & applicatio Table 1-3, continued, Top Demand Occupation Knowledge Requirements Projected Workforce Losses: The UTSA/SAMA survey included an inquiry regarding projected manufacturing workforce losses; however, the survey responses were inadequate to develop a conclusive assessment. Twenty-four (24) companies, employing 8,092 workers (representing 16% of the regional manufacturing workforce), responded to the projected workforce losses inquiry. Although some of the 24 companies forecast no losses over the next 12 months, others did, identifying a total 23

loss of 371 employees within the next year, or 4.6% of all responding companies employment. No reason(s) for the projected losses were identified. As a result, it is unclear whether the projected losses are attributable to movement of employees, retirements or other reasons. In an attempt to provide some additional insight into projected workforce losses due to possible retirements, UTSA assessed the average age of Texas workers in several manufacturing-related occupations. Although no regional information was provided, the UTSA analysis reflecting Texas employment predicted an average of 5.6% of the State s manufacturing workforce would be older than 65 years of age by 2020 15. Due to the lack of detailed survey responses to the projected workforce loss inquiry, this report is unable to provide an accurate assessment of the impact of this item; however, both analyses indicate that the losses may be significant and, if substantiated, may exceed the ability to replenish retirement losses from the pool of unemployed workers (currently at 3.7%). It should be noted that inquiries to various manufacturing companies, large and small, indicated that the vast majority of firms have not assessed their potential workforce retirement losses. Although the pertinent information is available through employee records, companies generally have not taken action to assess this potentially significant and impending impact upon their current workforce and their capability to sustain existing business operations when such employee losses do occur. Additional Occupational Demands: In addition to the projected occupational demands identified earlier in this report, several occupations were identified as demand requirements by individual survey respondents. These occupations were identified only by a single company in the survey responses and, as a result, were not included in the projection of the demand over the entire population of regional manufacturers. Several of the occupations identified by the survey responses indicate those individual companies may possess unique demands at a level sufficient to justify development of specialized workforce programs tailored to meet their needs (e.g., SOC 49-3042, Mobile Heavy Equipment Mechanics). Alternatively, these single company responses may indicate that other companies also possess demand for these occupations at a level in addition to their Top-3 occupational needs requested by the survey (e.g., SOC 17-2071, Electrical Engineer) and, as a result, the true regional demand level is not reflected in the survey responses. Additionally, the chart below (Table 2-1) includes several occupations that were identified by survey respondents as one of their Top-3 High-Demand occupations; however, no quantified demand was reported by the survey respondent. The implication is that although no vacancies exist for the identified occupation during the current and projected periods, the particular skill is significant to the company. It should be noted that several of these single company demands are reflected in the grouped occupational data shown in Figure 2-1, Top 15 Current & Projected High-Demand Manufacturing Vacancies by Occupation Category, where similar occupational needs are depicted within the occupational SOC groupings. 24

Table 2-1, Single Company Survey Responses 25

Conclusions & Recommendations: This 2015 SAMA Workforce Assessment Study provides a significant insight into the workforce needs of the Alamo Region s manufacturing industry. The results of the study provide a forward-looking assessment of the region s critical occupational demands for both the current and out-years. This report documents and quantifies both the high-demand occupational groupings that reflect common skills requirements, as well as specific occupations that have been identified as critical employment needs for regional manufacturers. The report further reflects regional employment levels, wages, cross-industry utilization and knowledge requirements for those high-demand occupations. Review of the identified occupations indicates the trend toward the use of increased automation and technology within the manufacturing industry as both manufactured products and production processes gain complexity. High-demand occupations were identified by the study that reflect varying levels of experience requirements, ranging from senior/journeyman skilled employees, to mid- and entry-level workers. Although the impact of impending baby-boomer retirements upon our regional manufacturing industry was not able to be quantified by the survey, the study indicates that the losses of these senior workers will be both substantial and significant. The skilled manufacturing vacancies identified in the report represent a significant, although understated, economic impact upon the Alamo Region. The $1.3B annual economic benefit reflected in the report represents almost a 6% increase over the current economic impact of the manufacturing industry upon the Alamo Region. The economic impact identified by the report is likely understated as it does not include other occupational vacancies not identified within the Top-3 demand designation of the survey, nor does it take into consideration the additional employment needs of with new businesses that will join the Alamo Region during the surveyed period. The inability to fill these critical occupations represents a significant loss of economic opportunity not only to the individual manufacturing companies, but also to the region itself. 26

As a targeted regional economic growth industry, a separate analysis of the Transportation Equipment Manufacturing (NAICS 336) sector was performed. This assessment further provided confirmation that the majority of the demand occupations within this targeted industry subsector also reflect the skills demands of the region s manufacturing industry at large, although at sometimes differing demand levels. In addition to the cross-industry utilization of manufacturing-related occupations, the study found significant commonality of high-demand occupational skills within various identified occupational groups as identified in Figures 2-1 and 3-1. This commonality of industry needs, both within the occupational groupings as well as between various industry sub-sectors, indicates potential opportunities for the development of broader-based skills development programs that could provide deeper penetration into the number of positions impacted. Establishment of such broader-based training programs could then facilitate establishment of a knowledge baseline for further development of the workforce upon employment into the specific occupation and industry subsector. Engagement of the small business sector of the region s manufacturing companies is also essential to properly address potential job growth within the community. The majority of the region s manufacturing workforce are employed by small businesses. Any workforce development programs must consider how to support the small business employers workforce needs as well as those of the larger (and more visible) businesses. The various governmental, civic, educational and industry communities within the Alamo Region must work together to develop creative approaches to address the perfect storm of significant senior worker retirements; lack of available STEM qualified workers; a decline in technical education programs within the public education system; a very low regional unemployment rate; and a general lack of knowledge within the community of the current manufacturing industry. This study s identification of high-demand manufacturing occupations should be used to assess regional technical education and workforce development programs to determine if the programs align with the industry s needs. The assessment should identify existing regional programs that address the identified occupations and, perhaps more importantly, identify those occupational needs that are not being met by existing local programs. Once the gaps are identified, action must be taken to evaluate all alternatives to meet the occupational development needs for those positions. Alternatives considered may include: development of new or altered regional training programs, establishment of formal internship or apprenticeship programs within the industry, utilization of On-The-Job (OJT) training programs, use of nationally-recognized specialized training centers to meet unique workforce needs, and/or targeted national recruitment programs for critical occupations. 27

Any evaluation effort must be structured to concurrently assess the industry s workforce needs from three different perspectives: Short Term (1 2 years): Address immediate workforce demands through incumbent worker and targeted skills adult training programs to meet current employment needs of the manufacturing industry. For example, expansion of existing workforce development and training programs; identification of occupational demands that can be met with minimal incumbent or experienced worker up-skill training programs; identification of entry-level positions capable of being met with either no prior experience or Just-In- Time (JIT) programs for veterans or unemployed/underemployed workers requiring minimal training, etc. Intermediate Term (2 5 years): Address projected workforce demands associated with retirements, business expansions, defined technology upgrades, etc. through longer term development programs. Examples may include formal internship or apprenticeship programs; critical skills upgrade programs for incumbent workers; On-The-Job training programs; development of regional centers for higher skilled job training programs that include joint work/study curriculum; expansion of high school CTE and dual credit programs for targeted manufacturing occupations, establishment of post-secondary educational and training certificate and/or accredited programs to develop critical skills needed within manufacturing; etc. Long Term (5+ years): Address longer term workforce development initiatives to ensure a continuous supply of skilled workers capable of meeting projected industry needs. Examples within this category include establishment of youth-oriented career development programs within the education system leading to increased awareness and engagement of manufacturing career opportunities and requirements; education of teachers, counselors, parents and students through externships and engagement with industry; adaptation of emerging technology initiatives to skills acquisition programs; and the promotion and correlation of manufacturing-related activities within the community, such as National Manufacturing Day; FIRST Robotics, etc. 16 Manufacturers and key community leaders must constantly and consistently emphasize the value and contributions of our industry to leaders within the public, academic and private sectors. This effort is necessary to ensure the proper focus is placed upon the development and maintenance of programs to support the economic well-being of our regional manufacturing industry, with an emphasis on strengthening the workforce development foundation of the manufacturing ecosystem. Intensifying regional industry efforts should be accomplished to increase the focus on manufacturing-oriented workforce development and the career opportunities that exist within the manufacturing occupations. Greater depth of engagement is needed by industry members in support of Texas House Bill 5 (HB5) Career & Technical Education (CTE) and Science, Technology, Engineering and Mathematics (STEM) curriculum and career development programs to promote the early development of a future workforce interested and capable of meeting the needs of the manufacturing industry. 28