Report shows threshold of skilled worker lags advance of technology

The 2005 Georgia Manufacturing Survey, benchmarking use of modern manufacturing technology, practices, and techniques in 648 companies, found the major barrier to innovation has now shifted from financial constraints to a lack of skilled personnel.

"The biggest surprise was that more respondents say they are having problems with basic skills," says Jan Youtie, research associate at the Georgia Tech Enterprise Innovation Institute in the School of Public Policy, which cosponsored the study with the Office of Economic Development and Technology Ventures. "Companies don't have the qualified personnel they need to implement innovation."

In addition to basic literacy skills, the threshold of what constitutes a "skilled worker" has increased with the advance of manufacturing technology.

Innovation was segmented into four types: product, process, organizational, and marketing. The most common innovations were working with customers to create or design a product, process, or other innovation; and the purchase of machinery, equipment, computers, or software to implement innovations. CAD is the most prevalent technology, employed by nearly half. RFID was cited the least, deployed by only 5 percent. Nearly two-thirds of respondents obtain some sales through either the Web or e-mail.

Those companies that did pursue innovation paid workers one-third more than the average Georgia manufacturer, and were 40 percent less likely to lose work to outsourcing than were companies competing on low cost. While fewer than 8 percent of respondents cite innovation as the key competitive strategy, nearly half see innovation in products and processes as part of other strategies.

"The benefits of innovation are pretty much across the board for companies in terms of quality and variety of goods, market share, increased capacity, reduced time for product delivery, and improved production flexibility," says Youtie.

The risks in innovation, however, are real—especially among small and midsize manufacturers.

"It can be quite personal for a small manufacturer," says Youtie. "Given that it could mean the end of the company, some prefer using techniques to reduce costs, rather than employ a riskier strategy."