"Help Wanted" highlights skills drain in U.S

By Joanne Morrison

TRAFFORD, Pennsylvania (Reuters) - Only half the machines are running at precision parts maker Hamill Manufacturing, nestled in the Allegheny Mountains just east of Pittsburgh, once the booming center of the U.S. steel industry.

But the factory's overcapacity is the result not of a shortage of business -- it has more orders than it can fill, despite a slowing U.S. economy -- but because of a shortage of skilled workers.

"I'd hire 10 machinists right now if I could," said John Dalrymple, president of the company, which makes high-end parts for military helicopters and nuclear submarines. "That's eight to 10 percent of our workforce."

While millions of jobs making everything from textiles to steel have moved to new powerhouses like China in recent years, precision manufacturing remains a crucial niche in the United States, one that is overworked and chronically understaffed.

And, in a bad sign for the United States and its declining economic might, that shortage of skilled workers is likely to get worse as Baby Boomers retire -- with no younger generation of manufacturing workers to take the baton.

"Our workforce is an aging workforce," said Chief Executive Jeff Kelly, whose father founded Hamill nearly 60 years ago. "There isn't a queue of people lining up to come into the industry."

Some 20 percent of small to medium-sized manufacturers -- those with up to 2,000 workers -- cited retaining or training employees as their No. 1 concern, according to a survey by the National Association of Manufacturers. The survey was carried out in 2007 but has not been published yet.

A separate study in 2005, the latest available, said 90 percent of manufacturers are suffering a moderate to severe shortage of qualified workers.

"The irony is we pay very well, we have good benefits, we have job security and most of the companies that have survived the manufacturing recession at the early part of this decade can't find enough skilled workers," Kelly said.

A typical manufacturing job pays about $60,000 a year, according to manufacturing industry figures, a premium of about 25 percent to the service industries.

At Hamill, a general machinist will start at $9 an hour, rising to $14.50 an hour after training, and going up to the mid to high twenties for senior machinists, who can earn nearly $70,000 a year.

But that is not enough to attract younger workers into manufacturing, a sector that has suffered a bad rap over the years with layoffs in well-known companies such as the big three U.S. automakers.

"Too few young people consider manufacturing careers and often are unaware of the skills needed in an advanced environment," the U.S. Labor department wrote in a study on the issue.

Edward Lazear, the chairman of President George W. Bush's Council of Economic Advisors, warns that as more and more baby boomers retire the skills shortage will eventually cut into the country's economic growth.

"You will start to see some decline in our growth rates as a result of these demographic factors," Lazear told Reuters in an interview. "As people start to retire, the labor market is going to not grow at the same rate that it did in the past and it's going to affect our growth," Lazear said.