An SRG Leadership Interview with:
American manufacturing is vying for a comeback and with the boomer work force retiring, there’s ample opportunity for great careers in the sector. But an entire generation of Americans has been taught that a bachelor’s degree is a necessity and that manufacturing jobs are undesirable—poor pay and bad conditions.
Many gen-z and millennials are struggling with debt and have difficulty establishing a career path; meanwhile, many good paying jobs in the manufacturing sector remain open without qualified candidates.
In 2012, German manufacturing companies in the Chicago area were beginning to realize that while the economy was recovering, their talent pipeline was drying up. This was a striking realization because this type of problem rarely occurs in Germany—a fact widely attributed to Germany’s robust apprenticeship system.
These Chicago based German companies were interested in developing the same system locally in order to attain the same ‘soft benefits’ that are available in Germany. They wanted to get young people involved in the business with the goal of showing them there is a possibility not just to earn money, but to establish a career in their company and industry.
This led to an inquiry at the German American Chamber of Commerce of the Midwest, Inc. (GACC Midwest) and, soon after, Mario Kratsch was boarding a plane to Chicago. Today, Mario and a team of ten run the Industry Consortium for Advanced Technical Training (ICATT)—the American apprenticeship model benchmarked against the time-tested German System.
ICATT provides a long-term solution to the skills-gap problem by cultivating a system that trains and supports skilled workforce. Apprentices commit to work-study programs, come out of the apprenticeship with an associate degree, a well-paying job and, here’s the kicker: no debt.
We recently sat down with Mario to learn how ICATT was adapted to meet the needs of American companies and apprentices.
What is the origin of the German Model?
The German model finds its basic origins in the pre-industrial era when skills needed to work in the trades were prized. Guilds formed and only approved apprentices were taught the craft – and only those with the skills were allowed to work in these trades. But by that time, the system was looking way different – for instance: apprentices had to cover the entire cost of such training.
When you fast forward to post-war Germany, when the country was in an era of reform, the government passed the current Vocational Training Act which created the Apprenticeship system under the Ministry of Economy with the goal of promoting and ensuring a stable economy. Additional partners are included, but, generally speaking, the apprenticeship system in Germany is much more seen as a matter of a healthy economy first - hence the close connection to the Ministry of Economic Affairs.
Today, within Germany’s apprenticeship system, the entire workforce breaks down into roughly 350 industry standardized occupational profiles. These profiles (e.g. job specs) describe the skills, experience, education and certifications necessary for any vocation. Industry and education closely cooperate in the process of defining these minimum standards. Companies train to these minimum standards and add specifics to fit their needs.
The good thing for the company is: they develop the workforce with the skills they need.
The good thing for the apprentices is: they end up with a transferable credential which is valid throughout the industry – rather than just a company internal qualification.
When German kids are in high school, they are encouraged to take on internships to test out different industries and to help them form thoughts about their ideal career path. From there, many choose the apprentice route after high school to gain valuable work experience which can be applied to a career path or give them a ‘leg up’ in college level education.
Tell us about the ICATT Model.
The initial challenge of launching the model was adapting the German system to American norms. It’s an industry backed system in Germany and everybody values it. Here in the U.S., apprenticeships as a career pathway are commonly unknown, or unappealing.
ICATT is changing that narrative by creating a pipeline that begins with outreach to high schools with the goal of advocating for careers in manufacturing to teachers, parents, and students. Interested students can apply for an apprenticeship, if accepted, they start with a company right away. In turn, by investing in the program and the apprentice, participating companies have access that stream of talent. While high- school graduates are the main target group for companies, companies are free to hire whomever they want as their apprentice.
Today, ICATT operates in 5 states, with 62 participating companies and a total of 78 apprentices. The retention rate is 85%.
Due to the tight labor market, ICATT receives a lot of inquiries from companies. Some of which have short term needs and, in this case, ICATT is not an ideal solution.
ICATT is a tool for a company’s mid-to-long term workforce development. It is not a quick fix for a talent shortage.
ICATT works by identifying a ‘cluster’ of companies in the same area that invest resources into building an apprentice program. This way we create an economy of scale for both the businesses and the apprentices. This cluster approach helps to make this program accessible even to mid-size and small companies.
Once we have an established ‘cluster’ of interested companies, we seek a community college as a partner. When these two are in place, we can begin taking the concept to schools, parents and students.
Apprentices split their week between days at work and days at class. And, in some cases, we do block scheduling with eight weeks of class and eight to ten weeks of work.
The apprentice is in the program for three years, earns hourly wages and a stipend while at college. And, college tuition paid for by the company.
After successful graduation, they receive their Associate Degree, our certification (which is similar to what German apprentices receive) plus a two-year employment guarantee from the company.
What does ICATT mean for apprentices?
For the longest time, in modern American, it looked like there were only two options after high school: get a job or go to college.
In most cases, the jobs available to high school graduates don’t have a lot of room for growth, and do not necessarily pan out as careers. On the other side, many students who enter college might not really have a sense of what they are interested in pursuing for a degree... let alone a career.
The ICATT program offers a new path to a career. Graduating apprentices have earned money throughout the program, graduate without debt and have guaranteed employment.
Perhaps most importantly is job security. There is a company that has heavily invested in you as an apprentice. They did so for a reason – so there’s a career ahead.
What does ICATT mean for companies?
ROI always seems to be the first question. There used to be little room (and little need) for developing a mid-to long term workforce development strategy. So, when it comes to talking with companies about ROI, we focus on the following questions:
In many cases, the cost of status quo is not easily revealed by looking at just one line-item in your budget.
The cost of just maintaining the status quo can easily add up to a considerable amount that does nothing to address the deeper issue of the talent pipeline.
ICATT proposes that we change some of that ‘status quo’ expense into an “investment”.
This is what ICATT or any apprenticeship program is about…investment in your workforce.
The interest you earn from this investment is qualified workforce and a way better retention rate.
What is the future of ICATT?
Our first 5 Apprentices have just graduated last year, yet this year ICATT Network Companies have hired 60 new apprentices in the spring and fall cohort. I find that amazing, since the program started only 4 years ago.
The rate of growth has been astounding.
We now have multiple clusters in the Midwest (IL, IN, MO, WI, NE), and growing interest around the country. Plus, we support other programs already up and running with our expertise and knowledge, like the MAT2 program in Michigan or the MAP2 program in Ohio.
There is bipartisan support on the political level for such initiatives and growing support from a wide range of institutions. ICATT has been and is supported by the US Department of Labor, JP Morgan Chase, The Joyce Foundation, and one of our biggest partners is the Illinois Manufacturer’s Association. A huge portion of the cost for running this program is being covered by the companies themselves, and this was the intention right from the start – to have a sustainable program up and running that will be operating even if third party contribution go away.
But with everything growing, you need support from partners. Such support is much appreciated